Thursday, September 12, 2019

Munich court schedules first hearings in two Sharp v. Daimler patent cases for late November, another anti-antisuit hearing for early October

Two key contributors to the Avanci IoT patent pool are suing Daimler in Germany:

Today the press office of the Munich I Regional Court ("Landgericht München I") thankfully responded to my inquiry regarding the hearing dates in the three Munich Sharp v. Daimler cases:

  • On November 20, 2019, the court's 21st civil chamber under Presiding Judge Tobias Pichlmaier will hold hearings in case no. 21 O 8609/19 over EP2854324 on a "communication system and mobile station apparatus" and case no. 21 O 9918/19 over EP2312896 on a "base station device, mobile station device and corresponding communication methods using carrier aggregation."

  • On March 5, 2020, the 7th civil chamber under Presiding Judge Dr. Matthias Zigann will hear case no. 7 O 8818/19 over EP2667676 on a "base station device, mobile station device, and uplink synchronization requesting method."

The question is whether Sharp is now going to seek a prophylactic anti-antisuit-injunction injunction ("AAII") from the Munich court, given that Daimler supplier Continental may in the not too distant future file an antisuit-injunction motion with Judge Lucy H. Koh in the Northern District of California targeting at least Sharp, Nokia, a couple of patent assertion entities Nokia had fed with patents, and the Avanci patent pool firm. On Tuesday, after Continental's miserable failure over the course of four days (two weekend days, but well-run litigants wouldn't care) to respond to a letter Sharp had addressed to Judge Koh, the world's #1 technology industry judge dismissed a pending antisuit-injunction motion without prejudice so as to avoid piecemeal resolution with two or more antisuit injunction motions in the same case. While Continental was too slow and/or unprofessional to clarify promptly that Sharp wasn't meant to be included by the original antisuit motion, it could have brought a subsequent antisuit motion targeting Sharp. Also, Continental had withdrawn parts of its motion even with respect to Nokia (most importantly the ten aformentioned pending German cases) to comply with the first Munich AAII, but by doing so without prejudice, the automotive supplier reserved the right to revive those parts in the event of a successful appeal to the Munich Higher Regional Court. And then the Avanci pool has various other members, so if Continental refiles, it should target all Avanci contributors (in case its lawyers are conflicted with regard to any of them, it should simply find new ones, which may be a good idea anyway given how things have gone wrong so far with respect to the antisuit effort).

There are two AAIIs in place, one (the first to come down) against Continental Automotive Systems, Inc. of Auburn Hills, MI, and one against Continental AG, the Germany-based parent company of the entire group (and, as part of that, an indirect parent of the U.S. entity). The first one had been granted ex parte without a hearing and without Continental even having a clue until the decision had come down. But there was a service-of-process dispute as the U.S. entity pointed to the Hague Convention (which according to the Avanci defendants' motion to dismiss Continental's U.S. lawyers may have failed to comply with when attempting to serve Sharp Japan). The second one didn't raise that kind of issue, but the court initially denied an AAII because Nokia had not made it sufficiently clear what complicit or intermediary role Continental AG, which is not a plaintiff in the case before Judge Koh, had played in the U.S. antisuit effort. Nokia didn't take no for an answer, so the court held a hearing, and then decided in Nokia's favor.

On October 2, 2019, the Munich I Regional Court will hear the U.S. Continental entity's motion for reconsideration of the first AAII. The court didn't say why that hearing wouldn't take place sooner, given the urgent nature of a preliminary injunction, but it's easy to figure: the issues will be a subset of the ones already heard in late August, so the outcome will be the same unless the appeals court (Munich Higher Regional Court, "Oberlandesgericht München") will lift the second AAII in the meantime. It may seem counterintuitive that the appeals court will decide on the second AAII before the first, but that's due to the combination of two factors:

  • Continental didn't move for reconsideration of the first one until it had been served in what it deemed to be compliant with the Hague Convention. That's why, in a way, the second AAII is now practically ahead of the first one.

  • The losing party to a preliminary-injunction motion (be it the movant or the non-movant) must firstly give the lower court the chance to reconsider, which actually just worked out for Nokia and resulted in a second AAII. That's why the October 2 hearing formally had to be scheduled, but since the second AAII is already past that stage, the appeals court can review it soon (provided that Continental already has appealed, or will appeal in the coming days; the deadline is early next week).

The German legal term is "sofortige Beschwerde" (immediate objection), but it comes down to a motion for reconsideration in the lower court, and if that one fails, then it goes up to the appeals court. By scheduling the reconsideration hearing for early October, knowing that the appeals court will likely hold a hearing before (or otherwise the reconsideration hearing could be pushed back), the lower court enables itself to quickly lift the first AAII should the second one be lifted on grounds that apply to the first one as well (most of the issues are overlapping, but the second one involves complicit or intermediary liability on top of everything else).

This takes us back to what Sharp may do. If Nokia's AAII is upheld, we can set our watches by Sharp bringing an immediate AAII motion with the lower court unless Sharp will already have done so by that time. Should Nokia's AAII be lifted on grounds that would apply to any AAII Sharp might bring, then Sharp will likely refrain from bringing one in the first place or will withdraw a hypothetically pending one. The scenario of Continental not appealing the second AAII is almost impossible to imagine (even more so since we now know they objected to the first one); in that highly hypothetical case, Sharp would certainly pursue its own AAII just as if Nokia had won affirmance.

Given that Nokia, which has demonstrated its litigation prowess again and again, filed ten cases against Daimler before Sharp filed its five complaints, the question is whether those Sharp cases are ultimately going to make any difference. It's certainly a chance for Sharp, which increasingly seeks to monetize its patents, to send out a clear message to other implementers of cellular standards that the Foxconn-owned Japanese electronics company is not just a dog that barks but doesn't bite. They do sue from time to time, as those five German cases prove.

But if Nokia got decisive leverage over Daimler in the meantime, Daimler might take an Avanci pool license, in which case it would also be licensed to Sharp's patents-in-suit. I hope Daimler will be able to avoid this, as Avanci's terms are supra-FRAND and SEP licenses should be available at the component level, with royalties calculated as a percentage of the smallest salable patent-practicing unit. However, Nokia is amazingly good at the patent litigation game, and I have yet to see an automotive company that can withstand such an onslaught. Let there be no doubt that Quinn Emanuel's Dr. Marcus Grosch, Daimler's lead counsel in the Nokia and, according to Juve Patent, also the Sharp cases, is going to give Nokia a run for the money. But the first hearing in one of those cases already showed the court leaning Nokia's way, and ten patents is just too much ammo. Without a successful FRAND/antitrust defense, or the infringement cases at least being stayed pending the resolution of Daimler's and some of its suppliers' EU antitrust complaints against Nokia, it will only be a question of when, not if, Daimler will lose. And QE does a whole lot more work for SEP asserters than for implementers, especially in Germany (where they also represented a patent assertion entity against Nokia over the course of many years, until Nokia exited the mobile handset business).

Share with other professionals via LinkedIn: