Saturday, March 30, 2019

Days of automatic German patent injunctions may be numbered: key meeting in Federal Ministry of Justice on May 20

In the post-eBay v. MercExchange era, patent holders seeking rapid injunctive relief basically have two choices: the USITC (provided that the accused products are imported into the U.S. and that the domestic industry requirement can be met) and Germany. And China is becoming more and more popular as a venue.

As a cross-jurisdictional patent litigation watcher I can tell that injunctive relief is what attracts plaintiffs to Germany more than anything else. That's why they tend to play the lottery: they assert a bunch of patents, most of which tend to be weak, just in hopes of securing an injunction that allows them to settle an entire dispute on their preferred terms. Until the Court of Justice of the EU handed down its Huawei v. ZTE opinion, it was hard to avoid injunctive relief in Germany even over standard-essential patents (SEPs).

This may change, and I'm one of those who hope it will. Last week I attended a really great conference entitled "Enforcing Patents Smoothly--From Automatic Injunctions to Proportionate Remedies" that was organized and hosted by the Friedrich Alexander University of Erlangen-Nuremberg, where academics, practitioners, and a Mannheim judge (Presiding Judge Dr. Peter Tochtermann) discussed this subject. I wish to thank Professor Franz Hofmann for chairing this conference, and the ip2innovate industry body for supporting it. It clearly exceeded my expectations. At that conference I learned about a legislative initiative in Germany that appears to be in its embryonic stages.

Meanwhile I've obtained official confirmation from the Federal Ministry of Justice and Consumer Protection of Germany that an "expert talk" will take place on May 20, 2019, for the stated purpose of preparing a legislative initiative in the area of intellectual property policy. Industyr groups, academics and judges will discuss one of the potential elements of said initiative: a potential reform of the legal framework governing patent injunctions, particularly in connection with SEPs and, more generally, complex products.

All of the presentations at the Erlangen conference were great, and most of them would actually deserve to be discussed in greater detail, which I may do at a different point in time. What I do wish to share here is the impression that those advocating a more eBay-like approach in Germany, which would require some proportionality principle to be enshrined in statutory law, likely have far more political clout than those opposing it. And they have EU law on their side: the IP enforcement directive comes with a proportionality paragraph, just that Germany transposed it into national law only in connection with other types of intellectual property rights than patents.

It's not just "Big Tech" from America or Asia that's interested in this. There are major German players such as the country's automotive sector (not just car makers but also their component suppliers) and telcos such as Deutsche Telekom. They're tired of facing the threat of disruption from the enforcement of injunctive relief all the time.

While Judge Dr. Tochtermann and his law professor wife both believe the status quo should remain unchanged, and companies like Qualcomm (not among the speakers, but actively asked questions) or Nokia have a vested interest in it, there simply are examples of situations in which a patent covering a minor feature of a complex product could be enforced with enormously disruptive effects for purely logistical reasons that are unrelated to the inventive step the patent is meant to protect.

Professor Christian Osterrieth, one of the name partners of the Reimann Osterrieth Köhler Haft (ROKH) firm that is now part of Hoyng Rokh Monegier, explained how eye-opening it was for him to see a case in which a single patent covering a secondary aspect of a technology could have had disruptive impact on Germany's highway toll collection system. The way Professor Osterrieth described the problem was reminiscent of Justice Kennedy's famous and influential eBay concurrence.

Professor Hofmann made a more theoretical argument for greater flexibility. Professor Thomas Cotter (University of Minnesota, and author of the Comparative Patent Remedies blog that I've recommended on various occasions) focused on the economics of patent injunctions. Simply put, injunctive relief creates a situation in which the parties will negotiate a price, and a court-determined ongoing royalty would be another, so the key question is which approach results in a more reasonable valuation. It's about avoiding overcompensation as well as undercompensation.

In my observation as a patent litigation analyst, there's a particular concern that overcompensation results from the early enforcement of injunctive relief over patents that are invalid as granted, but it takes longer for the nullity proceeding before the Federal Patent Court of Germany to unfold (the so-called "enforcement gap"). In this regard, Judge Dr. Tochtermann said something very encouraging. He told us about his experience from a temporary clerkship at the Federal Court of Justice. That's not to be confused for a straight-out-of-law-school clerkship like in the U.S.; Judge Dr. Tochtermann was a (side) judge on the Mannheim Regional Court by the time he went to the Federal Court of Justice for a few years. He said it really changed his perspective to see the outcome of patent invalidation proceedings at the highest court in the land that hears such cases, and since then he's actually more receptive to motions to stay cases pending the outcome of a parallel invalidation action than he used to be. In fact, Judge Dr. Tochtermann would like all other German patent judges to go through that instructive experience.

I'll attend another conference with a largely overlapping focus on April 4 and 5, entitled "Injunctions and Flexibility in Patent Law -- Civil Law and Common Law Perspectives," at the Ludwig Maximilian University of Munich. The debate will continue, and various stakeholders are gearing up for the Federal Ministry of Justice meeting on May 20. It's too early to be sure, but I think reform advocates are likely to have the upper hand. They have economic reason and logic on their side, and a proportionality-centric approach to injunctive relief would benefit Germany's major industrial companies.

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Friday, March 29, 2019

San Diego judge: Apple, Foxconn et al. v. Qualcomm is primarily an antitrust dispute as Apple says, not just a contract case as Qualcomm claims

More than a month ago I described, based on some key pretrial filings, the contours of the Apple-Qualcomm dispute, which will go to trial on April 15, as follows: "Apple emphasizes antitrust, FRAND, patent exhaustion -- Qualcomm says contracts are contracts"

It's about "framing," and it affects the structure of the trial (who gets to present what type of testimony first) as well as that of the jury instructions and verdict form. It's obvious that Qualcomm's attorneys would have preferred to avoid the situation in San Diego (in the Apple & contract manufacturers case) that it experienced in January in San Jose, where the FTC initially gained control over the center of the chessboard and never really relinquished it, with Qualcomm being left with little more than a last line of defense (evidence of actual anticompetitive harm). Qualcomm scored some points, but probably not enough (quantitatively and qualitatively speaking) to prevent the FTC from prevailing on at least one or two key claims (we're all still waiting for Judge Lucy H. Koh's ruling).

After a hearing held on Thursday by Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California, Qualcomm faces an increased risk of a San Jose-like experience in San Diego, with the only structural difference that makes the outcome harder to predict being the involvement of a jury, while the FTC trial was a bench trial (before a judge without a jury).

At the Thursday hearing, Judge Curiel made an explicit reference to the FTC case, describing Judge Koh's partial summary judgment on Qualcomm's obligations to license standard-essential patents to rival chipset makers based on two U.S. standard-setting organizations' FRAND licensing declarations as "a very well-written decision" in which "she thoroughly addressed all of the facts and questions that were raised there." Listening to Judge Curiel saying so must have caused Qualcomm's attorneys significant discomfort. That was an "in your face" moment even though the contract interpretation questions underlying the referenced decision won't directly resolve any of the fundamental issues in the San Diego case. The contexts of the cases overlap to a huge extent, and even though Qualcomm avoided a patent-specific patent exhaustion analysis in the San Diego case (by a successful motion to dismiss some claims and by mooting others through a Super Sack covenant not to sue--yeah, not to sue, not just Qualcomm's preferred commitment "to sue last"), Judge Koh's summary judgment ruling strongly supports Apple's general assertion of patent exhaustion.

The Thursday hearing's focus wasn't on component-level licensing. It was originally supposed to be about various motions, and Judge Curiel made it clear that all those Rule 44.1 motions relating to questions under French law (governing the ETSI FRAND declaration) were basically summary judgment motions in disguise and he'd need more time to rule on them. What he was able to decide right at the hearing, however, is that a motion Qualcomm brought, according to a sworn declaration by Apple, without any advance warning had no merit and was, therefore, given short shrift in terms of an outright denial before Apple even filed an opposition brief.

That most recent motion was related to an earlier one in which Qualcomm argued that, after the summary judgment Apple obtained two weeks ago against a certain set of breach-of-contract claims (to the effect of Qualcomm now being virtually certain to owe Apple about a billion dollars in kickbacks and being unable, absent a successful appeal, to claw back billions of dollars it paid before), Apple no longer had any claims--much less any claims related to that particular Business Cooperation and Patent Agreement (BCPA)--for the jury to hear and decide. Only the issues between Qualcomm and Apple's contract manufacturers would have been jury-triable as per Qualcomm's representation. The surprise motion then built on that other motion and argued that Qualcomm should get to present its contract claims first. Anything that Apple was still pursuing would just have been for the judge to decide (bench trial).

Simply put, Qualcomm's envisioned trial playbook would have been to tell the jury

  • that there are some contracts between Qualcomm and those four contract manufacturers;

  • that the contract manufacturers owe Qualcomm tons of money under those contracts;

  • that they stopped paying and should be ordered to finally cough up the money, with a potential enhancement of damages (they wouldn't want to tell that one to the jury) and interest on interest on top; and

  • evil Apple told the contract manufacturers to stop paying for no reason.

But that's not how the judge views the case, and it's especially not how the judge would allow the case to be presented to the jury, because that distorted perspective misses the point.

Judge Curiel made it clear that (in slightly different words) lawyers get paid for gamesmanship like this, but the court's function is to focus on the issues and not to accomodate gamesmanship.

As for the BCPA-related evidence, Judge Curiel does agree that it would be prejudicial to Qualcomm if Apple could tell the jury about the court's summary judgment on the payment obligations and the impossible clawback under that agreement. Also, the contract manufacturers won't be allowed to introduce evidence regarding antitrust investigations in some other jurisdictions. But the judge denied that earlier motion in other respects, so the jury will see and hear about the BCPA. Judge Curiel reached this conclusion by focusing on commercial realities, not on mere formalities such as whether or not the contract manufacturers were, in the strictest sense, parties to the BCPA. With Qualcomm's web of contracts (where the contract manufacturers buy the chips and pay the patent royalties, but Apple offsets those patent royalties and Qualcomm then promised go give Apple some de facto rebates contingent upon certain types of behavior) being characterized by cross-references and interdependencies as became clear at the FTC trial, the court takes a holistic and business-minded approach.

The recent surprise motion was then denied because Qualcomm's representation of the case as being first and foremost a contract (not antitrust/FRAND) dispute fails, in Judge Curiel's opinion, the "primary purpose" test. Here, again, Judge Curiel made it clear that he had "a duty to look beyond the pleadings to determine the actual interests of the parties." I always like it when judges decline invitations to narrow their focus on formalistic-legalistic considerations. There are questions that are purely questions of law, but in those high-profile, high-stakes commercial disputes, a court would fail to see the forest amid the trees without really asking the question of "what's the gist." Judge Curiel described that gist as follows:

Here, there is not one scintilla of a doubt that the primary dispute relates to the claim that Qualcomm has designed a business model for chipsets that has allowed it to create and maintain a monopoly. This is an anticompetitive conduct case, first and foremost. Apple and the CMs [= contract manufacturers] are aligned on that claim due to their relationship in the production, manufacture of Apple iPhones and iPads. This alignment is seen in many ways, including the Apple and Qualcomm contracts that follow up on the CM agreements."

Against that background, the judge said one would put the cart before the horse by focusing on the individual contracts beteen Qualcomm and each of the contract manufacturers as the starting point of the analysis: "It would present the case to the jury in an illogical, disjointed, and disorganized manner and would likely lead to confusion."

The court has yet to decide on the jury instructions and the verdict form. Judge Curiel sees a lot of "cherry picking" and isn't inclined to agree with either party on what the jury should be told, but he'll need some time to decide on what to do in that regard. In strategic terms, however, Apple is now in a stronger position with a view to jury instructions and verdict form as well: the judge agrees with Apple, and disagrees with Qualcomm, on the gist of the case and the proper order of presentation at trial.

In closing I'd like to mention that I was interviewed on the Qualcomm antitrust and patent cases by The Capitol Forum for about one hour on Monday. The conference call was accessible to The Capitol Forum's subscribers, but a transcript and a podcast will be made available to the general public soon.

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Swedish government may have to vote against copyright bill in EU Council: Riksdag Committee on EU Affairs will decide

The triply illegitimate European Parliament vote in favor of a copyright bill requiring upload filters (as the French government, its #1 proponent, has since stated clearly and German EU commissioner Günther Oettinger considers "not entirely avoidable")=should be repeated as Czech conservative MEP Tomáš Zdechovský formally proposes. But in any event, it's not yet a "settled matter" as Mr. Oettinger, who initially came up with the ill-conceived proposal that led to this mess, just claimed in an interview in which he threatened sanctions against countries that might "water down" the text through the national implementation process. The EU Council still has to formally adopt the bill, and since it's clearly irreconcilable with the German government coalition agreement, let's see what happens.

The following tweet (in Swedish) greatly increases the likelihood of the Swedish government, which supported the political agremeent in February, being forced to change its stance and vote against the bill (this post continues below the tweet with further commentary and analysis):

Tomas Tobé is the top-listed candidate of the Moderaterna ("Moderates"), the Swedish conservative party that is a member of the European People's Party (EPP) just like Merkel's CDU/CSU, and he's presently the vice chairman of the Swedish national parliament's Committee on European Union Affairs. A Swedish Twitter friend of mine translated Mr. Tobé's tweet as follows:

"We should force the government to say no. They had no mandate to say yes."

Mr. Tobé was replying to Amelia Andersdotter, a former Pirate Party MEP from Sweden. Amelia and I disagree on economic and migration policies (anyone connected to one of us on Facebook could tell), and her IP reform proposals go far beyond not only mine but also the ideas espoused by the more centrist Julia Reda MEP, the leader of the fight against the copyright bill in the European Parliament (who just left the German Pirate Party and wasn't seeking reelection anyway). Anyway, Amelia is famous in Sweden, and it's great to see she's fighting for this cause.

Mr. Tobé's reply to Amelia is very significant. As the Riksdagen website explains (in English), the Swedish government "must gain support for its EU policies in the Riksdag ahead of meetings in the Council of Ministers."

I haven't received definitive confirmation yet, but I've been told that this committee will meet on Friday, April 5, and will then have to hold a vote on the copyright bill. Let's consider three facts here:

  • All Swedish MEPs except for a couple of social democrats had expressed their intent to vote against upload filters (Article 13, now Article 17). The Sweden Democrats are also clearly against upload filters, though their MEPs accidentally hit the wrong button.

  • Sweden, with Spotify and some other digital businesses, is actually stronger in the Internet platform economy than any other EU Member State (even far larger ones).

  • While the Moderaterna party isn't currently part of the Swedish government, the left-green government coalition is a minority government, making it particularly dependent on parliamentary decisions.

In light of all of the above, it's reasonably likely that the Riksdag's EU affairs committee will vote against the copyright bill, and the Swedish government will have to vote accordingly.

The most important aspect of this is the potential fallout with a view to Germany. Even with Sweden changing its vote from Yes to No, we're still far short of a blocking minority as I'll explain further below. But Germany could single-handedly block the deal (as could the UK, by the way, though there's little hope of that happening). A Swedish reversal would embolden and encourage those who'd like the German government to withdraw its support.

The Social Democratic Party of Germany (SPD), Merkel's coalition partner, has so far tried to have its cake and eat it: they spoke out and almost all of their MEPs voted against upload filters, but they caved to a clear breach of the coalition agreement by Merkel and her minister of economic affairs, Peter Altmaier. Here's the relevant passage from the coalition agreement (lines 2212-2214):

"Eine Verpflichtung von Plattformen zum Einsatz von Upload-Filtern, um von Nutzern hochgeladene Inhalte nach urheberrechtsverletzenden Inhalten zu 'filtern', lehnen wir als unverhältnismäßig ab."

Here's my unofficial translation:

"We consider disproportionate and therefore oppose a requirement on platforms to install upload filters for the purpose of 'filtering' out user-generated content based on copyright-infringing content."

Pressure on the SPD will grow should Mr. Tobé's plan work out in Sweden. And then the numbers would be in place to prevent the bill from being passed into law.

As for the numbers, I've obtained from the EU Council's press office the current list of population sizes that is used in the computation of a qualified majority. A qualified majority in the Council has two prongs:

  • They need at least 15 Member States to support a proposal, and

  • the countries voting in favor must collectively account for at least 65% of the EU's total population size.

Conversely, a blocking minority can consist of either

  • 13 countries (but we only have five, so this is unrealistic), or (now comes the far more achievable option)

  • at least four countries collectively accounting for more than 35% of the EU's total population size.

With a view to the copyright bill, we still had five countries on our side in February. In decreasing order by size: Italy, Poland, Finland, the Netherlands, and Luxembourg.

Pre-Brexit, those countries collectively account for 23.88% of the EU's total population size. With Sweden, that number would go up only marginally to 25.86%. So we'd still need a lot more support for our cause. We'd need Germany--that's ground zero. With Germany in our column, we wouldn't need Sweden--but a Swedish reversal would make it far harder for the German government to stand by the directive and its horse trade with France.

Should there be delays and Brexit occur (currently scheduled for April 12), the five "dissident" countries from the February Council meeting account for 27.42% of the EU-27's total population size, and with Sweden we'd have 29.69%, in which case the combination of a few small countries might also work without Germany. But without Germany on our side, the Council will most likely adopt the bill on April 8 or 9 anyway.

I'll keep my fingers crossed for the Riksdag's Friday decision. It could set off an avalanche, not in terms of the number of countries but the ability to improve the prospects of a German reversal. Maybe the SPD would then have the courage to jeopardize the stability of the German government coalition, as Julia Reda MEP said this week they'd have to in order to show they're truly opposed to upload filters.

In this context, let also point you to a press release by the Foundation for a Free Information Infrastructure (FFII) calling on national parliaments to force their governments to vote against "Soviet-style Internet upload filters."

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Thursday, March 28, 2019

Austria plans de facto exemption of all startups from scope of Article 13 (now 17) of EU Copyright Directive: useless unless entire EU follows suit

What makes it hard for me to comment on some developments regarding the EU Copyright Directive as harshly as I'd like to is that there are some Members of the Europen Parliament (MEPs) involved with whom I got along very well in other contexts. Otherwise I'd have voiced some outrage here over EP President Tajani's refusal to accept the SaveTheInternet petition signed by 5.1 million people, and I'd express outrage now over a proposal by Othmar Karas MEP, an Austrian conservative (but a different kind of conservative than Austria's chancellor Sebastian Kurz).

It would be a better choice for Mr. Karas to support his colleague (from the same political group, the European People's Party) Tomáš Zdechovský's call for repeating the European Parliament vote on whether or not to allow votes on individual amendments than to toss out proposals that look helpful at first sight but are highly unlikely to solve the problem. That's what's called misleading voters, by the way. But I won't say anything harsher than that for the reason I gave further above.

In a letter to voters, which I've also obtained from his office, Mr. Karas seeks to assure Austrian startups that they'll be fine because of how that small Alpine country will transpose the EU directive and, particularly, the upload-filter article (Article 17, previously Article 13 and still mostly referred to by the original number) into national (Austrian) law. Here's the related passage (click on the image to enlarge; this post continues below the image):

Mr. Karas tells voters that Austria's Chancellery Minister for the EU, Art, Culture and Media, Gernot Blümel, assured Mr. Karas that it would be possible to limit the scope of Article 13/17 to platforms that have so many users that startups would benefit from a de facto exemption.

The directive doesn't apply to companies that are less than three years old, generate annual revenues below 10 million euros, and have fewer than 5 million monthly users, but if a company meets only one of the criteria (such as a company that's four years old), it doesn't benefit from the explicit startup exemption in the EU directive.

The loophole that Mr. Karas suggests he has identified is that the directive doesn't contain any numerical definition of what platforms are large enough to fall within the scope of the directive. It's clear that a platform must have a significant quantity of copyrighted content uploaded by (and viewed by= users, but no number is specified. In the Austrian implementation of the directive, Mr. Karas and his Österreichische Volksparty (Austrian People's Party) plan to require a quantity that they say startups simply won't reach.

The practical problem is that this would benefit startups only as long as

  • such an "Austrian SME rule" isn't successfully challenged in the Court of Justice of the European Union, and

  • (the real issue!) as long as they just operate in Austria and in countries that adopt the same approach to a wide-ranging startup carveout.

Copyright law, like all other fields of intellectual property law, is territorial. It's specifically excluded from the "country of origin principle" of the e-commerce directive. Therefore, an Austrian company wouldn't be able to claim that the Austrian implementation of the directive applies to any enforcement against it. Instead, the place where an alleged infringement occurs will matter, and that's where a user accesses the content in question.

The Austrian market is so small that many Austrian Internet startups don't focus exclusively on their domestic market. Instead, they typically offer their services to other German-speaking users as well--and some expand to other language markets, too.

Mr. Karas is right to have concerns over the impact of the directive on startups, but what he proposes is not a reliable solution, and if other EU Member States don't adopt this approach (or if they do but the CJEU holds such wide-ranging exemptions to be irreconcilable with the EU directive, which trumps national law at the end of the day), it's not really useful. There would inevitably by forum shopping (plaintiffs would go where they find the most favorable legal framework and sue there if a potential infringement is location-independent).

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Conservative MEP Zdechovský, petition call on European Parliament to REPEAT copyright vote that went wrong

While the proponents of Article 13 (now Article 17) such as the Macron regime are already pushing for the rapid implementation of Internet upload filters and putting pressure on Switzerland to adopt a similar set of rules (so as to avoid the relocation of many EU web servers to the non-EU member states in the heart of Europe), it may turn out soon that those people were simply jumping the gun. There are some dynamics, and this triply illegitimate piece of legislation can still be prevented from being passed into law if we all do what it takes. We'll see in the coming days whether the movement that opposed Article 13 (now Article 17) gets its act together. Most members of that movement apparently haven't understood the opportunities yet, but some have. There clearly are political and procedural ways to turn this around.

One of those who understand that no one is ever beaten unless he gives up the fight is Czech conservative MEP Tomáš Zdechovský. Here's what EURACTIV journalist Samuel Stolton reported on Twitter today, referring to a statement on Mr. Zdechovský's website, which relates to what I explained in my blog post on the accidental vote against allowing votes on amendments:

What's even better is the MEP's response to the question of whether such a "revote" has ever been done before by the EP:

This attitude makes all the difference in the world between winners and losers. While I have the greatest respect for the efforts that some key players made in the build-up to the EP vote, I disagree with those who suggest that MEPs who changed their votes merely wanted to avoid being held responsible for their decision. That's unsupported by the facts. I've looked at the list of MEPs who said they wanted to vote in favor of the introduction of amendments, and it's easy to verify that they include MEPs who have consistently been against Article 13. Also, there definitely was confusion: the President of the European Parliament himself got confused. It's unfair vis-à-vis those MEPs to insinuate that they're lying, and it's politically unwise since the illegitimacy of the bill is a fact we should stress, not something we should deny, much less deny on an implausible basis.

Just to be clear, Mr. Zdechovský correctly voted in favor of admitting amendments, as evidenced by the voting list prior to MEPs submitting changed positions.

As I explained right after the vote, if we merely prevented the German government from approving the bill in the EU Council prior to the late-May elections, the Parliament could ask for a restart of the process. That's what the Parliament requested in connection with software patents (the Commission declined, but then the Parliament threw out the entire bill). The "revote" request is an interesting new variant of the same approach.

What all of us can do in the meantime is to sign a petition calling for a revote. I've already done so and encourage everyone to do the same, for the sake of 21st-century creativity, innovation, consumer choice, and democratic legitimacy.

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France wants urgent implementation of Internet upload filters: three government agencies to collaborate on this

Without going into details here in public, I am in a position to tell you that there are certain dynamics in German politics across multiple parties that ultimately might prevent the German government from allowing the EU Council, where there is no qualified majority without Germany's support, to rubberstamp the triply-illegitimate current version of the Directive on Copyright in the Digital Single Market ("EU Copyright Directive"). I attended and was, without prior notice, invited to speak at a small impromptu demonstration in Munich last evening against the European Parliament's copyright vote.

By contrast, the Macron regime, whose police forces commit extremely violent acts even against grandmas and other peaceful citizens joining the Yellow Vests protests, is as excited as government officials possibly could be about the prospect of filtering uploads by Internet users as soon as possible.

Yesterday, Benjamin Henrion, the president of the Foundation for a Free Information Infrastructure (FFII), alerted me to a tweet by French journalist Marc Rees according to which the French government will start with the promotion and definition of a legal framework for upload filtering technologies in a matter of days. As per my suggestion, Benjamin asked Marc Rees for the source, not because I doubted the accuracy of the information but because I did want to see the specific context.

This web page by the French "Ministère de la Culture" (culture ministry) contains a speech that French culture minister Franck Riester gave yesterday (the day after the vote) at the "Lille Transatlantic Dialogues" during a cultural event, and the key passage is this (first in French, then I'll translate):

"Je vous annonce également que le Conseil Supérieur de la Propriété Littéraire et Artistique, la HADOPI et le CNC lanceront conjointement dans les prochains jours une 'Mission de promotion et d’encadrement des technologies de reconnaissance de contenus'.

"Elle doit permettre notamment de nous assurer de l'efficacité de ces outils, qui occupent une place centrale dans la protection des œuvres sur les plateformes de partage des contenus.

"Elle est essentielle pour que l'article 17 de la directive adoptée hier puisse produire tous ses effets.

"Il n'y a pas de temps à perdre sur ce sujet."

My translation (with explanations in [brackets]):

"I am also announcing that the Superior Council of Artistic and Literary Property [an advisory body on copyright law that is formally independent but was created by the French government to advise the culture ministry], the HADOPI [Supreme Authority for the Distribution and Protection of Intellectual Property on the Internet; in other words, a governmental copyright enforcement agency focusing on the Internet, whose creation was highly controversial at the time] and the CNC [National Center for Cinema and the Moving Image, a regulator and state sponsor of movie productions and theaters] will jointly launch, in a matter of days, a 'Project [literally he said "mission"!] to promote and define [the noun "encadrement" literally means to put something in a (legal, in this case) framework; its meaning can, however, also come close to the incorporation or employment of something] content recognition technologies [emphasis added; so this means "upload filters," plain and simple].

"Notably, this project should allow us to guarantee the effectiveness of such tools, which are central to the protection of [copyrighted] works on content-sharing platforms.

"The project is imperative to enable Article 17 [no. 17 after a renumbering; still widely known as Article 13; simply, the upload filter article] to produce all the [desired] effects.

"We have no time to waste on this topic."

The passage I just translated and explained shows the stark contrast between the French statist (= government-centric) and extremely enforcement-happy approach to digital and culture policies on the one hand, and the far more moderate German approach (with the digital policy experts of Merkel's party, and her party's secretary-general, seeking to obviate the implementation of upload filters altogether). In light of this contrast, the question is whether one and the same EU directive can really be implemented with a radically filter-focused approach in France while entirely avoiding filters in Germany. Sorry, this was a rhetorical question given that the whole idea underlying EU directives for the Single Market is to harmonize the regulatory framework across that market...

France and Germany are generally incompatible in the area of economic policy. The German approach has traditionally been that of a "social market economy," while the French idea is that government should control almost everything--not as bad as a Soviet-style plan-based economy, but somewhere between a market-driven economy and a state-run one. On top of that you have different approaches to, and traditions in, copyright law. In France they have the most restrictive rules in place: for an example, you infringe copyright by simply taking a photo of someone (even yourself) in front of a building without the owner of the building having consented. In Germany and most other countries in the civilized world, photographers do enjoy what is called the "freedom of panorama," and French MEP Cavada (who worked just as hard to push for this directive as Axel Voss MEP, and was far more radical) even sought to take that "freedom of panaroma" away from all Europeans.

Many proponents of Article 13 (now Article 17), such as Axel Voss, denied that upload filters would be a practical consequence. That's a particularly delicate subject in Germany given that the written coalition agreement between Merkel's CDU/CSU and the Social Democratic Party of Germany (SPD) explicitly speaks out against upload filters.

The French government is already pawing the ground in this regard, but we should probably thank Minister Riester for having pronounced the underlying intentions and inevitable consequences of Article 13 (now Article 17) this clearly, and only within roughly 24 hours of the European Parliament's accidental vote.

The copyright extremists accused critics of the proposal, such as Julia Reda MEP, of fearmongering. Now the very government that pushed harder for this disastrous idiocy than any other has just validated our concerns.

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Wednesday, March 27, 2019

Qualcomm wants ITC to reconsider patent invalidity finding because jury decided otherwise after Apple "abandoned" invalidity defense

This is one of the rare cases where company press releases after a judicial decision contain relevant information beyond someone claiming victory, denying defeat, or whatever other form of spin doctoring. After Qualcomm lost its first ITC case against Apple yesterday because the sole remaining patent-in-suit was deemed invalid, Qualcomm issued a press release vowing to seek reconsideration of the ITC determination:

"The Commission's decision is inconsistent with the recent unanimous jury verdict finding infringement of the same patent after Apple abandoned its invalidity defense at the end of trial. We will seek reconsideration by the Commission in view of the jury verdict."

I wrote yesterday that the outcome in the ITC over the same six patents asserted (Qualcomm withdrew three patents in the ITC and in district court before trial, though one patent withdrawn in the ITC stayed in the San Diego case and vice versa) makes the jury verdict lose credibility. Qualcomm turns it around and says the ITC decision is "inconsistent" with the San Diego verdict.

So let's compare the two theories. I must admit I wasn't aware of Apple having "abandoned" the related invalidity defense at the end of the San Diego trial (which I didn't attend), and we'll see whether or not Apple agrees that it did. All things considered, I think anyone who wants to disagree with Qualcomm or me or even both of us at the same time would have a point.

One thing is certain based on the jury verdict form: the San Diego jury didn't render a verdict on quality.

The biggest issues I have with Qualcomm's perspective are these:

  • A layperson jury is definitely not better-placed to decide patent cases correctly than the professionals at the ITC who deal with these things on a daily basis and are legally trained. It is particularly well known that juries rarely ever invalidate patents, and that may be the reason why Apple didn't focus on that invalidity defense in San Diego (also, I see no indication that the motion for judgment as a matter of law--on infringement--was withdrawn in whole or in part).

  • The '490 patent is likely invalid in the opinion of the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO), which instituted five inter partes reviews against this patent in January further to petitions filed by Apple. The legal standard is likelihood of success (wth respect to at least one claim, but since five different petitions were brought against the patent, each petition is pretty granular).

Also, there's really nothing that Qualcomm stands to gain from "reconsideration" by the ITC in practical terms. It's just about vindication and probably meant to be a signal to the appeals court (the Federal Circuit) that Qualcomm hasn't given up. But practically, it will now take some time for the ITC to decide on whether or not to reconsider, and even if the ITC did, it would then take time to make a decision. Apple already has a workaround for the '490 patent in place. If the ITC had decided that Qualcomm was entitled to an import ban (based on the merits, which the ITC didn't see, and on not being against the public interest, a question that the ALJ answered with "no" and the Commission didn't even reach), the only practical question here would have been the length of a grace period so Apple could have sought a determination of non-infringement by devices with newer iOS versions. The more time passes, the less sense it makes to even think and talk about outdated iOS versions. Those older versions are not entering the U.S. market anymore, and presumably stopped entering it months ago. So in practical/commercial terms, it's a waste of time--it's ultimately just about the "principle" of proving infringement. Even the San Diego patent infringement damages award is insignificant relative to the overall dispute between the parties.

That said, I can understand that Qualcomm is disappointed because the ALJ had sided with it on the '490 patent, the ITC staff was also on its side (it defended the ALJ's decision against Apple's petition for review), the outcome was more favorable in the San Diego jury trial, and then the Commission (the six people at the top of the U.S. trade agency) deemed the patent invalid. But in that regard, the Commission ruling is simply consistent with the likely outcome of the inter partes review (otherwise the PTAB wouldn't have instituted those five IPRs in January), and the PTAB is actually the most competent forum on patent validity in the United States.

Should the fact that the PTAB instituted some IPRs against the '490 patent have played a persuasive role here (I would think so!), then that doesn't bode well for Qualcomm's second ITC case against Apple, where a judge ruled yesterday that Apple was deemed to infringe a valid patent, though the ITC staff disagreed on infringement and the PTAB considers the patent likely invalid. I, for my part, very much doubt that the other ITC case would ever result in an import ban. The final Commission decision in that one is scheduled for July 26.

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After yesterday's ACCIDENTAL vote, EU copyright bill faces three HUGE legitimacy issues--not counting lobbying and Putin's pipeline

The lesson from yesterday's European Parliament vote on copyright reform is that no one is ever beaten unless he gives up the fight. In fact, the vote was not just very close on whether or not to allow amendments but it turns out we only lost the vote on whether to proceed to the votes on amendments because various MEPs accidentally pushed the wrong button, resulting in an incorrect 317-312 "majority" against allowing amendments! More on this further below.

Going forward, there are actually some opportunities to derail or delay adoption of the directive by the EU Council (by simply delaying adoption into the new EUJ legislative term, new procedural opportunities would arise, and it shouldn't be too hard to delay adoption of an incredibly unpopular measure during the hottest phase of the election campaign). And even if this didn't work out, the efforts going into this would highlight and underscore the illegitimacy an ill-conceived bill with a view to national adoption.

It's not even like we'd have to create facts that delegitimize the bill. The facts are already there, out in the open, well-documented, indisputable, and incontrovertible. It's our job--as the defendants of a reasonable, fit-for-the-future balance between traditional creativity and 21st-century creativity--to take those silver bullets and use them wisely, forcefully, and swiftly.

We have some very powerful silver bullets and I want to focus on only the top three aspects here. I wouldn't emphasize the impact of "lobbying", or of alleged threats by conventional media. Both camps were quite aggressive in their ways, and threats that were made against Axel Voss MEP (and possibly others) are not just unacceptable: they're illegal, and I hope such behavior will have consequences. (I once received a threatening email in the United States when I was fighting there and in the EU against Oracle's acquisition of Sun Microsystems in 2009, from someone who just identified himself as a Sun employee.)

What's certainly helpful in PR terms is the Russian gas connection that Frankfurter Allgemeine Zeitung reported on a couple of days ago. The German government originally opposed Article 13 (now adopted as Article 17), but caved to its French counterpart when France was about to complicate Germany's Nord Stream 2 gas pipeline deal with Vladimir Putin's Russia. However, such horse trades are "par for the course" in the EU. It's useful in political terms because it shows the German about-face was not driven by copyright-related considerations, but not a hard legitimacy issue like the three I'm going to discuss now:

  1. As I mentioned above, the European Parliament's decision to disallow votes on individual amendments (the single most important one of which would have been an amendment resulting in the deletion of Article 13/17) resulted from a voting accident that unfortunately cannot be corrected under standard EU Parliament procedures, yet deprives the decision of whatever little legitimacy it had left after the two issues addressed by the next bullet points.

    Dutch MEP Marietje Schaake highlighted on Twitter "[a] very inconvenient truth about the #copyright vote: after corrections of votes (allowed for the record but without changing the outcome of the vote) there would have been a majority for voting for or against [Articles] 11&13." Tiemo Wölken MEP explained this in German. The FixCopyright/ campaigns tweeted the corrected voting record, at the bottom of which one can see the votes that were changed afterwards. Out of a dozen MEPs who changed their vote, most actually wanted to allow votes on amendments, and we'd have had a majority if everyone had voted as they intended. Techdirt also explained this is in a blog post. Cory Doctorow's Boingboing blog talks about this, too (with a particular focus on the Sweden Democrats' MEPs, and they clearly opposed Article 13/17 all the time.

    Even the President of the European Parliament, Antonio Tajani, got confused during the related vote. In fact, he said so during the session.

    We have to make a distinction here between procedural law and politics: EU procedural law doesn't provide for a way to repeat the vote, but that doesn't mean that anyone can claim an EP majority wanted Article 13/17. Maybe the amendment to delete Article 13/17 would have succeeded; maybe it would have been defeated. We don't know because of some people's accidental votes.

    This accident in the European Parliament would actually make it politically much easier to push for delaying the Council vote and restarting the legislative process along the lines of what I outlined in my first blog post after the vote.

  2. The European Parliament, as an institution, wasn't neutral and fair. It published a propaganda video created by pro-Article 13 lobbyists. It's also questionable why (or, at a minimum, rather uncommon that) the Parliament's administration allowed a "wine & dine" session by the "yes2copyright" campaign in the Parliament during a plenary session. And this tweet by the campaign o a #yes2copyright T-shirt at the entrance of the plenary also suggests a lack of impartiality--as does the fact that the President of the Parliament declined to accept a petition signed by 5.1 million citizens.

  3. In Germany, what's a far bigger issue than the "Putin connection" (especially since there's obviously no reason to assume he'd want the EU to require upload filters) is that the CDU/CSU/SPD coalition agreement contained a commitment to avoid an upload filter requirement. Merkel and her minister of economic affairs, Peter Altmaier, did a deal with France that was irreconcilable with the coalition agreement, and that's why the SPD, which distanced itself from the decision, can now be reasonably required to derail or at least delay adoption of the bill by the EU Council. The breach of the coalition agreement gives us leverage against the SPD and gives the SPD leverage against CDU/CSU. But if we don't leverage it, the SPD won't have any ammunition either.

It's great that a new round of demonstrations--with three big ones (Munich, Berlin, Cologne) instead of a mix of big and small ones--is being planned. That can have an impact. But it will take more than that to turn this around.

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Tuesday, March 26, 2019

Qualcomm loses first ITC case against Apple, recent San Diego infringement verdict loses credibility

Earlier today, an Administrative Law Judge (ALJ) of the United States International Trade Commission (USITC, or just ITC) issued a preliminary ruling in Qualcomm's favor with respect to one of the three remaining patents-in-suit (out of five originally asserted patents) in the investigation of Qualcomm's second ITC complaint against Apple. But that finding is still subject to review.

A final (apart from a possible appeal) Commission decision just came down at 5 PM Eastern Time in the investigation of Qualcomm's first ITC complaint against Apple. A different ALJ, Thomas B. Pender, had identified a violation of one patent (out of six patents originally asserted in that case), but recommended that, even if this finding had been affirmed, no import ban should have issued in light of Qualcomm's anticompetitive intentions (as the complaint targets only Intel-powered iPhones). The final ruling (PDF), however, is that there is no violation.

Apple's petition for a review of the infringement holding had been granted in December, while Qualcomm's petition for review had been denied.

As a result of the ITC finding that the sole remaining patent-in-suit being invalid (in the ITC's opinion, it fails to meet the nonobviousness requirement for patentability), any further public-interest analysis became unnecessary.

In my commentary since the Commission's determination to review the finding of a violation, I had repeatedly noted that any one out of the first eight (of nine) questions raised by the Commission on review had the potential to decide the case in Apple's favor, so from a probabilistic point of view it was relatively likely (though far from certain) that the result would be "no violation." And, in any event, Apple had already worked around that patent.

For Qualcomm, this decision is nevertheless disappointing. As I wrote about the recent jury verdict in San Diego relating to a "companion lawsuit" that mirrored the ITC complaint, that verdict is grossly inconsistent (almost an understatement) with the outcome in the ITC. Post-trial proceedings are ongoing, and Judge Dana M. Sabraw of the United States District Court for the Southern District of California still has to adjudicate Apple's motion(s) for judgment as a matter of law (JMOL). The chances of a JMOL motion have definitely improved with today's ITC decision, simply because Judge Sabraw will take note of the fact that the professionals at the ITC found no violation of the '490 patent (which is one of the patents at issue in the San Diego case). The standard for JMOL is that no reasonable jury could have found otherwise, and an ITC decision doesn't necessarily make a jury verdict unreasonable, but again, it has become more likely than before.

Qualcomm may appeal the ITC decision, and I guess it will, while Apple will appeal the upcoming San Diego judgment unless its JMOL motion succeeds with respect to all patents-in-suit (in which case Qualcomm would appeal). Both appeals will go to the Federal Circuit, and will likely be consolidated there.

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ITC judge disagrees with ITC staff, sides with Qualcomm against Apple: one patent held infringed, import ban recommended; but patent likely invalid

In 2017, Qualcomm filed two ITC complaints (requests for U.S. import bans) against Apple. In the earlier-filed case, a final determination by the Commission (the six-member decision-making body at the top of the U.S. trade agency with quasi-judicial authority) is due at 5 PM Eastern Time today, and the outcome of that one will be inconsequential as Apple has already worked around the sole remaining patent-in-suit. What's not so clear right now is whether Qualcomm may or may not gain leverage from the later-filed case. In that one, Administrative Law Judge (ALJ) MaryJoan McNamara just announced an initial determination ("initial" means the parties can seek a Commission review, and a final ruling is still four months off) according to which Apple is deemed to infringe one of three Qualcomm patents-in-suit (this post continues below the document):

19-03-26 ID on Violation by on Scribd

This preliminary decision disagrees with other findings in three respects:

  1. The patent in question, U.S. Patent No. 8,063,674 on "multiple supply-voltage power-up/down detectors," was not deemed to be infringed by Apple in the opinion of the Office of Unfair Import Investigations (OUII, commonly referred to as "the ITC staff"), which participates in many investigations as a neutral third party. In my observation, decisions by ITC judges that run counter to staff recommendations are virtually certain to be reviewed and more likely than others to be reversed.

  2. While ALJ McNamara recommends an import ban for the event her finding of a violation is upheld, the ITC staff originally also advised against a ban, for public interest reasons. The big public-interest issue here is that Qualcomm is specifically targeting Intel-powered iPhones, and Intel is its only competitor in the relevant market segment.

  3. In January, the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office instituted two inter partes reviews (IPR2018-01315 and IPR2018-01316) against this patent. Such petitions as Apple's are granted only if at least one challenged claim is likely to be found invalid.

Originally, Qualcomm asserted five patents in its second ITC complaint against Apple. It dropped two; the ALJ ruled on three, and one of them--the '674 patent--has now been deemed infringed (contrary to the ITC staff's findings) and valid (which is the less likely outcome of the pending inter partes reviews).

The parties and any other stakeholders will soon file another round of public-interest statements (not the first one between these parties). The Commission ruling coming down in the other case later today will provide valuable guidance in that regard.

Should the Commission affirm the ALJ's decision and adopt the recommendation to issue an import ban despite concerns over the anticompetitive implications of doing so, the President of the United States (who typically delegates this authority to the U.S. Trade Representative) could still veto an import ban. Also, there would be an appeal, and the Federal Circuit could stay enforcement for the duration of the appeal. And an antisuit injunction motion that a consumer class brought last year--but which was deemed premature at the time--could still succeed after the Presidential review.

Given all the question marks related to the existence of a workaround, to the July 26 Commission determination, to the Presidential review, to a potential appeal, and to a potential antisuit injunction, it's too early to tell what the fallout from this will be. Some of this will probably become clearer only when Apple files its next public-interest statement in this case, or even at a later stage.

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Even after today's EU Parliament vote, we can still kill Article 13 through pressure on German government to prevent formal adoption by EU Council

Under normal circumstances, today's outcome of the European Parliament's plenary vote would mean we lost the fight against Article 13 ("upload filters") definitively because a 348-274 majority adopted the bill without amendments after an incredibly narrow 317-312 majority disallowed votes on individual amendments. The latter result indicates a majority against Article 13 was in striking distance, given that no amendment had nearly as much as momentum as the one that would have deleted Article 13 (now named Article 17). Some folks may have given up prematurely, but that's another story.

If we organize another an even bigger round of street protests in Germany, work with opposition parties, and put maximum pressure on Merkel's junior partner (the Social Democratic Party of Germany, SPD), we may be able to prevent Germany from allowing the directive to pass into law. But we only have two weeks to make it happen. Let me explain step by step.

Again, under normal circumstances the next step would be for the EU Council to adopt the bill in the very near term. According to Julia Reda MEP's website (by the way, she gave the greatest speech any MEP ever gave in an IP context to the best of my knowledge):

"The final remaining step is then for the Council to adopt the law as well, which is likely to take place on April 9. However, Germany, whose Minister of Justice has come out in opposition of upload filters, could still retract its support, which would make a majority unlikely and thus also lead to further negotiations after the EU elections in May.

Yes, there still is a hypothetical chance, but we have only two weeks left and it would be a first in EU history. I'm speaking from somewhat successful experience here because the first time in EU history that the EU Council was unable to quickly rubberstamp a text on which a political agreement had been reached at the level of the diplomats (COREPER = Committee of Permanent Representatives) was in late 2004 and early 2005: the proposed directive on the patentability of computer-implemented inventions aka "software patents directive." Eventually, after significant delays, the Council did adopt that one, and we got it voted down in the European Parliament with a movement that was smaller than the anti-Article-13 movement but counted more small and medium-sized enterprises among its members (some SMEs got involved against Article 13, but rather late) and had greater pan-European coverage, while Article 13 never became truly controversial in Southern Europe.

So what can we do and (how) could it work?

Let me explain the formal part: how the EU Council adopts a bill. The first step is a political agreement. That's the case when diplomats representing a qualified majority of EU Member States agree on a particular proposal in a COREPER meeting. It's not yet the formal adoption because that one requires either a European Council (a meeting of the heads of state or government) or EU Council (colloquially called "Council of Ministers") meeting. For legislation like the EU Copyright Directive, the formal decision is typically made by a Council of Ministers. The EU Council meets in different "configurations" such as "Finance" or "Fisheries," but legally it's indivisible, which means that even a Fisheries Council can adopt a copyright directive because any Council meeting is a Council meeting.

It's legally absolutely possible for a Member State to change mind between a political agreement and the formal adoption. But it's an unwritten law in the EU that political agreements are followed up, as soon as the translations are available (or in the case of the copyright directive, after an EU Parliament vote), by approval as a so-called "A item." Don't get confused by all of this EU terminology--I'm trying my best to explain.

An "A item" is a decision that is taken by silent consent. If something is listed in the "A" section of the agenda of a Council meeting, it's approved on the basis that no Member State raises a hand to object. That gives the representatives of the Member States (heads of state or government, ministers, or the state secretaries filling in for the ministers) the chance to have the item put to a vote (requiring a new Council agenda).

That's what they do all the time. Ultimately, it even happened in the case of our software patent directive, but the additional breathing space the delays in the Council afforded us enabled us to draw further attention to the issues and to get the European Parliament's Legal Affairs Committee to hold a "restart" vote based on a rarely-invoked procedural rule according to which the EP can ask the European Commission to restart a legislative process if EU elections took place in the interim. There's no automatic discontinuity (unlike in U.S. Congress), but this is like a resolution requesting discontinuity. The Commission declined the Parliament's request, but the blowback was that the Parliament later rejected the entire directive (not only for this reason, but this gave some people a great excuse).

So what are the odds in the case of the EU Copyright Directive?

There are some unique circumstances and parameters here:

  1. The most massive street protests ever against an EU legislative proposal took place last Saturday with about 200,000 people in Germany alone, mostly but not only young people. The German government parties know they're at risk of losing an entire generation of voters, even more so after Merkel's party alienated them.

  2. It appears that our efforts to kill Article 13 really failed by only a couple of votes. In the livestream I saw a sigh of relief on Axel Voss MEP's part.

  3. Just on the eve of the vote Frankfurter Allgemeine Zeitung reported something I had actually speculated about in a February 20 email responding to questions from a reporter: there was friction between France and Germany because of the Nord Stream 2 gas pipeline. In that situation, a typical EU-style horse trade took place, and France, which (I'm sorry to say) is in terrible shape in various respects, insisted on getting Germany's support for Article 13. Germany wanted Article 11 ("link tax"), and didn't want further irritations surrounding the gas pipeline, so they struck a deal.

  4. The intent to prevent upload filters (an inevitable consequence of Article 13) from being legally required is one of the items in the coalition agreement between Merkel's CDU/CSU and the SPD. The Franco-German deal violated the coalition agreement.

  5. The German minister of justice, Katharina Barley, who will become an MEP soon, declared herself in opposition to Article 13, but her party decided in February not to leave the coalition. However, large parts of that party want out of Merkel's coalition. Their youth organization, the Jusos, has been making that demand ever since. And SPD politicians have recently made various prohibitive demands in preparation of a mid-term review scheduled to take place in the fall and which could, as per the coalition agreement, result in a breakup.

    So far, it would have been unthinkable that a copyright reform bill could destabilize Merkel's coalition. And some more traditionally-minded politicians in the SPD's leadership probably still don't understand the issue in the slightest, while some others do. But nothing would be a better exit strategy for the SPD from Merkel's coalition than preventing the adoption of a law that is so incredibly unpopular especially (but not only) among young people.

  6. Merkel is a lame duck in various ways (though unfortunately not in all). She had to step down as chairwoman of the CDU, not least because of her unpopular migration policies. Her successor, Annegret Kramp-Karrenbauer, could theoretically form a new government coalition anytime with the libertarian Free Democratic Party (FDP) and the Greens. The Greens would normally prefer early elections because they're very strong in the polls right now, but ultimately there could be a negotiated solution that would give the Greens greater influence than their number of parliamentary suggests.

  7. EU elections will take place on May 23-26 (in Germany, it's May 26 only).

What is the potential road to victory then?

First, we must be realistic that it would shock many EU diplomats if they couldn't adopt an "A item" after a political agreement. But in the software patents case we already proved that many months of delay are possible. In this case, we have EU elections ahead of us. If all we achieved was to delay adoption beyond the elections, the newly-elected Parliament could again request a restart. Also, the new EU Commission could withdraw the old Commission's proposal and start all over.

So they could give us another chance to defeat Article 13 without breaking the unwritten rule that political agremeents result in the adoption of an "A item." It would be quite similar to the software patents situation, just that this time around they would actually have to restart the process after the elections.

Second, we'd have to prove that we can again take to the streets in large numbers--Saturday, April 6, would be the only realistic chance given that they'd otherwise adopt the "A item" on April 9. I believe that's possible. We've drawn additional attention to the issue lately, also with Wikipedia's help. We'd get more and more media coverage. There's a number of reasons for which this might work, provided that there isn't "demonstration fatigue." I'm ready!

Third, we'd need a more comprehensive and sophisticated strategy than the one that failed to achieve the desired result so far. We'd have to team up with people inside the CDU/CSU who want to get rid of Merkel, with SPD politicians who want to leave Merkel's coalition, with the opposition parties who could replace the SPD even without new elections (FDP and Greens), and also with parties to the left and the right of those parties who would, for whatever reasons, be on our side. Also, we'd have to make a far greater effort with respect to local and regional chapters of those parties, and their youth organizations at the national, regional, and local level.

While this would be sort of a long shot, the software patents experience makes me think it could work. While it's highly unlikely the Council would, for the first time in EU history, decline to adopt an "A item" after a political agreement, it's legally possible; but they wouldn't even have to break their unwritten golden rule if they simply delay things to the extent that a new Commission can, in conjunction with a newly-elected Parliament, restart the process (optional discontinuity).

No one is ever beaten unless he gives up the fight. Today's narrow outcome (of the vote on whether or not to allow amendments) proves that truism right again.

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Sunday, March 24, 2019

Merkel's party in hurricane-strength shitstorm after falsely alleging U.S. corporations pay anti-Article 13 demonstrators

The day after tomorrow, Tuesday, March 26, the European Parliament will hold its first-reading plenary vote on the Directive on Copyright in the Digital Single Market aka EU Copyright Directive, at 12:30 PM local time in Strasbourg. The proponents of the totally ill-conceived Article 13 (which is technically Article 17 now due to a renumbering, but everyone knows what is meant by Article 13) would like it to be the final reading, but don't hold your breath:

  1. Under normal circumstances and according to conventional wisdom, you'd get your way. But this is an atypical situation with outside pressures and dynamics. There have been various defections in recent weeks from the pro-upload-filter camp, the most important one being Friday's announcement by Poland's Platforma Obywatelska (Civic Platform), the second-largest (by nmber of MEPs) party in the European People's Party group and even in the EU Parliament as a whole, to vote against Article 13 and, if necessary, against the entire bill. I thanked Platforma Obywatelska in my speech at yesterday's Munich demonstration (the largest one of roughly 100), which starts at 2h42m of the recorded livestream.

  2. Even if an unholy alliance between Merkel's party and numerous Southern European parties secured a majority on Tuesday, the proposed directive would still have to be formally adopted by the EU Council. Normally, such approvals following an earlier vote at the level of the diplomats are listed as an "A item," meaning for approval without discussion (they're approved by no one objecting). That's the way things work in the EU. But in this case, considering that even based on traditionally-conservative police estimates we had well over 100,000 people (mostly but not all of them rather young) on the streets across Germany (40,000 in Munich alone), I believe we have the potential to create a situation in which no member of the German government short of Merkel herself--she did a horse trade with Macron, who insisted on Article 13--would want to be responsible for the formal adoption of the bill by failing to raise a hand. And if Merkel herself wanted to take that step, it might even be the end of her government coalition.

    We're not there yet. The immediate objective is to get Article 13 voted down. But even if not, we won't give up. It would then be conceivable that the recently-elected chairwoman of Merkel's party, Annegret Kramp-Karrenbauer, could replace Merkel in a so-called Jamaica coalition (based on the colors of the parties involved) and kill Article 13. That's because the Social Democratic Party of Germany (SPD) opposes Article 13 and appears to be preparing for an exit from Merkel's coalition government. The number of people taking to the streets would reach stratospheric heights if we mobilized not only opponents of Article 13 but also disillusioned SPD voters who want Merkel's "grand coalition" to come to an end sooner rather than later (such as the SPD's youth organization) and other people who are tired of Merkel, of whom there's plenty.

    Should the EP adopt Article 13, I'll be among those who will immediately try to dissuade the German government from supporting its formal adoption regardless of unwritten diplomatic procedural rules.

We're less than 48 hours away from the EP vote, and Merkel's party (formally two parties--CDU and CSU--but practically just one as the CSU is basically the pseudo-independent Bavarian state party like Minnesota's DFL is just the Democrat Party in the North Star State) is going through a shitstorm now that beats everything they've ever been through. It's a hurrican.

What triggered this shitstorm is the most stupid and most outrageous claim made in the whole copyright reform debate, which means a lot because earlier this week the CDU/CSU delegation to the European Parliament already made itself the laughing stock of German Internet users by saying something totally foolish and incompetent about Google's inner workings. Also, the European Commission's "mob" blog post won't be forgotten anytime soon.

The CDU/CSU delegation's incompetence is an embarrassment, but now they're seriously antagonizing an entire generation of voters by falsely alleging that people taking to the streets against Article 13 are paid by "large American corporations" (click on the image to enlarge; this post continues below the screenshot of the tweet):

In the above tweet, the CDU/CSU EP delegation's official Twitter account shared a quote from an interview their leader in the EP, Daniel Caspary MEP, gave to the "Bild" tabloid newspaper, which I'll translate as follows:

"When American corporations attempt to prevent the adoption of a law by massively leveraging disinformation and paid demonstrators, our democracy is in jeopardy." (emphases added)

This. Is. Outrageous.

This. Is. Preposterous.

This. Is. Pathological.

What Mr. Caspary apparently confused for hired guns at demonstrations is that one NGO, EDRI (which is far left of my political inclinations to be sure) offset parts of some activists's travel costs, to the tune of 450 euros (many professional lobbyists charge more per hour) for coming to Brussels and Strasbourg to meet MEPs. But with roughly 150,000 demonstrators on German streets yesterday, plus dozens of demonstrations in other European cities (roughly 100 venues in total), it would have cost tens of millions to pay 450 euros to each participant in yesterday's demonstrations.

Various CDU politicians, also including some members of the German Bundestag (Federal Parliament), have distanced themselves from this idiocy in the strongest terms. The CDU youth organization's Hamburg-Harburg chapter even warned that this offensive behavior against people exercising their democratic rights would make their party lose an entire generation of voters.

Actually, the crowds across Germany even included some CDU members as this tweet shows (#cnetz is the CDU/CSU-aligned digital-economy think tank).

It's high time the CDU/CSU realized that this is a grassroots movement. I wasn't paid for my participation in the Munich demonstration and didn't have the slightest indication of anyone receiving anything. Instead, the organizers are even struggling to offset their hard costs with donations, as Arnold Schiller, the organizer of the Munich demonstration (which unexpectedly even surpassed the attendance in Berlin, which was originally expected to be the main event) explained on Twitter.

A leading German YouTuber, Rezo (@rezomusik on Twitter), replied to a retweet of mine of CDU politician distancing himself from his party's EP delegation's "communications" on Twitter that the issue is one of substance, not style: the problem is not how they say it, but what they say and, above all, the underlying disdain of democracy.

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Thursday, March 21, 2019

Qualcomm may seek declaration of having met FRAND obligations, gets minor adjustment of Korean antitrust fine, wholesale acquittal in Japan

There's three pieces of news regarding Qualcomm's antitrust issues, none of which has huge impact in its own right, but the combination of the three warrants an update.

First, Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California issued an order on Wednesday, denying a motion for judgment on the pleadings through which Apple sought to prevent Qualcomm from seeking, at the trial starting April 15, a declaratory judgment that Qualcomm has met its FRAND obligations under ETSI (a standard-setting organization based in Europe) through its licensing offers (this post continues below the document):

19-03-20 Order Denying Judg... by on Scribd

The legal standard here is that declaratory judgment is available if there's a definite and concrete controversy, and in case of doubt, courts tend to be permissive. In this particular case, the question was whether Qualcomm would stand to gain anything from the declaration it's seeking if it prevailed that it wouldn't already gain from successfully defending itself against Apple's FRAND breach claims. In other words, Qualcomm's defenses would require the court to either agree or disagree with Apple that Qualcomm breached its FRAND obligations; if the court agreed with Apple, Qualcomm would lose anyway, and if the court disagreed with Apple, it would conversely mean that Qualcomm met its obligations. So why issue a specific declaration? Judge Curiel has decided that such a declaration may have value beyond what a successful defense can provide.

Judge Curiel agrees with Apple that the requested declaration of FRAND compliance "will not resolve Apple's antitrust cause of action or disgorgement claims." That's simply the case because Qualcomm's declaratory judgment claim relates to a limited period of only a couple of years (the parties' negotiations in 2015-2017), while the antitrust claims here cover the time since 2008. However, pointing to an Eastern District of Texas decision (HTC v. Ericsson, December 17, 2018), which is obviously not binding on a district court in a different circuit and generally not too persuasive outside of that particular patentee-friendly district, Judge Curiel notes that the theory of an "unwilling licensee" no longer being entitled to the benefits of a FRAND licensing commitment "has been recognized as a legitimate basis for declaratory relief and is legally sufficient to survive Apple's motion." But, in any event, all of the evidence required to resolve this declaratory judgment claim will have to be put before the jury at any rate (just to adjudicate the claims that the parties agree must be resolved)--and Judge Curiel doesn't see a risk of confusion of the issues.

The idea of an implementer of a standard forfeiting its rights to a FRAND license through its conduct in negotiations looks like the kind of pro-patentee extremism the Eastern District of Texas is known for. It's already debatable whether a patent holder may have access to injunctive relief against the products of an unwilling licensee. But the idea that someone's (alleged) failure to make a FRAND counteroffer affords the patent holder the freedom to seek supra-FRAND terms, or hypothetically even to decline granting a license on any terms, is absurd simply because two wrongs don't make a right.

Given the facts, such as that Qualcomm collects about 25% of all patent license fees (counting all industries) in the world and the lion's share of all wireless patent license fees, it's hard to imagine that anyone would find its terms to be FRAND. In fact, Judge Lucy H. Koh's upcoming FTC v. Qualcomm decision may make this clear in a way that the Southern District of California could rely on the Northern District's decision. Even if a jury got confused or misled, the trial judge or, at the latest, the appeals court would certainly find that no reasonable jury could have considered Qualcomm's royalty rates (and various other terms) fair, reasonable, and non-discriminatory. That's why I guess the Ninth Circuit won't even get to decide on whether or not to adopt the Eastern District of Texas line on FRAND compliance declarations.

The second development to report briefly comes down "See I Told Ya So" with respect to a 2009 antitrust fine imposed on Qualcomm by the Korea Fair Trade Commission. As I had explained after a recent decision by South Korea's Supreme Court, it was only about an adjustment in the tens of millions of dollars, while the aggregate of the old 2009 fine and the late-2016 decision that basically kicked off the current wave of Qualcomm antitrust actions is on the order of a billion dollars.

As Reuters reports, the 2009 fine was lowered by 18% to $200 million.

The single most important issue facing Qualcomm in Korea is actually a requirement (resulting from the December 2016 order) to extend SEP licenses on FRAND terms to rival chipset makers. Continued non-compliance could at some point result in criminal charges.

The third tidbit relates to another very old Asian antitrust ruling: a 2009 cease-and-desist order by the Japan Fair Trade Commission. A week ago, Qualcomm issued a press release according to which the nine-year proceeding in Japan resulted in the conclusion that Qualcomm doesn't violate Japanese antitrust law through its cross-licensing requirements and non-assertion covenants. Qualcomm's attorneys also filed the Japanese decision with Judge Koh in the FTC case and announced they'd submit a certified translation later.

I have no idea what exactly the antitrust standard in Japan is and don't even know who the complainants were. What I do suspect very strongly is that the JFTC's about-face has a lot--or simply everything--to do with changes in market shares. In 2009, Japanese device makers played a far greater role in the worldwide handset market than today. They're still around, unlike their European counterparts, but almost insignificant outside of their domestic market compared to their rivals from the U.S. (Apple), Korea (Samsung), and China (Huawei, ZTE, Xiaomi etc.). And Sharp even got acquired by a Chinese company (Foxconn). Therefore, I believe the Japanese government's perspective on what benefits the likes of Sony and Panasonic changed fundamentally during the protracted process. Obviously, Qualcomm would have us believe that it simply prevailed in the end because of a more thorough analysis than the one underlying the original decision. But antitrust agencies don't hand down cease-and-desist orders (the most incisive remedy!) on a whimsical basis--they do so after in-depth investigations (and it's hard to imagine the standard would be lower in Japan). That's why a change in economic-policy priorites, with the JFTC potentially looking at Japanese companies as future net licensors, is the most plausible explanation.

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