In a few hours the Munich I Regional Court will finally hear oral argument regarding Nokia's motion for an anti-antisuit-injunction injunction ("AAII") against automotive industry supplier Continental. In the post I just linked to, I stated the correct weekday (Thursday) but missed the correct date by one day (meanwhile fixed).
In the antisuit context, I've previously expressed some disappointment that Continental didn't make it structurally easier for Judge Koh (such as by choosing the ideal plaintiffs and movants from that large corporate group) to grant the U.S. antisuit motion. The motion and the related reply brief made some valid points, but also contained nonsensical parts. And, quite frankly, I don't understand why they didn't counter Nokia's denial of functional identity of the parties by pointing to Nokia's own argument in the German AAII case, where Nokia essentially tells the court that Continental AG, the Germany-based group parent, controls all Continental entities at any rate--in which case functional identity (between the parties in Continental v. Avanci et al. in San Jose and the German Nokia v. Daimler--as well as recently-filed Sharp v. Daimler--cases) becomes a matter of merely applying the logic of the U.S. customer suit exception here.
But I must give Continental's U.S. lawyers credit for now having filed the strongest and most thoroughly researched opposition brief to a venue transfer motion that I've seen in almost a decade of watching these kinds of cases. It's roughly three times as fact-rich as the average opposition brief of this kind that I've seen in high-profile cases. While Continental's filings in the antisuit context contain passages that attempt to substitute words for facts, the opposition brief to Avanci's motion to transfer the case out of Judge Lucy H. Koh's court in San Jose (Northern District of California) and to the Northern District of Texas excels with a record density of relevant facts (this post continues below the document):
If I didn't agree with Continental that "[t]his case will profoundly impact an entire global industry—the Internet of Things, including automotive connectivity," I wouldn't have taken an interest in it in the first place. As Continental's opposition brief notes, the IoT industry is estimated to reach $11 trillion by 2025, and Avanci has made it clear all along that the patent pool firm "seeks to license the entire Internet of Things."
There simply is no judicial district in the world where you'd find a higher concentration of today's and tomorrow's leading IoT companies than the Northern District of California, and within that district, San Jose is, at most, a few miles away from the center of gravity.
Besides the strictly legal relevance of the particular relevance of a case to the local economy in a federal judicial district, Continental's efforts to portray this case as a pivotal one for Silicon Valley are presumably also meant to persuade Judge Koh that this case is worth her time despite being one of the busiest federal judges.
Technically, it's about the district. Practically, it's about the judge. If someone, in an alternative universe, offered Avanci a deal under which the case would stay in San Jose but another judge would take over, but Avanci would have to withdraw its transfer motion in exchange, I guess they'd do so any day of the week.
Continental notes that "[t]his Court is extremely familiar with the legal issues in this lawsuit because it recently decided FTC v. Qualcomm, Inc., No. 17-cv-00220-LHK, another case involving FRAND, SEP, and related antitrust issues." That is, quite obviously, the reason for which Avanci's first transfer motion, prior to the one that is pending now, tried to at least move the case up north to San Francisco--before it had even been formally assigned to Judge Koh.
Among the other relevant cases that Continental lists are some that Judge Koh presided over, with her decision on the smallest salable patent-practicing unit in GPNE Corp. v. Apple being particularly interesting. There were some SEP issues in Apple v. Samsung, but Judge Koh left them to the jury, while in GPNE she made a key decision--specific to the facts in that case, but based on an approach that can be applied here as well.
Continental is right that "the Northern District of Texas has had few, if any, cases involving FRAND, SEP, or related antitrust issues." That's true because if patent holders sue in Texas, they generally prefer to do so in the Eastern District.
Continental has a very good story to tell about its own presence in the Northern District of California. Its Intelligent Transportation Systems (ITS) segment offers "Key as a Service" ("KaaS"):
"Using KaaS, a person can use her phone to lock, unlock, start, stop, and operate the vehicle in other ways. [...] In other words, this technology enables keyless entry and use of a vehicle. [...] The user's phone communicates with a Remote Cloud Key ('RCK') device typically installed in the vehicle, which also provides information about the vehicle to the phone, such as speed, fuel levels, and location. [...] KaaS also utilizes devices (e.g., ACCM and CSM modules) that rely on 3G connectivity. [...] ITS has 44 engineers working on KaaS, all located in San Jose."
ITS, which also depends on connectivity for its "fleet management" service and "telematics platform", is less than eight miles from the San Jose federal courthouse on North 1st Street--the courthouse is between South 1st Street and 2nd Street.
Continental's lawyers have done the most thorough research imaginable on travel by Avanci representatives to the Northern District of California for licensing talks as well as speeches at conferences. Continental criticizes Avanci's motion for its failure to reference one of the Ninth Circuit's Jones factors considered in evaluating transfer motions: "the respective parties' contacts with the forum." That's where any business meetings or presentations at conferences become relevant--and, unsurprisingly, Avanci and its members travel there all the time. They also choose or are forced to litigate there quite frequently. And they have various offices in the area, though Avanci's motion denied that the activities of those offices are too relevant to this FRAND/antitrust case.
Continental stresses that the plaintiff's choice of forum generally deserves some deference, and even more so in an antitrust case. Also, while Avanci argues that Continental's claim under California's Unfair Competition Law won't survive the upcoming motion to dismiss the complaint, at least for now there is such a claim and no one could reasonably claim that a judge in Texas should have to make a decision based on California UCL.
Avanci could have tried to move for a transfer to another district in California (just like they wanted to move it over to a different city with in the Northern District). But where could they go? The Eastern District (Sacramento) doesn't matter for tech cases. The Central District (L.A.) does get a significant number of technology cases, and there some carmakers have operations in or around Torrance, but presumably not the ones that are directly or indirectly involved with Continental v. Avanci. Relatively speaking, the Southern District of California would apparently have been the only alternative in the Golden State, but then Avanci would have had to place the emphasis on Qualcomm, which is a key Avanci member and certainly has a strong interest in this case, though Nokia is more relevant. Continental actually mentions the fact that Qualcomm witnesses can be compelled to testify in San Jose, but not in Dallas.
Continental doesn't want to take its chances, so while they are, for good reason, confident of being able to defeat Avanci's motion, they'd at least like to be allowed to conduct venue discovery before the transfer motion would be granted. Again, I predict that the motion will be denied (and most likely without a hearing, much less discovery), but it's better to be safe than sorry.
In the absence of compelling reasons for transferring the case from San Jose to Dallas, Avanci's only realistic chance of effectively wresting this case out of Judge Koh's hands is to gain decisive leverage over Continental through enforceable German patent injunctions. That strategy might work given the sad situation in Germany, where injunctions come down too often (typically even over invalid patents) and judges used to be totally unreceptive to FRAND arguments until they saw the European Commission taking action against Samsung and Motorola and the Court of Justice of the EU's Huawei v. ZTE opinion practically overruled the German Orange-Book-Standard doctrine or at least its utterly unreasonable application at the time. Post-Huawei, even German courts have become slightly more moderate with respect to SEP issues, but it's still an exceedingly patentee-friendly jurisdiction where judges tend to feel that a patent over which you can't obtain an injunction isn't really a patent. If Continental can't secure a U.S. antisuit injunction against Nokia (and, if necessary, also against Sharp in the next step), it's more likely than not that Nokia or some other Avanci member would gain so much leverage in Germany (over Continental customer Daimler) that Continental might ultimately be forced to drop its San Jose case, and the IoT industry would be the poorer for it.
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