Friday, July 10, 2020

Nokia getting nowhere: two more infringement cases against Daimler stayed as declared-essential patents-in-suit are likely invalid

An earlier version of this post went live on Wednesday and confused EP'505 (asserted in Munich) for EP'199 (asserted in Mannheim). A source of mine had gotten confused, and I should have double-checked, but now it's all 100% correct--and the conclusions are obviously the same, except that the Nokia v. Daimler trial in Munich on the 23rd will go forward and promises to be the most important event to date in the automotive patent wars. I'll try to attend.

Sometimes I wonder whether the S in "SEP" stands for "scam" rather than "standard."

Everyone who deals with patents professionally knows that, at least with respect to information and communications technologies, the system is broken beyond repair. Patent offices issue far too many patents and treat mass filers as "key accounts" whose "demand" for weapons of extortion they seek to satisfy. Unlike its U.S. counterpart, the European Patent Office isn't run by a trolls' lawyer, but it's also part of the problem.

But standard-essential patents take the issues facing the patent system to an even higher level. Companies overdeclare (though some have higher "hit rates" than others). No scrutiny is performed. And besides countless patents that aren't essential from an infringement point of view, the vast majority of those who may claim a standard-essential technique are simply invalid as granted.

Nokia failed to deliver a great smartphone user experience, then increasingly resorted to patent monetization. But it concluded license deals without a lot of patents actually coming to judgment. They monetize a portfolio that contains a huge amount of hot or even not-so-hot air. Where's the substance?

For a while, everything appeared to be working out according to plan for Nokia with respect to the Daimler dispute. They knew they were facing a 19th-century company that they hoped would cave at some point. Daimler certainly failed to put the necessary pressure behind its EU antitrust complaint, while Nokia found political opportunists of the worst kind in Brussels who were--and potentially still are--perfectly prepared to do lasting damage to the European Commission's reputation as a competition watchdog. After so many years of having been accused of protectionism, the Commission couldn't vindicate its critics more effectively and convincingly than by condoning Nokia's conduct.

Meanwhile, Nokia was hoping to get leverage through a barrage consisting of ten German patent infringement actions against Daimler. But the tide has turned, and this appears to be a dreadful season for the failed handset maker. The amicus curiae brief filed by the Federal Cartel Office of Germany with the courts hearing Nokia's cases makes it very hard--if not impossible--to imagine that Nokia would obtain an enforceable injunction against Daimler anytime soon, if ever.

Now I've found out that Nokia also keeps losing on the technical merits. Not only has Nokia been unsuccessful in Mannheim so far, but Nokia felt forced to enter into stipulations to stay two more cases given the high likelihood of invalidation of the relevant patents-in-suit:

  • On October 30, 2019, the Munich I Regional Court's 21st Civil Chamber had held a first hearing in two cases, one of which is about EP2797239 on "a method and a telecommunication device for selecting a number of code channels and an associated spreading factor for a CDMA transmission." The trial was supposed to be held on July 29, but it won't go forward as this patent, too, appeared likely invalid, so much so that Nokia had to consent to a stay (as per a filing on July 7, 2020).

  • In Mannheim, Nokia had already lost one case (patent not essential), and another case had been stayed. On June 15, case no. 2 O 37/19 over EP1273199 on a "method and arrangement for maintaining synchronization in association with resetting a communication connection" was also stayed pending a preliminary opinion of Federal Patent Court on validity. The week before, counsel for Nokia had reiterated that they considered the patent valid, but nevertheless consented to a stay.

There still are some other Nokia v. Daimler cases pending in Germany, with a Munich trial still being slated for later this month, a Mannheim ruling scheduled for early August, and a few Dusseldorf hearings set to take place in August and September. But so far, Nokia simply isn't winning. Much to the contrary, Nokia keeps devaluating its portfolio, and all those handset makers whose licenses are up for renewal in the not too distant future are presumably watching those developments attentively. Nokia's litigators picked the patents they thought were their strongest weapons, and it turns out they're largely non-starters...

What makes me really happy is the fact that the Munich I Regional Court appears increasingly receptive to strong invalidity arguments. That brings at least some balance to an otherwise broken system.

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