Saturday, February 16, 2019

EU Copyright Directive: rejection of entire bill or of Article 13 only realistic options for opponents of idiocy

I'm a copyright hardliner regarding the scope of copyrightable works, a reasonably narrow exception for fair use, and remedies. I can say so without fear of contradiction from those who read my postings on copyright on this blog, particularly on Oracle v. Google, or who debated the Blizzard v. bnetd DMCA case with me back in the day. Copyright has been the basis of my livelihood ever since I started writing articles for computer magazines first, then computer books, while in high school. Meanwhile I've spent a lot of time and money developing software, and I've written tens of thousands of trivia questions (even thousands in recent years).

It says something about the utter lunacy that is the EU's proposed Directive on Copyright in the Digital Single Market ("EU Copyright Directive") when a staunchly pro-copyright blogger and creator of copyrightable works like me opposes it--obviously not every single word of it, but, at a minimum, Articles 11 ("link tax") and 13 ("upload filter"). The only other occasion on which I felt like this involved the EU as well: the CJEU's outrageous link liability decision.

The purpose of this post is to provide some unsolicited advice to the companies, industry bodies, NGOs and activist groups thinking about their strategy in a situation in which there's every reason to assume, based on the information available, that the "trilogue" (EU-style backroom negotiations between Commission, Council (= Member States), and Parliament) resulted in a very bad deal.

In 2005 and 2007, I emerged victorious from two very similar situations in the EU. I'm not sure anyone presently campaigning against the insane parts of the EU Copyright Directive can claim to have prevailed under such circumstances even once. So here's the experience from which I'm speaking, and I hope those war stories will encourage those in the trenches and serve as instructive examples. But after the war stories, I'll make some recommendations (based on this experience) that are specific to the EU Copyright Directive. So, first the old stories:

  • In 2004 and 2005, I ran a campaign named NoSoftwarePatents against the proposed EU Directive on the Patentability of Computer-Implemented Inventions ("Software Patents Directive"). I was not the founder of that movement: Hartmut Pilch was. But my campaign got significant support from small and medium-sized U.S. and European companies, provided content in 17 European languages, and I advocated a "restart" motion (which the Parliament adopted and the Commission ignored) as well as, at a time when even our political allies were highly skeptical, outright rejection (without conciliation).

    For the first time in EU history (and possibly still the only time to date), the European Parliament threw out a bill at the second-reading stage, where it normally either adopts the Member States' position or goes into conciliation with the other institutions. This event was significant enough that the Economist Group handed me the Campaigner of the Year award (which had gone to a pope three years earlier and went to Governor Schwarzenegger two years later), though Bono was another nominee, and then-outgoing European Parliament President Josep Borrell mentioned it as one of the most significant events in the Parliament's history. It was widely seen as a move that strengthened the Parliament, especially since the hurdle is high (you need a majority of the members, but in that parliament you always have many absentees).

  • In 2007, the European Commission was preparing a White Paper on Sports. Helping my friends at Real Madrid, the world's most famous and most popular sports team, became the only non-IT project in my career. The problem was that left-wingers and conservatives in name only formed an unholy alliance with corrupt association officials and FC Bayern Munich (which just sought to harm rivals to have better chances of winning the most important title for club teams, the Champions League). They were trying to pressure the EU to turn competition law on its head and authorize an extreme case of tying that would have forced my client, but also our informal allies (on this issue) at FC Barcelona and AC Milan, to submit to a "collective selling" (of broadcasting rights) system that would have cost my client roughly 100 million euros per year (the amount they later paid for the transfer of Cristiano Ronaldo).

    I wasn't just a "lobbyist," but authored a 41-page paper that was an informal preemptive antitrust complaint with the Commission. It was the first time I made a FRAND argument.

    Due to delays on my client's side (soccer clubs are a bit chaotic and not too strategic), we missed the opportunity to influence the European Parliament's four committee votes on a resolution that was meant to influence the Commission. The committee votes had gone against us, with only JURI (Legal Affairs) having been close to reasonable and the other three taking ideological positions. It was pure socialism, but with support from the nominally conservative European People's Party.

    While I was comfortable with the Commission officials in charge at the time being far from pursuing a radical agenda, it was critical to show to the ultimate decision-makers that there was no parliamentary majority for radical proposals. A pro-Brexit UK conservative (then an MEP, now an MP), Chris Heaton-Harris, was less concerned about substance than about subsidiarity: he didn't want the EU to impose sports rules on national associations and leagues. During our first meeting, Chris signed a proposed deleting amendment: we just took aim at the one passage of the proposed resolution that was trying to build a (fake) pro-competitive justification for tying a team's participation in the Champions League to socialist redistribution in a national league.

    One of Chris's assistants and I immediately started collecting signatures from MEPs and reached the quorum (40 or so) only minutes before the deadline. I still remember us running (well, it was sports policy) down the corridors of the Parliament to the "Tabling Office" where you present bills and amendments, and we were a few minutes late, but the officials were generous. Then came the plenary vote. What continued to be a huge issue: the Parliament's rapporteur, Ivo Belet, was radically against us, but a member of the largest group in the Parliament, the aforementioned EPP, and parties rarely go against their own rapporteur. We narrowly won the EPP-internal vote, which shocked Belet, but when our deleting amendment came to the vote, he gave a thumbs-down sign, which could still have influenced some people. Nevertheless we secured a majority consisting of those preferring subsidiarity (obviously also including my UKIP friends and ODS from the Czech Republic), politicians interested in sane competition policy, and supporters of the wildly popular teams in my camp.

Apart from those two situations, I only got involved with one other "lobbying" effort: the 2006 resolution on EPLA, a predecessor to the Unified Patent Court (UPC). The outcome there was mixed, but the objective was primarily to delay that process (and as of today, there still is no European patent judiciary). At an EPLA conference in London in the summer of 2006, a Commission director said that "generations of students [would] be taught the story of [our anti-software-patent] campaign as an example of a perfect political campaign."

There still is a chance to defeat the craziest aspects of the EU Copyright Directive, but it will take an extremely forceful and focused push. It appears that things went wrong last time the Parliament decided. Now there's only one last chance, and besides the advice you could find between the lines of my summary of how I triumphed over EU idiocies a long time ago, I have some recommendations specific to the EU copyright situation:

  1. Make an institutional argument. In connection with the "restart" motion for the software patents directive (which paved the way for outright rejection as MEPs positioned it as retribution for the Commission's decision not to make a new proposal), the FFII's activists (all of them very idealistic) argued what's "right" while my position paper focused to a greater extent on what would make the Parliament "strong." It was like a forking situation in open source where we tried both, but when they showed both texts to MEPs, everyone preferred mine.

  2. Make a votes-focused argument. There are only two currencies in politics: votes and money (and money is often just a means to secure votes, though sometimes it's an end in its own right, especially in the EP, where numerous MEPs are on corporate payrolls). Tell MEPs (many of whom are seeking reelection this year) that it's the smartest thing for them to vote either the whole bill or at least Article 13 down just so no voters--especially young voters and, generally, Internet users--will be angry. More than at any other point in time, the political establishment fears that EU-skeptical parties may actually form the strongest bloc in the EP after this year's election. You must leverage those fears and sell them on killing the bill so they keep their seats! This will be their last major vote before the election.

  3. Focus on a simple message and demand for which there can be a broad consensus. I would ask MEPs to reject the entire bill because it's the clearest message (then the Commission will have to go back to the drawing board and a new EP, with many EU skeptics, will give them an even harder time) or, if they're hesitant to do what actually made sense in 2005 for the software patents bill, they should delete Article 13. The latter may be more achievable.

    Apparently, some modification was made to Article 11 ("link tax") that may make it more acceptable to Google. And ultimately, Article 11 directly impacts only Google. I absolutely agree with critics of Article 11, such as Berkeley professor Pamela Samuelson (here's a tax-free link to one of her writings on this issue). Article 11 is counterproductive and plain stupid. But if you now want to get the majority you failed to get last time, you need a simpler, clearer, more focused and more powerful message! Your attitude toward Article 11 should be: "This, too, shall pass." You can try to get it repealed after it's failed.

    Article 13 is the much better cause for campaigning purposes. It affects user-generated content (UGC), which is extremely important. Case in point, even my trivia app will sooner or later get UGC, and some other trivia apps already rely on it.

    With respect to Article 13, a strong case can be made for consumer harm as well as for this further weakening Europe. Most politicians don't understand economics, especially digital-era economics, well enough to figure it out themselves, but--apart from the issues raised in this Wall Street Journal op-ed that compares the eurozone's shrinking (since 2009) economy to growth in the U.S. and Asia and the ever lower performance of continental European students in math (in France and Germany, degeneration is mostly due to decades of unselective migration)--Europe's single biggest economic problem is that it doesn't have major digital platforms. There are only two significant European companies that can be considered digital platform companies: SAP (big by European standards but small compared to Silicon Valley and Seattle Sound giants) and Spotify, which loses the more money the more users it has and probably can't stay independent for too long. Successful digital platforms have enormous leverage and benefit from network effects, which makes it hard enough for Europe to catch up, but UGC is essential to digital platforms. The EU shouldn't cut off its nose in order to spite its case by complicating the creation and operation of UGC-centric platforms.

  4. Combat the idea of "compromise" being a virtue here. With the software patent directive we faced the problem that many politicians initially didn't like the idea of outright rejection because they argued politics is all about the ability to find a middle ground. That is, together with the high mathematical hurdle, the reason why the EP hadn't exercised its right to reject a bill at second reading (a right the EP had since the Maastricht Treaty in the early 1990s) before we came and won. But every once in a while, no deal is better than a bad deal. Blame it on the other institutions: the Commission and the Council. Blame it on Axel Voss, the EPP MEP who was appointed as the EP's chief negotiator, though his positions are far from balanced. Alleviate MEPs' concerns, and emphasize the benefits: it's the best shot for reelection.

  5. Appeal to center-right and right-of-center politicians. A large part of the reason why my NoSoftwarePatents campaign was started in parallel to the FFII's and various FOSS organizations' efforts was a positioning issue: the anti-software-patent movement was misperceived as the spearhead of a generally anti-IP movement that wanted "everything on the Internet to be free," as a still-influential German conservative MEP (thus I won't mention her name here) told me in a meeting. For the copyright debate it's very important that you emphasize not only consumers but also creators. This, again, will be easier when giving up on Article 11. With the greatest respect for an organization like EDRI, which is involved with the push against the EU Copyright Directive: they're so radical that even a staffer of the Greens/EFA group in the EP told me many years ago that the Greens didn't want to be seen as too closely associated with them.

    Many MEPs want to be seen as pro-business. You must reach out to them more effectively. Bring in app development companies and similar stakeholders who really want and depend on copyright, but oppose its most insane excesses. If you can't convince MEPs that one can be pro-copyright but against Article 13, and that it's actually good for copyright in general to oppose Article 13, then you probably won't build the majority you need. You'll only get much support from the left, and that's not enough.

  6. Better online mobilization. The NoSoftwarePatents effort was very much about mobilization. MEPs told us that they had never received so many messages (emails, letters, faxes) from voters until the FFII (and, later, my campaign) mobilized "the Internet." At the time, we had to rely on mailing lists. Nowadays, with social networks, there's better infrastructure. But I really don't think it makes sense to focus on the link tax. Focus on Article 13, user-generated content, digital platforms. That one affects far more people (not just Google, and Google can probably live with Article 11 now anyway, though again, it's crazy and I hope it will be repealed after a few years--when everyone knows with the benefit of hindsight that it's counterproductive).

    If you want to mobilize citizens to contact politicians, you need a simple and compelling message. is mediocre at best.

    In late 2009 and early 2010, our "helpmysql" campaign (not about legislation, but related to Oracle's acquisition of Sun Micosystems) even broke the Commission's email servers, as we were told in a meeting with then-commissioner Neelie Kroes. We put it in place within only a couple of weeks, even during the Holiday Season.

    I strongly recommend either quickly optimizing or starting a fresh, new effort that will make a greater impact.

  7. Attack mainstream media harder (if necessary). You have all those mainstream media companies--which President Trump often refers to as the "fake news media"--against you. We had a similar problem with our campaign against software patents, not because publishers wanted those patents but because, quite frankly, most news agency journalists were simply not smart enough to figure out that the claim "it's about software-powered devices like washing machines, not about patents on computer programs" was obviously a lie when SAP publicly stated that it wanted the proposed directive because it would protect SAP's "innovations" (which aren't washing machines). When the lie came from the Commission and national governments, the fake news media propagated it as if it were a truth and didn't believe us, just because they were brainless.

    If you give up on Article 11 now and focus on Article 13, maybe that will be a basis to get more reasonable mainstream media coverage of your efforts. I'm not sure because those traditional media companies probably also view UGC as a threat to their business model, but at least there's a chance. Time is not on your side, so you must find out quickly whether, after accepting Article 11, they'll give you a reasonably fair treatment. If not, don't shy away from bashing those publishers. They're backwards-oriented, they're rent-seeking losers, they don't innovate, they're the past and not the future. Make this a story of the winners of the digital age--and consumers are the winners when there's such an abundance of great original content--fighting against an evil scheme by the sore losers, for the sake of Europe's digital future, to the extent Europe has any digital future at all (Europe won't be able to compete with the U.S. and Asia with or without that EU Copyright Directive, but at least it shouldn't be self-destructive).

I haven't been to Brussels and Strasbourg (the two EP seats) in many years, and it's very unlikely, though depending on the circumstances not 100% inconceivable, that I'd go there in the build-up to the final "copywrong" vote to campaign for rejection/deletion. There are still some MEPs who remember the 2005 vote on software patents, and even many of those who weren't there yet in 2005 have meanwhile heard about it. The showdown in Strasbourg or Brussels could become a huge event, like the legendary July 2005 software patents vote, but it takes the right message and turnaround strategy to get a better outcome under even more difficult circumstances (where the strongest argument of the "copywrong" side will be that the result of a "trilogue" is sacrosanct and must be rubberstamped).

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Thursday, February 14, 2019

Apple's workaround for German fake injunction--Qualcomm-based variants of iPhone 7 and iPhone 8--exacerbates Qualcomm's antitrust woes

At the end of my shareholder-value-focused analysis of Qualcomm's $1.5 billion deposit for the immediate enforcement of a Germany-wide patent injunction against the iPhone 7 and the iPhone 8, I predicted it was going to be "a Pyrrhic victory." By now it's clear that "Pyrrhic victory" is a euphemism. It's a total disaster for Qualcomm, actually. A waste of money; zero leverage over Apple (which as of today is again selling all iPhone models in Germany without restrictions); zero proof of patent portfolio strength; a significant risk of additional EU antitrust problems because it underpins a complaint by Apple that had already given rise to preliminary investigations by the European Commission's Directorate-General for Competition (DG COMP); and adverse effects on Qualcomm's reputation in U.S. and Asian competition circles.

I wouldn't normally call a formally-enforceable injunction a "fake injunction," especially since I try to disagree respectfully. However, there's an accumulation of reasons for which I can't help but use strong and harsh terminology:

It was unfortunately necessary to repeat all of the above because otherwise one could mistakenly see an admission of "guilt" (in terms of infringement) in the fact that Apple is, as of today, shipping a workaround--now confirmed by media reports based on official statements by Apple and Intel, while last week it was a credible but unconfirmed scoop for

This is a workaround for a patent that is almost certainly not infringed anyway, and likely invalid. The whole purpose is to keep selling (or to resume selling the iPhone 7 and iPhone 8 in the German Apple Stores) and to moot any potential enforcement dispute. Earlier this week it became known that Apple has also modified iOS to be unaffected by a potential U.S. import ban despite still having reasonably good chances of avoiding a finding of a violation anyway.

I asked someone at the Apple Store in downtown Munich and was told that they'd have the iPhone 7 and iPhone 8 on sale again in the store by early next week, and that those models can already be ordered again on Apple's German online store. Indeed, my first tweet about this new development included two screenshots from the German Apple online store (this post continues below the tweet):

There still is a possibility of the injunction being lifted by the Oberlandesgericht München (Munich Higher Regional Court). I asked the appeals court earlier this week whether they had any news about Apple's motion to stay enforcement. The answer was that the court had just received a convoluted filing (they didn't say from which party) and was studying it.

A stay would help to restore sanity with respect to the defendant's dilemma (give up your secrets or your adversary will be rewarded for obstruction of justice). But availability is no longer an issue, unless Qualcomm were to try to cut off its supply of Qualcomm baseband chipsets to Apple's contract manufacturers: the new variants come with Qualcomm, not Intel, baseband chips.

Intel points out that there's no patent issue relating to its chips--and that's not even because it's a fake injunction. The reason is that no Intel chip was accused of infringement in the first place. It was about a Qorvo envelope tracker. So why would Apple replace Intel's baseband chipset with a Qualcomm product? That's because the envelope tracker is technically tightly integrated with the baseband chip. The envelope tracker plays a key role in efficient power management with respect to the radio frequenty (RF) signal. For a certain range of amplitudes, an amplifier is usually activated (but not for all other amplitudes where it isn't needed). So it's key not to activate the amplifier all the time, but only as needed. However, when the battery is running empty, then it's actually the lesser evil to drain more power from the battery. Since the amplified signal is the RF signal, an envelope tracker isn't just a component for which a drop-in replacement works; it's too closely related to the baseband chip, which generates the RF signal.

This leads us to the antitrust issue I mentioned further above:

With what has happened now, Apple's warnings against the potential anticompetitive effects of Qualcomm's enforcement of patent injunctions have been validated. Indeed, the only practical alternative that Apple apparently had was to use Qualcomm chips again, which means Intel loses some potential sales. Obviously, the impact on Intel is limited as long as it's just about Germany and even there just about the iPhone 7 and the iPhone 8. But Qualcomm wanted and still wants to make far greater impact with its patent injunctions.

In fact, Qualcomm has continued to escalate the dispute with Apple (which is to some extent about getting leverage over Apple, but the effect of Apple buying Qualcomm chips again would harm Intel and, ultimately, consumers). Some more German Qualcomm v. Apple patent infringement lawsuits will be decided this year:

The contempt proceedings in Munich are going to be much less interesting now.

So far, Qualcomm has clearly failed to prove the value of its patent portfolio. An agnostic decision by one court that is clearly outweighed by two facts-based non-infringement findings in other venues won't impress anyone. Nor will some Chinese software patent injunctions that have apparently been worked around by way of an iOS upgrade. Qualcomm wants a 3.25% royalty for its standard-essential patents (with the royalty being the device price, but capped at $400), and another 1.75% (thus a total of 5.0%) if its non-SEPs are included. The royalty demand for its cellular SEPs will be history once it's determined (in FTC v. Qualcomm) that Qualcomm actually must license (in general, and not only based on two specific FRAND declarations, which has already been decided) its cellular SEPs to rival chipset makers. In that case, even device makers with their own chip divisions could seek chipset-level licenses, and it would be hard for Qualcomm to get more than a $1 per-unit royalty or so on a $10 component. And as for Qualcomm's non-SEPs, all those enforcement efforts against Apple have made noise, but have failed to deliver a proof of concept. 1.75%, capped at $7 per unit, is a lot for a patent royalty--in fact, it even makes a host of workarounds the smarter choice.

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BlackBerry seeking German patent injunction against WhatsApp's message-forwarding feature: validity is primary--but not only--issue

I'm temporarily back to Germany for app development-related reasons, and seized the opportunity to return to the Munich I Regional Court for the first time since the envelope-tracker injunction Qualcomm obtained late last year through procedural shenanigans.

Today the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) held a first hearing in a BlackBerry v. WhatsApp & Facebook case that is part of a set of eight Munich patent infringement actions--over five different patents--against Facebook and its WhatsApp and Instagram subsidaries. The patent-in-suit discussed today: EP1746790 on a "method of sharing an Instant Messaging history."

It's undoubtedly a pure software patent, and Judge Dr. Zigann noted, diplomatically, that such patents are "at the margins of the scope of patent-eligible subject matter." However, the focus of first hearings in Munich is on claim construction and infringement analysis (so the parties can prepare accordingly for the second hearing, which is normally a decisive trial), not on validity.

Not only does the patent have a subject-matter problem but BlackBerry's lead counsel in this action, Quinn Emanuel's Dr. Jesko Preuss ("Preuß" in German), communicated right at the start of the hearing their decision to narrow the asserted claims by way of an additional claim limitation. Such claim amemdments are always an indication of a problem with distinguishing overbroad claims from the prior art. I believe the claims are still invalid, but BlackBerry and QE apparently believe that the narrowed claims are more defensible.

Facebook's lead counsel in this litigation, Freshfields Bruckhaus Deringer's Dr. Frank-Erich Hufnagel (frequently mentioned on this blog because of his representation of Apple in numerous other cases), wasn't impressed. The court even noted sua sponte that the additional claim limitation--requiring that the recipient of a forwarded message from a chat history not be the same as the one from whose chat it is copied--may contradict dependent claim 5. While this wasn't discussed, as a WhatsApp user I immediately realized that this modification means BlackBerry wouldn't have an infringement theory for the WhatsApp feature that allows one to copy a message (or its beginning in case it's long) when replying to a particular message from the history. Now it's exclusively about forwarding messages to a third party.

Judge Dr. Zigann noted that paragraph 10 of the patent specification mentions the possibility of performing a standard "copy and paste" operation for messages from a chat history, though it describes that approach as "woefully inadequate as well as cumbersome." As a matter of fact, the copy-and-paste option was widely used years before the priority date of that patent (July 20, 2005). I remember copying and pasting chat messages in 2000 using ICQ (then the leading instant messenger, and also mentioned in the patent specification) and in 2001 using mIRC, then (and possibly still) the most popular Internet Relay Chat (IRC) client. Old documentations of those (and other) tools should still be available in some Internet archives. Discussion boards also prove what I just said:

  • When UTF support (= support for many more special characters than in ASCII) was added, users discussed the practical implications, and copying and pasting came up.

  • discussed in 2001 how to save ICQ chat histories, and "Daddad" proposed just copying and pasting them.

Therefore, if BlackBerry seeks to defend the patent (which it is trying for now, though I really can't imagine that it would win a case over such a junk patent), it will have to push for a claim construction that gives the patent some technical meaning while still allowing an inventiveness theory.

In the early part of the two-hour hearing, Dr. Hufnagel voiced concerns over Judge Dr. Zigann's remark that a defendant should always focus on the top three invalidity contentions. While the court would allow filing more of then, the defendant should assume that only the top three (as indicated by the defendant)--or, as he conceded the number was arbitrary, maybe also four or six--would get a lot of attention, but the court lacks the time to entertain an infinite number of invalidity contentions. Dr. Hufnagel said that is really weak and has technicity problems, an issue with an inadmissible extension of subject matter, and additionally is anticipated by ten prior art references, a defendant should be able to seek a stay (pending parallel invalidity proceedings) based on more than, for instance, a hard limit of three contentions. Judge Dr. Zigann said that if an invalidity argument beyond the most important few was overwhelmingly strong, it would impress the court at any rate.

Dr. Hufnagel's concern is particularly understandable in light of bifurcation and the enforcement gap: instead of a full invalidity defense, German patent infringement proceedings don't come with an invalidity defense in a narrow sense as defendants can merely seek a stay based on an analysis that rarely results in a stay for obviousness considerations (it's typically just about novelty, or admissibility issues). But infringement cases are adjudicated way faster, so patent holders often get to enforce injunctive relief in Germany and then force a defendant to settle. As a result, any invalidity challenges must be withdrawn, and the patent will survive, regardless of how week it may be.

Facebook's motion for a stay will be discussed in detail at the mid-September trial. Patent attorneys from Samson & Partner (a patent firm that also frequently represents Apple) will then explain how they're challenging the patent in the Federal Patent Court of Germany. Today, Facebook's lawyers Dr. Hufnagel and Dr. Sonja Mross ("Mroß" in German) primarily argued non-infringement in accordance with Munich procedures.

Facebook argues that WhatsApp doesn't practice the claim limitation of "wrapping said message history into a file object based on the selected transmission mode for sharing said message history with said selected recipient" for three distinct, independent reasons:

  • WhatsApp doesn't perform certain steps in the sequence shown in a flowchart (Fig. 2 of the patent specification). Here, the court has an inclination for the time being, and BlackBerry unsurprisingly agrees, that no particular sequence of those operations is claimed.

  • WhatsApp doesn't perform the wrapping operation baed on the selected transmission mode. The patent is about potentially emailing a message history or sharing it through other channels, but in WhatsApp you always just forwarded a message from one WhatsApp installation to another. Here, the court has an inclination for the time being, and BlackBerry naturally agrees, that even if just one transmission mode is used, the patent is still infringed.

  • Based on the patent specification, Facebook argues that the patent expects the wrapping operation to preserve the entire look & feel of a message history, while WhatsApp just forwards the text. Here, the court has an inclination for the time being, and BlackBerry unsurprisingly agrees, that "look & feel" is not explicitly claimed.

Some discussion also arose over the meaning of an "IM communication session," with Facebook arguing from a user-interface angle while the court tends to view a "session" as a duration as opposed to a particular window or set of windows (and BlackBerry, obviously, agrees with the court).

In other words, the court favors a broad claim construction. I venture to guess that Facebook is confident it can show a reasonably high likelihood of the patent being invalidated even with a narrow construction. But come the actual trial in September, I wouldn't be surprised to see Facebook make a "squeeze" argument where a broad interpretation of one or claim limitations is an indispensable requirement for BlackBerry having any infringement argument, but then there would be prior art references over which the claimed invention isn't novel (or maybe there is something novel, but if a novel element is clearly not technical in the sense of European patent law, that's also the end of the story).

What BlackBerry is doing here is the equivalent of buying some lottery tickets. Those lottery tickets aren't cheap, though the fact that no QE partner represented them today shows that at least this particular case here is not one they'd want to bet the farm on. They just hope that maybe one of those Munich cases will present enough of a threat to Facebook that BlackBerry can cash in. But the overall BlackBerry-Facebook dispute has been going for almost a year, and it may take another year or two. Since patents on software "as such" aren't allowed in Europe, I really can't see why BlackBerry should be able to collect any patent royalties on anyone's European revenues with patents of this kind.

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Wednesday, February 13, 2019

BlackBerry suing Facebook and its WhatsApp and Instagram subsidiaries over five European software patents in Munich

As the former director of the European NoSoftwarePatents campaign I always find it shocking what kinds of patents the European Patent Office (EPO) grants despite the exclusion of "programs for computers as such" from the scope of patentable inventions according to Article 52 of the European Patent Convention (EPC).

Post-grant reviews often do away with those patents, but rarely ever on the basis of Art. 52 EPC per se. What typically happens is that the Federal Patent Court of Germany or other courts of competent jurisdiction categorize some claim limitations as "non-technical" and purposely ignore them in their novelty or inventiveness analysis. Whatever little remains then is often anticipated by, or at the very least obvious over, the prior art. But, unfortunately, efficiency gains (reduced data volumes, increased processing speeds, economic use of screen space etc.) often serve as an excuse for circumventing Art. 52 EPC.

Tomorrow the Munich I Regional Court will hold a first hearing in one of eight BlackBerry v. Facebook/WhatsApp/Instagram cases over a total of five different patents--all of them pure software patents. Patents on "programs for computers as such."

In March 2018, BlackBerry sued Facebook as well as its WhatsApp and Instagram subsidiaries in the Central District of California (= L.A., though geographically it would be SoCal). Facebook's VP of Litigation and Deputy General Counsel, Paul Grewal, issued the following statement:

"Blackberry’s suit sadly reflects the current state of its messaging business. Having abandoned its efforts to innovate, Blackberry is now looking to tax the innovation of others. We intend to fight."

The fact that Facebook still isn't paying BlackBerry any royalties is a good sign. Don't feed the failed-business-turned-troll!

Mr. Grewal used to serve as a United States Magistrate Judge in the Northern District of California. Over the years this blog mentioned him quite often, most notably in connection with Apple v. Samsung discovery and (un)sealing disputes as well as his mediation effort with Oracle and Google, a case that he realized just had to go to trial.

While there has been some media coverage of BlackBerry's U.S. litigation against Facebook (and a countersuit by Facebook), I haven't been able to google any articles on the eight Munich lawsuits, even though a couple of first hearings have already taken place there. This is the list of patents and first hearing dates:

  1. EP1734728 on a "method and apparatus for switching between concurrent messaging sessions" (first hearing held on 01/10/2019)

    accused functionality: showing two chat histories in parallel

  2. EP1633114 on a "system and method for maintaining on a handheld electronic device information that is substantially current and is readily available to a user" (first hearing held on 01/17/2019)

    accused functionality: automatically identifying user profiles containing partly identical data

  3. EP1746790 on a "method of sharing an Instant Messaging history" (first hearing: tomorrow = 02/14/2019)

    accused functionality: sharing messages from the chat history

  4. EP1540495 on a "method and system for displaying group chat sessions on wireless mobile terminals" (first hearing: 02/28/2019)

    accused functionality: displaying chat history while text is being edited

  5. EP2339799 on an "IM contact list entry as a game in progress designate" (first hearing: 02/28/2019)

    accused functionality: chatting during gameplay

This is another series of Munich cases in which Quinn Emanuel is asserting patents on behalf of a patent monetization-focused client against a Freshfields client. QE is representing Qualcomm against Apple in a series of German infringement cases, and Freshfields is defending Apple. Here, QE is suing Freshfields client Facebook on BlackBerry's behalf.

The BlackBerry company was named Research In Motion (RIM) when it filed the related patent applications. The irony is that "Research In Motion" is structurally similar to the names of many patent trolls, but the company was actually focused on making products at the time and itself the target of lawsuits brought by trolls, with the NTP case (settled for $612.5 million) being the most well-known example, while it's now named BlackBerry, but far more interested in patent monetization while its namesake products became pretty irrelevant a long time ago, thanks to the iPhone and Android.

I was in frequent contact with RIM in 2006, shortly after the costly NTP settlement that happened on the eve of what would most likely have been a U.S. injunction. I remember that they were the first company (of many) to tell me about the problems they had with Qualcomm, and that they were really happy about the Supreme Court's eBay v. MercExchange ruling (on patent injunctions) that year. But times have changed, and now they're asserting software patents against Facebook and its two most famous subsidiaries as if Article 52 of the European Patent Convention didn't exist.

In addition to suing companies like Facebook directly, BlackBerry engages in privateering. Last week, PatentlyApple reported on a declaratory judgment action brought by Apple against a troll named "Fundamental Innovation Systems" that wants (but hopefully won't get any) license fees from Apple over a dozen former RIM/BlackBerry patents.

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250 million consumers v. Qualcomm: trial in 2019 no longer realistic

Only two things worked out well for Qualcomm on the litigation front this year: the Lasinski cross-examination and the fact that the United States Court of Appeals for the Ninth Circuit allowed Qualcomm's interlocutory appeal of Judge Lucy H. Koh's certification of a class of up to 250 million consumers suing Qualcomm for a partial refund of what those people paid for their smartphones (seeking $5 billion in total, or roughly $20 on average per person who bought a smartphone in the U.S. during the relevant period, which started in March 2011).

Other than that, the first month and a half of this year have been a near-total disaster for Qualcomm, especially since its Chinese and German injunctions appear to have been worked around and some of Qualcomm's offensive cases have recently failed.

The Ninth Circuit has set the following schedule for the interlocutory appeal of class certification:

  • Mediation Questionnaire due on 02/06/2019.

  • Transcript ordered by 02/22/2019. Transcript due 03/25/2019.

  • Appellant Qualcomm Incorporated opening brief due 05/03/2019.

  • Appellees' answering brief due 06/03/2019.

  • Appellant's optional reply brief is due 21 days after service of the answering brief.

If the related trial, originally scheduled for June, ever takes place, it won't happen this year, realistically. Judge Koh put the related pretrial proceedings on hold in January. After briefing, the Ninth Circuit will have to schedule a hearing, and then make a decision. This is all going to take time.

Theoretically, if both parties wanted to accelerate things, they could save time, but in the current situation that's not foreseeable. What they need more than anything else so they can even determine their preferred pace is (i) Judge Koh's ruling on the FTC's complaint (which the consumer class action is directly related to) and (ii) the Supreme Court's Apple v. Pepper (App Store commission case) opinion. I believe the FTC is going to score at least a partial victory over Qualcomm and that Apple is going to lose the App Store case (not referring to the case as a whole, just to the question before the Supreme Court), and then it will depend on the reasoning (the Supreme Court may decide Apple v. Pepper in consumers' favor with or without overruling the Illinois Brick doctrine).

For Qualcomm, the class action is a pain in the neck for at least four reasons:

  • With so many people being potentially entitled to a partial refund of what they paid for their phones, even a seemingly small per-class-member amount would still result in a sizable total payout.

  • Any payout, unless the amount was just laughable relative to the size of the class, would stigmatize Qualcomm forever as a company that owed consumers money for indirectly overcharging them.

  • As long as there's a class action connected to the FTC case, a settlement would have to be run by Judge Koh. And at this stage there is no indication that Qualcomm can even settle with the FTC on the terms it wants.

  • The consumer class can bring all sorts of motions that Qualcomm doesn't like, such as the antisuit motion that Judge Koh dismissed without prejudice only for timing reasons last year (timing was, by the way, described by this blog as the relatively most interesting argument Qualcomm had raised against that motion).

The problem with the schedule for mediation is that it will take place at a time when Judge Koh may still be working on her FTC v. Qualcomm opinion, and even though the Supreme Court held the Apple v. Pepper hearing in November, it may also need more time, especially since different justices appear to have different preferences for how to achieve the result that all of them but the Chief Justice appear to consider to be the right one.

All things considered, I'd be surprised if mediation succeeded under these circumstances.

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Monday, February 11, 2019

Apple has already defeated Qualcomm's first ITC complaint with a workaround in iOS 12.1 and later, blessed by Qualcomm's CTO

Qualcomm's patent enforcement campaign against Apple, which started in the spring of 2017, has produced some headlines but no real results. What Qualcomm wanted was to gain leverage over Apple well in advance of the Apple & contract manufacturers v. Qualcomm trial that will take place in San Diego in April. Qualcomm furthermore wanted to demonstrate the strength of its patent portfolio to the industry at large. But it has failed to achieve the former (practically zero leverage over Apple), and with respect to the latter, the very opposite is the case: the longer Qualcomm keeps litigating against Apple without real results, the less its royalty demands for non-standard-essential patents (a premium of 1.75% as Qualcomm charges 5% for its entire portfolio vs. 3.25% for only its standard-essential patents) will be accepted by the rest of the industry going forward.

On Friday, Dr. Ron Katznelson, a former Professor of Electrical Engineering at the University of California in Qualcomm's home town of San Diego, told the United States International Trade Commission (USITC, or just ITC) in a public-interest statement that there are dozens of alternative technologies to the asserted claim 31 of U.S. Patent No. 9,535,490 on "power[-]saving techniques in computing devices." That's the one Qualcomm patent an Administrative Law Judge (ALJ) deemed Apple to infringe, though the ALJ recommended (for public-interest considerations) that no import ban be ordered.

Dr. Katznelson was right. Qualcomm's sole remaining patent-in-suit in the investigation of its first ITC complaint against Apple is apparently as useful as having a fence on only one side of a property: anybody can just walk around it.

Today I downloaded the public redacted version of Apple's brief on review and remedy. It's Apple's response to the ITC's nine technical questions (any one of the first eight of which could be answered in a way that would singlehandedly overturn the finding of a violation) as well as the U.S. trade agency's five public-interest questions. In the middle of that document, Apple tells the ITC that it has already implemented a workaround for the '490 patent in all iOS versions since iOS 12.1 (this post continues below the document with further information on Apple's workaround):

19-02-08 Apple Brief on Rev... by on Scribd

The relevant passage starts on page 29 based on the page numbering at the bottom of each page, or page 35 based on the page numbering of the PDF viewer. Amazingly, Qualcomm's Chief Technology Officer Dr. James Thompson himself had blessed that workaround beforehand:

"Qualcomm's presentation at the hearing crystallized its theories regarding the scope and coverage of claim 31 of the ’490 patent. Against that backdrop, Apple recently changed its software (i.e., iOS) to remove the functionality that Qualcomm has accused of infringing claim 31, by implementing a design change that Qualcomm's own witnesses conceded would fall outside the scope of the patent. Thus, although Apple's Accused '490 Products with Intel baseband chipsets and the previous software do not infringe, products implementing the software change (included in iOS versions 12.1 and later) leave no doubt on that score."

"[...] [L]ate in the hearing and in post-hearing briefing, Qualcomm and its Chief Technology Officer James Thompson began suggesting that design-around options were readily available, including specifically for the '490 patent. With regard to claim 31 of the '490 patent, Qualcomm argued that removing the accused functionality would be 'relatively simple' [...] and that Apple and Intel could avoid any infringement of claim 31 by 'simply remov[ing]' the accused uplink (UL) / downlink (DL) synchronization feature in response to an exclusion order."

"[...] This fall, after the close of the hearing record, Apple implemented a new software-based design for its Accused '490 Products that removed the accused UL/DL synchronization feature that Qualcomm emphasized could be 'simply remove[d]' to avoid infringement of the '490 patent. To be clear, the pre-change versions also do not infringe the '490 patent, and thus there is no legal need to 'design around' it. But to moot any possible allegation of infringement from Qualcomm, Apple changed its products to do precisely what Qualcomm’s own witnesses testified would not infringe the '490 patent."

Apple asks the ITC for six months just so there's enough time for an official determination of non-infringement in all iOS versions since 12.1. Otherwise there would be a risk of customs officers mistakenly seizing non-infringing iPhones at the border.

There's no way that Qualcomm could credibly dispute Apple's workaround theory: Qualcomm's own CTO blessed this approach beforehand. Now it's too late. No government agency or judge is going to be persuaded by an after-the-fact about-face on Qualcomm's part. The workaround is in place, so even if Qualcomm obtained an import ban, it would be absolutely ineffectual.

In order to gain leverage, Qualcomm needs to prevail on a patent (by proving infringement while preventing Apple and Intel from proving invalidity) that is not exhausted, not licensed, and can't be easily worked around. Qualcomm has been unable to do so. There's every reason to believe Apple has worked around two Qualcomm software patents asserted in China; there are credible reports that a German workaround (for a Munich injunction that is most likely a fake injunction, a miscarriage of justice) is going to ship in a few weeks; and now it's official that Qualcomm's first ITC complaint against Apple has been a total waste of time and money. (Qualcomm's second ITC complaint is in even worse shape, by the way--the ITC staff identified no violation whatsoever.)

When Qualcomm brought that first ITC complaint in the spring of 2017, it published an infographic designed to stress the "vital" importance of the claimed "inventions" protected by the six Qualcomm patents-in-suit. But this is what's left of it--nothing (click on the image to enlarge; this post continues below the image):

Qualcomm dropped three of the six patents before the evidentiary hearing (the ITC equivalent of a trial). That's actually quite normal: the ITC expects complainants to narrow their case. But the idea is that complainants focus on strong patents, and the three that Qualcomm chose to continue to assert were anything but strong. The ALJ held that two of them weren't infringed, and the Commission (the six-member decision-making body at the top of the ITC) affirmed those findings by denying a Qualcomm petition for a review. Instead, the Commission granted Apple's petition for a review of the finding of a violation of the '490 patent. But even if the final ruling upheld the ALJ's finding of a violation, and if the Commission then ordered an import ban against ALJ Pender's recommendation, Qualcomm would still have lost the case for all practical intents and purposes. An import ban against products Apple isn't even importing anymore before the final ruling comes down is worthless.

Qualcomm is represented against Apple by some of the very best law firms, and one might expect Qualcomm and its lawyers to be able to find some really strong patents among the roughly 100,000 non-standard-essential patents in that portfolio of 130,000 patents. But after almost two years of infringement litigation, leverage is not in sight for Qualcomm.

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South Korea's Supreme Court vacates 2009 antitrust fine imposed on Qualcomm by the Korea Fair Trade Commission: unrelated to 2016 ruling

[Update] The analysis below, which was based on Yonhap's first report, has meanwhile been confirmed by the Korea Herald. The Supreme Court decision is largely a win for Korea's Fair Trade Commission (headline: "Supreme Court rules in favor of FTC in decade-old battle with Qualcomm"), with at least 200 billion won out of the 273 billion won fine having been upheld. Just as I had assumed, Qualcomm may get an adjustment in the tens of millions of dollars, but no more than that. [/Update]

South Korea's leading news agency, Yonhap, just reported on a decision by South Korea's Supreme Court relating to a decision the Korea Fair Trade Commission (KFTC) made almost ten years ago: a 273.2 billion won ($243 million) antitrust fine on Qualcomm for one particular type of conduct has been vacated, requiring a new decision by a lower court.

This appellate decision is unrelated to the much bigger (1.03 trillion won = presently almost $950 million) fine imposed on Qualcomm by the KFTC in December 2016. That one will take many years before it reaches the Supreme Court.

So let's put all of this into perspective. The old 2009 matter, which apparently took almost a decade to make its way up to South Korea's top court, was about incentive payments by Qualcomm "to Samsung Electronics Co. and LG Electronics Inc. between 2000 and 2009 on condition that they only use Qualcomm chips for certain smartphone models" (quoting Yonhap). That decision was affirmed by the Seoul High Court in 2013 for its anticompetitive effect. According to Yonhap, the Seoul High Court determined the incentive payments "effectively forced Korean buyers [= Samsung and LG] to refrain from exploring other deals with [Qualcomm's] competitors," and the Seoul High Court took particular issue with some of what was paid to LG because it "undermined fair competition."

Today, however, South Korea's Supreme Court determined that LG's share in the (presumably Korean) smartphone market in the years 2006-2008 was "well below the 40 percent level," which in the top court's opinion makes it "less likely" that these exclusive dealings had anticompetitive effects.

So what's the actual impact of this decision to vacate the 2009 fine, apart from being unrelated to the 2016 case (in which the fine is almost four times as high)?

My interpretation of Yonhap's report is that a limited adjustment amounting to tens of millions of dollars is somewhat likely, but large parts of the $243 million fine presumably won't be affected. I believe this adjustment will have limited impact on the number because

  • Samsung is clearly bigger than LG (the fine related to Qualcomm's payments to Samsung and LG), and

  • the appeal succeeded with respect to only a subset of the period the fine relates to (the fine was for 2000-2009, while the Supreme Court's decision to vacate is based on a market share determination for 2006-2008, i.e., only about a third of the period at issue).

What could be the case is that the KFTC fined Qualcomm particularly hard for the LG deal (should it have taken even more issue with the terms of that deal than with the terms of Qualcomm's deal with Samsung). So maybe the adjustment will be greater than tens of millions of dollars. But even if, hypothetically speaking, half of the 2009 fine was overturned, it would only amount to about 10% of the total of the 2009 and 2016 rulings. [See the update: it really is just about an adjustment in the tens of millions of dollars according to the Korea Herald]

LG recently became a party to the appellate proceedings related to the 2016 matter. Samsung used to be a party to the proceedings relating to the 2016 decision, but dropped out after effectively settling its dispute with Qualcomm throuhg a new commercial deal in 2018 that involved not only patent licenses but also the use of Samsung's foundry by Qualcomm.

Testimony from Samsung and LG, and documents referring to Samsung and LG, also played a role in last month's U.S. antitrust trial (Federal Trade Commission v. Qualcomm) in San Jose.

At the end of the Northern California trial, Judge Koh indicated that her ruling would take more time than her decisions usually do (there's probably no faster federal judge than her). With a view to another potential government shutdown (which may happen after this week), FTC staff inquired about whether they should keep some members of the litigation team available in order to respond to a ruling during the shutdown. Judge Koh then ruled out that a decision would come down before February 15 (after which date government funding might be interupted again) and invited the FTC to inquire again shortly before February 15. But Judge Koh also noted that the next shutdown would also affect her court. I guess we'll see an FTC filing with Judge Koh's court in a couple of days, and then Judge Koh may provide some indication of a likely ruling date. A delay of the decision in the FTC case would potentially affect the Apple et al. v. Qualcomm trial scheduled to go to trial on April 15 in San Diego (Southern District of California), as some of the issues to be decided by Judge Koh are relevant to Judge Curiel's case.

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Sunday, February 10, 2019

District court's pretrial ruling on damages and ITC scheduling order: no good news for Qualcomm in Apple dispute

A few months after Apple sued Qualcomm two years ago, the chipmaker started a patent enforcement campaign in three jurisdictions (U.S., Germany, and China). Almost two years have passed, but Qualcomm has yet to prove two thirds of its enterprise value (that's what the company's patent licensing business accounts for as was stated repeatedly during last month's FTC antitrust trial) in litigation. If one focused on only a few mainstream media headlines, one might be (mis)led to believe that Qualcomm gained serious leverage in China and Germany, and had a decent chance of achieving the same in the U.S., but headlines can answer only some of the world's most important questions. Patent enforcement isn't one of them.

It's one thing to obtain a favorable ruling. It's another to obtain a favorable and impactful ruling on a lasting basis. As fast-paced as this industry undoubtedly is, ephemeral results don't get major disputes settled.

There's no indication (otherwise the stock market would know) of Qualcomm's Chinese injunctions having had an impact on Apple's ability to sell or make products there. At least for the time being it appears that software updates have indeed solved the problem, which is plausible since that's what usually happens when non-standard-essential software patents are enforced. I've been interested in this subject since my NoSoftwarePatents campaign, which I started in 2004, and I've never seen a case where a software patent killed an entire product. The response has always been a software update. There's no reason to assume it shouldn't work in China.

Patent injunctions ban products that come with a particular set of technical characteristics. They don't ban products just based on their name regardless of what's inside. That would be the domain of trademark law.

As for Germany, most of Qualcomm's lawsuits there have been a failure even in strictly formal terms. The one injunction (technically, a pair of injunctions over the same patent but enjoining different Apple entities) Qualcomm obtained there

Guess how many of the mainstream media--even if one includes high-traffic IT-specialized websites--that reported on the German injunction cared to publish a follow-up on one of those three developments, or (which would make the most sense) the combination of all three?

None. At least I can't google anything. What I've been able to google, however, is that they all got the amount of the required deposit wrong until Qualcomm announced that it had, as only this blog had said from the beginning, laid down approximately $1.5 billion (all other media had previously stated only half of that figure).

Forget mainstream media headlines. Seriously, forget them when it comes to patent litigation. The general public will pay attention to a product "ban" even if it's more or less inconsequential. Some reporters struggle with legal procedures, but even those who are familiar with litigation in general often miss the specific procedural aspects of patent infringement and invalidation proceedings--or at least the technical aspects, but the economic relevance of a patent injunction depends on technical implications.

The beauty of the Internet is that those who really care to know what's going on have more choices than ever, and somewhere one may find the actual facts, as opposed to fake news. The workaround for that German injunction is a great example: an indie website,, found out about it from retailers. The news agencies didn't. Nor did the major IT news networks. But the latter all reported on the "ban."

Getting back to the actual subject. Qualcomm has apparently had zero impact in China (other than headlines) and next to zero impact in Germany (again, other than headlines). What about the U.S.?

  • Qualcomm's first ITC complaint against Apple is down to one patent, and the Commission (the six-member decision-making body at the top of the U.S. trade agency) asked nine questions, any one of which could be answered in a way to dispose of whatever little is left of that case. In that case, the public interest (with a view to which an Administrative Law Judge advised against an import ban regardless of the merits of the infringement allegations) won't even have to be analyzed. Apple and Qualcomm submitted comments on the aforementioned nine technical questions and the public interest last week, but they are are still sealed.

  • In mid-September, an evidentiary hearing (= trial) was held in the investigation of Qualcomm's second ITC complaint against Apple. No violation was found, and ITC staff spoke out against an import ban, though rumor has it that the staff has changed its position on the public interest.

    On Tuesday, ALJ MaryJoan McNamara entered a scheduling order. While she'd have preferred to add only 35 days (= the length of the recent government shutdown) to the due dates in that case, she experienced "ripple effects [from the shutdown] across most of [her] [i]nvestigations,"< so she had to add more time. As a result, the target date for her initial determination on the merits (ID) and recommended determination on remedy (RD) has had to be pushed back from January 22 to March 26. The target date for the final Commission decision is always four months after the ID/RD, i.e., July 26.

    It's not over yet for Qualcomm, but there's a relatively high likelihood now of both investigations ending without a finding of a violation, which--should it play out that way--would be a total disaster for Qualcomm's lawyers.

  • When I first commented on the summary judgment that came down in the Southern District of California companion case to Qualcomm's first ITC complaint against Apple, I focused on the holding that the U.S. equivalent of the German injunction patent wasn't infringed. It's also worth noting that the same order granted an Apple motion to preclude Qualcomm from seeking pre-suit damages. This means that even if Qualcomm prevailed on the merits of any of the patents-in-suit in that San Diego action, the damages period would begin in the spring of 2017. As a result, that case (which will go to trial soon) is about a small amount of money--I'm wondering whether it's even going to be enough to cover, in the best case for Qualcomm, the litigation costs.

    For the sake of complete coverage, the summary judgment order agreed with Qualcomm that Apple could not hold one particular prior art reference against one of the patents-in-suit. However, Qualcomm's motion with respect to another prior art reference targeting the same patent was denied, so the patent might still be deemed invalid--and with all the progress Apple and Intel have made with their petitions for PTAB IPRs (inter partes reviews), Qualcomm's patent invalidity worries are huge.

It's easier to make patent royalty demands, or to propose arbitration, on the basis of owning 130,000 patents than to prove that a single one of those patents

  • is actually infringed,

  • is valid,

  • is not licensed,

  • is not exhausted, and

  • can't just be worked around with a software update or minor hardware modification.

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Thursday, February 7, 2019

USPTO and EPO post-grant reviews: Intel is beating the living daylights out of Qualcomm's envelope tracker patent

There's only been bad news for Qualcomm's envelope tracker patent family this week. So bad in fact that it's impossible to understand why Qualcomm made a $1.5 billion deposit last month to enforce an injunction in Germany that lacks legitimacy and teeth at the same time.

On Tuesday, the United States District Court for the Southern District of California considered it a crystal-clear case that Qorvo's envelope tracker chip found in certain iPhone models doesn't infringe. That's why Judge Dana M. Sabraw entered summary judgment against Qualcomm's related infringement claim. There wasn't even a point in presenting an extremely far-fetched infringement theory to a jury. Previously, the ITC had held the patent non-infringed as well. In the combination of the ITC and San Diego (Qualcomm's hometown) rulings, there is every reason to assume that the German injunction is a monumental miscarriage of justice, and Qualcomm will likely lose some part of its $1.5 billion deposit if there's no settlement before Apple will be able to seek wrongful-enforcement damages.

Also on Tuesday, German website scooped everyone by finding out from resellers that Apple will apparently have a workaround ready in a month's time. It's illustrative of the utter absurdity of the envelope tracker SNAFU that a workaround would have to be created, replacing a non-infringing (in all likelihood, given the two U.S. decisions) chip. Contrary to what some people on the Internet appear to think, it's not an admission. It's simply that, should be right (which I tend to believe it is), any infringement allegations by Qualcomm against the modified variants of the iPhone 7 and iPhone 8 would require a whole new determination on the merits, while a contempt proceeding involving the previously adjudicated chipset could be decided against Apple if the court relied on its agnostic--by now, most likely counterfactual--infringement finding again. If the standard in a contempt proceeding required Qualcomm to prove an actual infringement, a workaround would most likely not be needed, but the court might favor the same approach once again and adopt Qualcomm's attorneys' fiction. As the saying goes, discretion is the better part of valor.

Yesterday--Wednesday--delivered the next round of bad news for that Qualcomm patent. Technically it's U.S.-only news, but due to major overlaps it also has important implications for an opposition proceeding before the European Patent Office, which will hold an opposition hearing on May 24 (chairman: Manuel Pavón Mayo; 1st examiner: Ali Hijazi; 2nd examiner: Thomas Agerbaek). The U.S. inter partes review no. IPR2018-01154 targeting claims 15-20 of the U.S. envelope tracker patent is most interesting in this regard as the claims and the prior art references are most similar to the issues before the EPO's opposition division.

The Patent Trial and Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO), which had previously instituted two inter partes reviews of the envelope tracker patent, yesterday granted two more petitions, resulting in a total of four IPRs targeting this patent, with each proceeding relating to a different set of claims. The following screenshot shows the status of Intel's four IPR petitions, all four of which have given rise to post-grant reviews by now (click on the image to enlarge; this post continues below the image):

In light of the Supreme Court's SAS ruling, which requires the PTAB to either review all challenged claims or none, the partitioning of Intel's validity attack on the envelope tracker patent makes the four decisions on institution even more meaningful. Otherwise, if a single petition had challenged all claims, the PTAB might have granted a review theoretically because of a single claim being reasonably likely to be invalidated. But since Intel's lawyers (from the Wilmer Hale firm) challenged four sets of claims separately, we now know that the USPTO sees a reasonable likelihood of invalidation for multiple claims, and probably even for all claims.

The petitions were all filed in late June, i.e., after the SAS decision, and Intel presumably sought to avoid a situation in which the PTAB would be scared away by a monolithic petition targeting all claims at once if there had been a strong case for invalidation with respect to maybe just one or two claims. But by now we know it was a non-issue. The patent has a huge validity problem.

Should a constitutional law professor (who happens to be the chairman of the board of directors of an organization that has been supporting Qualcomm for some time now) be right and the ITC actually has to conduct a retrial with respect to Qualcomm's first ITC complaint against Apple, the envelope tracker patent would be relitigated, but the likelihood of the ITC deeming the asserted claims invalid would be higher next time around.

Since there will be news from those IPRs sooner or later, I'd like to help everyone navigate the four IPRs by providing an overview of what prior art references are held against what claims in what proceeding:

IPR2018-01153 (claims 1-9) -- instituted on 01/16/19

Intel's petition (PDF)

Claim 1: obvious over Chu + Choi 2010 + Myers

Claim 2: obvious over Chu + Choi 2010 + Myers

Claim 3: obvious over Chu + Choi 2010 + Myers

Claim 4: obvious over Chu + Choi 2010 + Myers

Claim 5: obvious over Chu + Choi 2010 + Myers

Claim 6: obvious over Chu + Choi 2010 (if necessary, + Myers)

Claim 7: obvious over Chu + Choi 2010 + Myers

Claim 8: obvious over Chu + Choi 2010 (if necessary, + Myers)

Claim 9: obvious over Chu + Choi 2010 + Myers

IPR2018-01240 (claims 10&11) -- instituted on 02/06/19

Intel's petition (PDF)

Claim 10: obvious over Chu + Choi 2010 + Hanington

Claim 11: obvious over Chu + Choi 2010 + Hanington + Myers

IPR2018-01152 (claims 12-14) -- instituted on 01/16/19

Intel's petition (PDF)

Claim 12: anticipated by Chu

Claim 13: obvious over Chu + Choi 2010 (if necessary, + Myers)

Claim 14: anticipated by Chu, or obvious over Chu + Blanken

IPR2018-01154 (claims 15-20) -- instituted on 02/06/19 and most relevant to the European proceeding

Intel's petition (PDF)

Claim 15: anticipated by Kwak

Claim 16: obvious over Kwak

Claim 17: anticipated by Kwak

Claim 18: anticipated by Kwak

Claim 19: obvious over Kwak + Choi 2010

Claim 20: anticipated by Kwak

Before the EPO, Intel attacks the relevant European claims as being anticipated by a prior art reference named Hou, but also argues that they're obvious over Kwak + Kim, or alternatively over Stauth + Tanabe. Further reference is made in Intel's European opposition brief to prior art references named Midya, Lee, Wu, Mathe, Kim, Kang, and Chu.

Finally, here's Intel's European opposition brief (Appled raised the same issues and is represented by the same Samson & Partner patent attorneys):

Intel Opposition to EP27244... by on Scribd

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Wednesday, February 6, 2019

ITC must hold retrial in Qualcomm v. Apple, says constitutional law scholar: judge not properly reappointed?

The ITC investigation of Qualcomm's first complaint against Apple had already reached the stage of a Commission review of the initial determination (ID) on the merits. Contrary to what various inaccurate media reports and commentaries suggested, that decision to review the ID is entirely unrelated to the fact that the Commission must make a determination on whether or not to order an import ban (unless there is a final finding of no violation). While the Commission can simply make an Administrative Law Judge's (ALJ) ID the final decision on the merits of a case by not reviewing it, the ALJ's recommendation on remedy cannot be elevated to an actual order: regardless of whether the Commission tends to agree or disagree with the ALJ's recommendation, it has to request public-interest statements from stakeholders (as long as there is at least a procedural possibility of a finding of a violation) and then has to make its own determination (which may or may not be consistent with the recommendation, possibly up to the point where it's basically just a copy-and-paste job, but formally an active determination has to be made).

On the technical merits, the Commission granted Apple's petition (to review the finding of a violation with respect to one patent) and denied Qualcomm's petition (to review negative findings regarding two other patents). This, too, was missed by the other reports I saw.

With respect to the technical merits, the Commission raised nine questions. Any one of those nine questions could be answered in a way that would make Apple win the case (apart from the possibility of an appeal by Qualcomm to the Federal Circuit). Even if we assumed, for instance, that Qualcomm had a 90% chance of prevailing on any given question, the fact that it would have to overcome a 10% risk nine times would result in a bottom-line chance only slightly better than 1 in 3 that it can surmount all nine hurdles. And at least some of the questions suggest a far greater risk than 10% to Qualcomm.

Despite the temporary government shutdown, some public-interest statements were successfully submitted about a month ago. In a January 13 blog post I noted bipartisan support for the ALJ's view that Qualcomm should not obtain an import ban even if it prevailed on the technical merits.

After the shutdown, the Commission extended the target date for its final determination to March 26, and some additional Congressional submissions became discoverable. Four U.S. Representatives from California (all of them Democrats) and seven Republican Congressmen (from Texas, Florida, Colorado, and North Carolina) submitted statements.

Then there were some NGO submissions supporting Qualcomm, one submission by multiple NGOs supporting Apple and Intel, and a few letters from people who personally know J. Gregory Sidak, a Qualcomm economic expert on whose credibility ALJ Pender commented very negatively. Mr. Sidak's friends--most notably including Judge Posner--seek to defend his reputation.

One submission, however, stood out because it raised an issue I hadn't seen in any previous ITC investigation. Professor Steven G. Calabresi (Northwestern University Pritzker School of Law), a former Reagan and Bush 41 Administration official who used to clerk for the late Justice Antonin Scalia, believes it would be unconstitutional to proceed on the basis of ALJ Pender's ID. Instead, Professor Calabresi argues, the Commission must "remand [this] Investigation for a completely new evidentiary hearing [= trial] and a completely new initial determination and recommended determination before a different ALJ who has been constitutionally appointed." Alternatively, he goes on to explain, the Commissioners could also preside over such a retrial themselves and then draft a completely new and final determination. The latter, which his submission doesn't say, would however be very unusual since the Commission delegates evidentiary hearings (= trials) to ALJs.

Professor Calabresi, who is also the chairman of the Federalist Society (which supports Qualcomm against the FTC, for all the wrong reasons in my opinion--though I'm politically in the same camp on most other issues), describes himself as one of the leading experts on the Appointments Clause. What makes him doubt the constitutionality of the investigation of Qualcomm's first ITC complaint against Apple is that ALJ Pender retired sometime in or before early September, but shortly thereafter, Chief ALJ Charles E. Bullock, who had temporarily been assigned to this case, informed the parties that retired ALJ Pender had been reappointed for the purpose of completing this investigation.

In Professor Calabresi's opinion, that notice was "constitutionally suspect" because, in his reading of the Appointments Clause and the related case law, the Commission--not the Chief ALJ--would have had to reevaluate ALJ Pender's ability to serve in that capacity and would then have had to hold a vote. Professor Calabresi does not see any indication that such a vote was held, and he doubts that an immediate reappointment was possible, given that some evaluation would firstly have been required. Therefore, he suspects Chief ALJ Bullock--not the six Commissioners--reappointed ALJ Pender.

[Update] Last summer the ITC published a document concerning its process for hiring ALJs (PDF). I wanted to add that link so anyone interested in the subject can compare Professor Calabresi's theory with the ITC's practice. [/Update]

I don't have an opinion on this theory of unconstitutionality. But interesting it is. It could be that this is an indirect attempt by Qualcomm to get a second bite at the Apple, given that it's currently on the losing track with respect to the merits (only one out of six originally asserted patents was deemed valid and infringed, and the nine Commission questions make it more likely than not that even that single-patent win won't be affirmed). However, Qualcomm is generally also interested in getting potential leverage quickly, and a retrial before a new ALJ would delay the investigation substantially, with a high risk to Qualcomm that the new ALJ would be influenced strongly by ALJ Pender's conclusions.

As I wrote earlier today, Qualcomm's attempts to gain leverage over Apple (and Intel) from patent infringement lawsuits have failed miserably so far. Most of those patent assertions went nowhere, and to the extent any of them succeeded, Apple has apparently been able to work around them (through software updates in China, and--as my previous post discussed--a hardware modification for the German market, though the chipset to be replaced almost certainly doesn't infringe Qualcomm's envelope tracker patent anyway).

Maybe Qualcomm is so desperate at this stage that it even wants an ITC retrial, just because it hopes to get a better outcome than if the ITC decided the case next month. Maybe Qualcomm doesn't want to alienate the ITC directly (as there is also a second case pending), and therefore has asked its friends at the Federalist Society--which already support it against the FTC as I mentioned--for help by raising a constitutional issue with the ITC. It's interesting that the FedSoc's vice chairman, David McIntosh, also submitted a public-interest statement (one that effectively supports Qualcomm), though not in the FedSoc's name, but on behalf of a "Club for Growth." But whoever may or may not have pulled whatever strings in this regard, I do think Professor Calabresi's theory is interesting. Here's his submission to the ITC:

19-02-06 Steven G. Calabres... by on Scribd

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