Saturday, December 5, 2020

Desperate-defiant Nokia withdraws two Dusseldorf patent cases against Daimler, trollishly refiles in Munich--where it's losing ground as well

The Nokia v. Daimler standard-essential patent dispute that began in early 2019 with ten standard-essential patent (SEP) infringement cases filed in three German venues. In eight of these cases, some kind of decision was made this year: some got stayed (in one Munich case, the stay was of an informal nature as the court simply pushed back the trial date), some complaints were rejected (non-essential patents-in-suit), and Nokia won two injunctions (one each in Mannheim and Munich). But even those two injunctions have so far turned out to be of zero value:

  • The Mannheim injunction can't be enforced for a combination of two reasons: Nokia presumably couldn't afford providing security to the tune of $8.5 billion (which is its own fault--the collateral would be so much less if Nokia sued component makers, which it should actually license), and the Karlsruhe Higher Regional Court got Nokia to commit to refrain from enforcement while the appeals court is weighing Daimler's motion for an enforcement stay.

  • In Munich, the determination of the amount of the security by the lower court is a total insanity--approximately $20 million--but the appeals court--in that case, the Munich Higher Regional Court--has recently made it clear that it's not inclined in the slightest to uphold the lower court's methodology.

    In a parallel Conversant v. Daimler case, the appeals court's patent-specialized division under Presiding Judge Konrad Retzer had already stayed enforcement until it has made a new determination of the prerequisite collateral. And more recently it has done the same with respect to Nokia v. Daimler. The new amount is slated to be set before the Holiday Season.

Nokia's litigation counsel can't be blamed--their "hit rate" is higher than the industry average in SEP enforcement, though an independent analysis showed this year that the quality of Nokia's aging SEP portfolio is average at best. But the purpose of litigation typically isn't to stick copies of symbolical courtroom victories to a wall. It's about leverage, and that's precisely what Nokia is still lacking.

Nokia's lobbying prowess (with Daimler and some of its suppliers failing miserably in that regard) has so far dissuaded the European Commission from letting its Directorate-General for Competition (DG COMP) do its job and investigate Nokia's SEP abuse. I'm sorry I temporarily blamed DG COMP for not taking action. Over time it became clearer and clearer that the problem has nothing to do with DG COMP. The main culprit is Thierry Breton (the EU's internal market commissioner). It's just not conducive to DG COMP's credibility (even with a non-competition commissioner being the one to blame). Whenever the Commission does or does not decide to investigate a high-profile complaint, a displeased party may insinuate protectionism. Just last month I expressed my fundamental skepticism concerning claims that certain antitrust complaints over SAP's software licensing terms (and as an app developer I am sympathetic to software makers who want to maintain a reasonable degree of flexibility, especially in the business-to-business segment, as to the scope of what users may do with the licensed products) don't get traction just because of SAP's importance to Europe's digital economy. It actually appears those complaints are contrived and unpersuasive. Still, some try to leverage an allegation of protectionism in a context like that, and by not taking action against Nokia, the Commission harms its own reputation as a competition enforcer at a time when that function is more important than ever (not only--but also--in the SEP context).

The issue of component-level SEP licensing is, however, basically in the process of bypassing Brussels and heading straight to Luxembourg. Late last month, the Dusseldorf Regional Court decided to refer to the top EU court two sets of legal questions--the first one being all about component-level access to SEP licenses and the second one, which may not even be reached, relating to the interpretation of the CJEU's Huawei v. ZTE framework. Whatever that court decides is binding on the Commission, not the other way round (though the Commission's input bears considerable weight with the Advocate General, whose recommendations the court adopts in about two thirds of its cases).

Nokia's lobbying machinery will try to influence the court process. They'll try to influence each and every EU member state government, and with the automotive industry being so bad and weak at this, it's possible that even some countries that have a strong automotive industry and virtually no SEP holders are going to make submissions that favor Nokia. But Nokia would rather gain decisive leverage over Daimler before a Luxembourg ruling.

Next week, the Dusseldorf Regional Court was scheduled to hold trials in two more Nokia v. Daimler cases. While the referral to the CJEU was decided by the division headed by Presiding Judge Sabine Klepsch, next week's trials would have been conducted by a panel under Presiding Judge Dr. Tim Crummenerl.

Within less than a week of the trial date, however, Nokia withdrew both cases--and simultaneously notified counsel for Daimler and its suppliers that it simultaneously refiled the same complaints in Munich.

The Dusseldorf withdrawal will result in an award of court fees, which Nokia is apparently happy to pay just to escape from a court it used to love and has apparently learned to hate. Refiling in troll-friendly Munich is a logical choice, but with what I wrote further above as well as in connection with Nokia v. Lenovo, it remains to be seen just for how much longer that venue is going to be a SEP abuser's preferred battleground.

The practice of bringing patent infringement complaints only to withdraw them at a procedural stage where that's a highly unusual thing to do is reminisicent of the most disreputable patent trolls. In fact, Apple and Intel are suing Softbank-owned Fortress Investment in the Northern District of California, and one Fortress front named Uniloc has made such procedural moves in the United States. Such behavior is obviously abusive and vexatious. Nokia has no class, at least not anymore. This Dusseldorf-Munich maneuvering is almost childish. It's an act of defiance after the CJEU referral, and a transparent effort to show to other courts that Munich gets Nokia's business because of its patentee-friendliness.

The Munich court will likely set a somewhat accelerated schedule for those two refiled Nokia v. Daimler cases as the parties are already very familiar with the issues. But a Dusseldorf decision would probably have come down in January, at which point there won't even have been an early first hearing in the refiled cases.

By the way, Nokia can't run from that Dusseldorf judge forever. Dr. Tim Crummenerl will serve on the Federal Court of Justice starting next year.

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