Monday, May 18, 2020

Munich court to hand down key Nokia v. Daimler patent decision on Wednesday (5/20)

This morning, a spokesman for the Munich I Regional Court ("Landgericht München I") confirmed to me that the 7th Civil Chamber (Presiding Judge: Dr. Matthias Zigann) is still on schedule to announce a decision in a Nokia v. Daimler standard-essential patent (SEP infringement case on Wednesday (May 20) at 10 AM local time. The trial was held in early February, and the original ruling date was postponed by about six weeks.

"Decision" doesn't necessarily mean final judgment; the case could also be stayed or the proceedings might be reopened. So what are the most plausible possibilities?

  • A finding of non-essentiality (Nokia's infringement theory is based on the specifications of the UMTS standard) appears very unlikely. Should it happen nevertheless, the complaint would be rejected. Nokia would likely appeal.

  • At trial time it looked pretty much like the court was going to find in Nokia's favor on all counts and order an injunction against Daimler. Most observers still expect that to happen, and I'll prepare a blog post for that event (because there's a sufficient probability to warrant such preparation on my side), but I'm a bit of an outlier because I'm far from convinced. The passage of time might have worked against Nokia. The court might have had second thoughts in the meantime, given that Nokia's case is deficient in more than one way.

  • The most obvious weakness of Nokia's case is the patent-in-suit itself. It's not realistically going to be deemed valid as granted once the Federal Patent Court of Germany looks at it. In most cases in this industry, settlements occur before the Federal Patent Court gets to decide, but this case is more likely than the average case to reach that point.

    Statistically, the Munich court stays only about 10% of its cases, while 80% of all patents-in-suit turn out invalid. That's a huge discrepancy. Injustice of the worst kind. But every once in a while, even the Munich court stays a case, and this patent--I repeat--is a particularly weak one.

  • The court could also identify a need for further FRAND analysis. In this regard I'd like to refer you to a previous post on this case, entitled How many times can a patent holder violate EU antitrust law in a single litigation? (Nokia v. Daimler)

Getting back to the scenario of an injunction, however unjustified it would be, it wouldn't be a general sales ban: Daimler would still be allowed to sell cars in Germany that come with telematics control units (TCUs) from Harman (a Samsung subsidiary). Nevertheless, Daimler argues that the financial impact of not being allowed to sell cars with non-Harman TCUs would amount to 4.5 billion euros.

What many people don't know is that it's easier in Germany to obtain a patent injunction than to persuade a court to impose contempt sanctions. The standard of proof would be higher: at the contempt stage, Nokia would no longer be able to base its infringement theory on a comparison between the patent claims and the specification of the standard.

An injunction could be lifted before it has any commercial impact whatsoever, depending on what the appeals court finds. Given the fundamental flaws of Nokia's case, and the possibility of one or more antitrust authorities taking action in the meantime, that's fairly possible.

But an injunction could set off a massive news cycle in Germany. Theoretically, that could benefit the camp pushing for patent injunction reform, but as I explained before, the pro-reform movement in Germany is so ridiculously incompetent (and the worst part is they don't even know how bad they are) that even the most spectacular German patent injunction ever (or at least in a long time) probably wouldn't change the political dynamics. But one never knows.

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