Sunday, October 31, 2021

Creepy patent case involves two unethical businesses, dozens of jobs lost over an invalid patent, the worst decision of a judicial career, and Quinn Emanuel Germany's challenges

Happy Halloween!

There's no better day of the year for a story that's truly creepy--and, actually, abhorrent. There was a patent case in Germany that reached its final resolution a few weeks ago, but only after creating a crisis that cost 60 people their jobs and made dozens of families suffer. That case brought out the very worst in some people. It's impossible to find anything to do with the case that would make any reasonable person feel good.

After this unmitigated disaster, I believe the Federal Court of Justice of Germany needs to realize that it has a responsibility to be more receptive to those pesky emergency motions for enforcement stays, and the folks over at Quinn Emanuel Germany should ask themselves how they're going to succeed again with brilliant fair play (like a decade ago).

The one who would stand the most to learn from this, however, is Dusseldorf-based Judge Thomas Kuehnen ("Kühnen" in German), and my recommendation to him is to seek early retirement now that his astonishing misjudgment, which has had such catastrophic consequences, has been put into evidence. He should also turn over the editorship of his book on German patent litigation to some other judge or a professor. His reputation is never going to recover from this. He will always be remembered as a job-killer judge and a "do as I write, not as I do" type of guy. This inexcusable legal error marks the bitter and embarrassing end of an era.

I'm 100% against smoking, so the mere thought of cigarettes almost makes me want to puke, and if it were up to me, tobacco products should be prohibited, at least the traditional ones: there appear to be some issues with e-smoking, but there is hope that at least the impact on passers-by is nowhere near as bad (at least there's less of a smell). In my opinion, anybody who runs a tobacco company is inherently an immoral person, and this includes companies who sell essential supplies to that scum of an industry. Meet the two parties to the case in question: Schweitzer-Mauduit (SWM) from the U.S. and Julius Glatz from Germany. They make cigarette papers. Not only cigarette papers, but it's a substantial part of their business, so they are tobacco profiteers.

The key feature of cigarette paper is that it must glow slowly, but not go up in flames like if you had poured gasoline on a pile of wood. But what happens if someone throws away a cigarette butt that is still glowing, and a day later an entire forest is burning? Low ignition is also key when highly combustible material is hit.

SWM obtained that job-killer patent more than a decade ago from the EPO: EP1482815 on "smoking articles with reduced ignition proclivity characteristics."

Julius Glatz is a medium-sized, old, family-owned company in the middle of nowhere somewhere in Germany. Its current CEO, Nina Ritter-Reischl, is a lawyer by training and heiress to that company.

SWM wanted to enforce its patent in order to drive its smaller rival Julius Glatz out of the cigarette-paper business, which it actually succeeded in, but on a totally wrongful basis. SWM's lead counsel in these proceedings was the head of Quinn Emanuel Germany, Dr. Marcus Grosch.

SWM/Quinn won the first round (Presiding Judge Ulrike Voss, "Voß" in German), but enforcement only began and actual harm occurred after the appeals court--a panel of the Dusseldorf Higher Regional Court under Judge Kuehnen--handed down a decision (in German) that was outrageous beyond belief in December 2017. If a U.S. jury had had all these facts before it and rendered such a verdict, it would have been a perfect example of a case for a judgment as a matter of law (JMOL) because no reasonable jury could have reached that conclusion.

It was a typical squeeze case: one could only find an infringement by interpreting the patent so broadly as to be invalid. If one interpreted it narrowly enough to survive, it wasn't infringed by the defendant. It was about the range of manufacturing methods that would be considered infringing. Narrow range: no infringement. Broad range: patent invalid.

But Judge Kuehnen killed dozens of jobs regardless. Dogmatically, ruthlessly, mercilessly, and so full of himself he thought he was the god of patent law, at least in Germany if not in the world.

The appellate opinion is the epitome of judicial arbitrariness. At the time, the EPO's position was that the patent was valid, but based on a narrow claim construction. Judge Kuehnen's decision explains that he's not formally bound to claim construction decisions made in a parallel validity-related proceeding, not even if the Federal Court of Justice itself had already adjudicated the (German part of the) patent, and much less so if it's only the EPO. And it wouldn't necessarily have been a problem if he had just considered himself smarter than them: he's entitled to it, and may think highly of himself. The problem is that instead of identifying the squeeze, he decided to enjoin.

SWM enforced. Julius Glatz had to lay off dozens of people. Again, I don't care at all about the owners of that company: they just had to shut down an unethical business division. But SWM was going to get additional market share, and not one cigarette less was going to be made as a result of this. So between the two of them, SWM is worse because it wrongfully enforced an injunction.

Shame on the ones who were responsible for this tragedy. When you wrongfully force a company to lay off dozens of people in a rural (i.e., structurally weak) region, it means dozens of families--all in all, possibly hundreds of people--are suffering terribly, only for the ego of a judge in Dusseldorf and to line the pockets of a white-shoe law firm. And the problem is not even limited to those hundreds of people. It probably dealt a serious blow to the entire region, as those hundreds of people suddenly had a lot less purchasing power. Again, all of that for ego and greed. Like I said, it's creepy, abhorrent, it may even make some people want to puke, and it brought out the worst in some people.

Now, the story isn't over, and the really most unethical part came a little later. At some point, the parties opposing the patent in the EPO all realized they weren't going to defeat the patent there as the EPO construed it narrowly enough to uphold it. But that enabled Julius Glatz to challenge the patent in the Federal Patent Court of Germany (Bundespatentgericht). The Federal Patent Court invalidated it, but even then, SWM kept enforcing regardless, for a number of months (while the infringement case had already been appealed to the Federal Court of Justice).

Winning a first-instance ruling despite a squeeze was one thing. Enforcing it is already something that I believe Quinn Emanuel should have told SWM to find someone else to do for them. But continuing to enforce--even if it had been for only one more day--despite the patent having been declared null and void, and after the aforementioned tragedy had happened, is unbelievable and indefensible.

Now, why didn't the enforcement get stayed? That's because, as I mentioned, the case was already past Judge Kuehnen's regional appeals court. The defendant had brought the German equivalent of a cert petition (Nichtzulassungsbeschwerde). The Federal Court of Justice is just annoyed when anybody brings a motion to stay enforcement, which is why Julius Glatz might not even have tried. That is a structural issue. The Federal Court of Justice should learn from this case and encourage motions for emergency stays in such situations. It has a responsibility to put an end to wrongful enforcement.

As Juve Patent reported on October 6, the Federal Court of Justice, to which SWM appealed the Federal Patent Court's invalidity ruling, affirmed the invalidation of the patent. That decision is final: all appeals (just that one is available) exhausted. It means that the parties have to sort out wrongful-enforcement damages, and German courts are traditionally very unreceptive to that: parties, even after suffering such costly injustice, get next to nothing. That, too, is something that needs to be reconsidered in Germany, especially with respect to patent law but possibly also beyond.

Whether Julius Glatz will recapture its market share now is unclear. I don't even care because of the inherently immoral nature of that business, which also makes that company a bad poster child for the so-called "injunction gap."

Would that recent German patent "reform" have changed anything? No. First, for several years after grant, that patent was being challenged before the EPO, to which the six-month target doesn't apply. Second, while the economic harm to Julius Glatz and, by extension, third parties was clear, SWM's patent would have been at the heart of the accused products. And as Germany's chief patent judge Klaus Bacher recently said, that legislative measure is merely "a clarification and consolidation of the case law." One of his side judges told some people that some far more impactful lobbying would be needed to achieve a better result next time. It's been my opinion all along that those pushing for reform were misguided: a mix of mostly amateurs and partly saboteurs. So the next Julius Glatz is sure to suffer the same fate.

Initially, Julius Glatz was defended by Arnold Ruess, which has definitely been on by far the most impressive trajectory of all young German patent litigation firms. I'm sure they just couldn't do anything about Judge Kuehnen, who based on how that (mis)judgment reads was just hell-bent to enjoin and may have known SWM's lead counsel too well as a result of certain seminars they co-organized.

The Arnold Ruess firm triumphed over Quinn Emanuel when Arnold Ruess represented Nokia and Quinn was defending Daimler. Not only did Arnold Ruess win two injunctions, one of which they'd have been able to enforce without security a few months after the settlement, but by the time of the settlement they were actually on track to winning two or three more injunctions. If you hire the most expensive patent litigation firm in the country, but end up losing anyway, it's a waste of money.

SWM v. Julius Glatz is not the first case of questionable patent enforcement and litigation tactics by Quinn Emanuel Germany. In Qualcomm v. Apple, QE in the United States had actually agreed to certain terms of discovery for the use of material in the German proceedings. QE Germany then backtracked (what an about-face) and refused to sign a confidentiality commitment in Germany. Apple got enjoined over a patent that the EPO later invalidated--and the fact that Apple was enjoined without the slightest evidence of infringement resulted in a reversal on three independent grounds. In two different U.S. proceedings (federal court and ITC) Apple was cleared of infringement because the facts were on the table, which they should have been in Germany as well.

Despite Qualcomm having a formidable patent portfolio and--I really mean this--being an absolutely outstanding innovator with many of this industry's most brilliant engineers, that was the only case Quinn won against Apple during that German campaign. They even sought contempt-of-court sanctions against Apple, adding insult to injury.

I also find it surprising that OPPO apparently outperformed Daimler in a SEP dispute with Sharp.

I have some unsolicited advice for QE Germany, a firm whose rise to the top in Germany I watched and even cheered on during the first half of the last decade:

  1. Refrain from enforcement when the circumstances are problematic. You know it when you see it. You shouldn't stoop that low. It's not just about your billable hours. There's a world outside where people may be suffering when you make unethical decisions.

  2. Your performance on Daimler's behalf against Nokia--and arguably also on Qualcomm's behalf against Apple--was nowhere near as successful as the services you rendered to Motorola. Are you perhaps acting like a "ghost driver" who thinks that all the other drivers coming in the opposite direction are misguided? QE Germany is the only litigation firm not to work in interdisciplinary teams with patent attorneys, except when clients like Samsung and IPCom insisted on it. It worked out for them in the Motorola cases. It's not been working out all that well lately. Change course. Patent attorneys do add a lot of value in German patent litigation.

    In my view, QE Germany clients who accept that they do not team up with patent attorneys do so at their peril. The results just don't support that approach anymore.

I hope we're going to see the QE of the first half of the 2010s again in the first half of the 2020s. And no more ethically questionable and wrongful enforcement.

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Tuesday, October 26, 2021

Dutch court rejects Ericsson motion for anti-antisuit injunction, but Apple may still be enjoined if need be: another jurisdiction adopts Munich approach

Ericsson means business, and it's not going to undervalue its patents in the renewal of its license agreement with Apple. Earlier this month, Ericsson filed a declaratory judgment action--on its own FRAND compliance--in the Eastern District of Texas. I've now become aware of a decision the Rechtbank Den Haag (Court of The Hague) published (in Dutch) last week. Judge D. Nobel denied an Ericsson petition for an anti-antisuit injunction against Apple. It may be counterintuitive, but all things considered the decision is clearly better for Ericsson--though it's "the loser" at first sight--than for Apple. As matter of fact, Apple itself has a history of bringing cases that serve a strategic purpose even if a court rejects a motion or complaint (such as when it demonstrated to the rest of the industry that it would enforce its design rights around the globe, even though it ultimately failed everywhere but in its home court).

There are three ways in which the decision from the Netherlands--even though technically negative--helps Ericsson:

  • Judge Nobel did not rule out in the slightest that an anti-antisuit injunction could be granted in order to pre-empt a foreign antisuit injunction that would prevent a party like Ericsson from enforcing its Dutch patents.

    The Munich I Regional Court's pre-emptive strike doctrine, which the 7th Civil Chamber under Presiding Judge Dr. Matthias Zigann laid out earlier this year in InterDigital v. Xiaomi, is clearly spreading to more and more jurisdictions. In the summer, the Dusseldorf Regional Court, whose FRAND case law used to be at the other end of the German spectrum, granted General Electric and Mitsubishi a pre-emptive anti-antisuit injunction against Xiaomi.

    The Dutch Ericsson v. Apple decision shows that other courts are also prepared to prophylactically shield patentees like Ericsson from foreign antisuit injunctions.

  • Ericsson didn't prevail this time (I'll talk about the missing link further below), but it might succeed next time: Apple now knows that the moment it seeks an antisuit injunction anywhere in the world, be it against Ericsson or anybody else, not only the Munich and Dusseldorf courts but also the Court of The Hague may strike down and protect their jurisdiction against foreign interference.

    While the Dutch decision is narrowly focused and doesn't address whether the pursuit of an antisuit injunction would weigh against an implementer's willingness to take a FRAND license (as the Munich court explained), there is--at a minimum--considerable risk for Apple that such an inference would be drawn.

  • Ericsson demanded from Apple a written declaration that it would not seek an antisuit injunction against Ericsson. Apple declined to do so, but as a result of Ericsson going to court, Apple then told the court that it had no intention of doing so. That is different from a firm written commitment because Apple could theoretically say at a later point that its representations to the Dutch court were truthful at the time, but something warranted a change of mind later on. While legally possible, such an about-face would have serious implications.

    Sometimes chess analogies can be used to explain litigation strategies. Here, Ericsson's motion--while technically unsuccessful for the time being--forced Apple to make a move (telling the court that it had no intention of seeking an antisuit injunction) that doesn't "cost" Apply anything in the short term, but just like a pawn can never go back to a previous position, this is also a one-way street for Apple: it can't seek an antisuit injunction anymore without potentially bringing up the Dutch court against it.

In a complex multifactorial type of decision, no two courts will ever apply identical standards. But in principle, the Dutch court took a similar approach as the Munich and Dusseldorf courts by looking at Apple's conduct vis-à-vis Ericsson as well as what Apple may have done in comparable situations involving other defendants. Not even in Munich would the refusal to promise in writing not to seek an antisuit injunction be dispositive all by itself: it's just a factor, and it appears to me (at least so far) that a patentee is deemed entitled to such a written declaration only if there are one or more other circumstances that give rise to a reasonable apprehension of an antisuit injunction being imminent.

In the Dutch case, Ericsson apparently made a representation that its own lawyers later conceded was erroneous: Ericsson said Apple previously sought an antisuit injunction in the Southern District of California against Qualcomm, but in reality, Qualcomm (unsuccessfully) moved for an antisuit injunction against Apple. And it wasn't even an antisuit injunction against patent enforcement, by the way...

However, there still is a possibility that Apple was somewhat involved with the pursuit of an antisuit injunction. In 2018, a consumer class action that attached itself to the FTC v. Qualcomm case in the Northern District of California (where Apple officially had a common interest agreement in place with the FTC) tried to prevent Qualcomm from the enforcement of a hypothetical U.S. import ban. The court denied the motion as premature. Class actions are normally all about money, and even if Qualcomm had gotten leverage over Apple by means of an ITC exclusion order, the FTC could still have carried on with its case. Therefore, the "cui bono?" analysis makes it at least plausible--and, to be honest, in my opinion even very likely--that the consumer class action was a proxy for Apple, and that Apple paid the class action lawyers. Maybe there is a way that Ericsson could find out about that by means of U.S. discovery for use in foreign proceedings.

The Dutch anti-antisuit case isn't even over. The decision indicates that some interim measures were ordered earlier in the month. I guess this was like a temporary restraining order in order to prevent Apple from seeking an antisuit injunction before the Dutch court would have made a decision on Ericsson's motion for a preliminary injunction). If so, they are not in force, but the main proceeding, which will culminate in a full trial, will continue on November 18. Apple already announced that it would then challenge the court's jurisdiction.

I'm pretty sure that Ericsson sought such an anti-antisuit injunction not only in The Hague but at least in Germany, and possibly in other countries as well. I will try to find out more, though ex parte motions are usually not discoverable until a decision comes down.

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Saturday, October 23, 2021

Intellectual Ventures predicted 'IP reckoning' for auto sector, then filed patent suits against General Motors, Toyota, Honda in Texas--even involving a former Daimler patent

This is the third post with an automotive industry topic in a row. On this occasion, I'd like to mention that I plan to attend the afternoon panels of the Auto IP Europe conference hosted by IAM in Munich on November 2, and point you to my two previous automotive posts:

The automotive industry must license more patents. Some patent holders are patient because they recognize that car makers are relatively new to the wireless patent licensing business--but that doesn't mean everyone will wait forever. On October 13, IAM published an opinion piece by Arvin Patel, the COO of non-practicing entity Intellectual Ventures ("IV"): "Why the auto sector is heading for an IP reckoning" (paywalled)

IV is not going to take the alleged wholesale borrowing of technology in the connected-car era anymore. On October 19, less than a week after that op-ed, IV filed patent infringement complaints against General Motor in the Western District of Texas (over 12 patents), and against Toyota and Honda in the Eastern District of Texas (over 11 patents each).

Let me show you the GM complaint as am embedded document (ths post continues below the document):

21-10-19 Intellectual Ventu... by Florian Mueller

I've also uploaded the Toyota complaint and the Honda complaint to Scribd.

These are the patents-in-suit:

  1. U.S. Patent No. 6,832,283 on a "method for addressing network components"; originally filed by Daimler; asserted against all three defendants

  2. U.S. Patent No. 7,382,771 on a "mobile wireless hotspot system"; originally filed by In Motion Technology, a company that Sierra Wireless acquired in 2014; asserted against all three defendants

  3. U.S. Patent No. 7,484,008 on a "apparatus for vehicle internetworks"; same family as '004 patent; asserted against Toyota

  4. U.S. Patent No. 7,684,318 on "shared-communications channel utilization for applications having different class of service requirements"; asserted against all three defendants

  5. U.S. Patent No. 7,891,004 on a "method for vehicle internetworks"; same family as '008 patent; asserted against GM and Honda

  6. U.S. Patent No. 8,811,356 on "communications in a wireless network"; asserted against all three defendants

  7. U.S. Patent No. 8,953,641 on "methods and apparatus for multi-carrier communications with variable channel bandwidth"; asserted against all three defendants

  8. U.S. Patent No. 9,232,158 on "large dynamic range cameras"; asserted against all three defendants

  9. U.S. Patent No. 9,292,475 on a "device, system and method for controlling speed of a vehicle using a positional information device"; asserted against all three defendants

  10. U.S. Patent No. 9,602,608 on a "system and method for notifying a user of people, places or things having attributes matching a user's stated preference"; asserted against all three defendants

  11. U.S. Patent No. 9,681,466 on "scheduling transmissions on channels in a wireless network"; from a patent family originally obtained by IPWireless, a company that General Dynamics acquired in 2012; asserted against all three defendants

  12. U.S. Patent No. 9,934,628 on a "video recorder"; asserted only against GM

  13. U.S. Patent No. 10,292,138 on "determining buffer occupancy and selecting data for transmission on a radio bearer"; from a patent family originally obtained by IPWireless, a company that General Dynamics acquired in 2012; asserted against all three defendants

I find it very interesting that even Daimler apparently divested IP assets to non-practicing entities. Daimler itself gets sued by NPEs all the time now, and can't credibly complain about any NPE's business model...

The complaints do not describe any patent as standard-essential. Reference to WiFI and 3GPP standards like LTE is made, and three of them have been declared essential to LTE according to IPlytics. For the vast majority of the patents-in-suit, standard essentiality can be ruled out just based on what techniques those patents cover.

Even though the profile of IV's patents-in-suit is, therefore, rather distinct from the types of patents in the Avanci pool, it is interesting that patent holders (SEP and non-SEP holders alike) appear less likely to sue Avanci licensees. IV is not an Avanci licensor, so it could even assert SEPs against Avanci licensees.

For SEP holders that are not Avanci licensors there is a serious issue if they sue Avanci licensees: those patent holders tend to seek far higher royalties relative to the value and size of their portfolios, and defendants would then point to the Avanci rate on a per-patent basis as a comparable license (the "ND" ("non-discriminatory") in "FRAND"). Anyone can point to Avanci's published royalty rates--but someone who doesn't even want to license patents at that rate just comes across as an unwilling licensee or even as an unrepentant infringer.

If a non-SEP case is put before a jury, U.S. judges might not accept a SEP pool rate as a relevant point of reference on patent valuation--but at a minimum the judges can see that the defendant is, in principle, a willing licensee. That, in and of itself, has value.

Another possibility is that companies with an Avanci license are also more likely to reach a negotiated agreement with other licensors.

I'll keep an eye on automotive patent infringement cases, and will pay attention to whether there is a pattern of Avanci licensees being sued less than non-licensees.

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EU competition chief's tough talk on cartels doesn't bode well for automotive SEP licensing negotiation groups

This is my second of at least three consecutive posts on automotive patent licensing issues. The previous one discussed the L2 Mobile Technologies v. Ford Motor Company case that is pending in the District of Delaware.

At the annual conference of the Italian Antitrust Association, the European Commission's Executive Vice President and competition commissioner Margrethe Vestager gave a speech yesterday that ushered in--as its title promised--"a new era of cartel enforcement." The manuscript was published on the Commission's website.

1+1+1=3. Mrs. Vestager vowed to crack down, inter alia, on (i) novel types of cartels and (ii) buyer cartels, and (iii) recalled recent enforcement action against (German) car makers. Automotive standard-essential patent (SEP) licensing negotiation groups (LNGs) are the combination of all of that. Further below I'll quote the relevant passages, which speak for themselves. If this doesn't serve to discourage car makers from advocating a solution that is inherently worse than the alleged problem it purports to solve, what else will?

If you haven't previously read my thoughts on collective licensing negotiation groups, here are the links to all parts of my late-July trilogy:

  1. SEP Licensing Negotiation Groups -- Part I: analogy to patent pools entails false symmetry between facilitating and complicating automotive patent licenses

  2. SEP Licensing Negotiation Groups -- Part II: justice delayed is justice denied when unwilling licensees can hide behind a consensus-building effort

  3. SEP Licensing Negotiation Groups -- Part III: legalization of buyers' cartels would invite group boycott and collective hold-out

In the passages from the speech that you find below, any emphases were added by me to highlight certain keywords.

Novel types of cartels (i); automotive cartels (iii)

In one way or another, most of the cartels we deal with are still fundamentally about fixing prices. But sometimes, what we want as consumers is not so much a cheaper product as a better one. More and more, for example, we want to be sure that the products we’re buying won’t harm the environment. So a cartel that holds back improvements in the quality or the sustainability of the products we buy can be just as harmful as one that fixes prices.

This is why we took our decision in July against the five German carmakers who limited competition between them on how effectively they would clean the exhaust of their diesel cars. The cartel took place within what was otherwise perfectly legal, even beneficial, technical cooperation. The companies were developing a new cleaning technology that used an additive, which they called AdBlue, to remove harmful nitrogen oxides from car exhausts. And they needed to cooperate to tackle the practical challenges – to set up a network of AdBlue filling stations, for example, or to design a standard pump nozzle that would fit any car.

But they crossed the line into illegal collusion when they indicated to each other that they wouldn’t aim at cleaning beyond the level required by the legal standard. They knew they could remove even more pollution than the law required, by injecting more AdBlue into the exhaust. So they could have competed to attract environmentally-conscious consumers, by making even cleaner cars. But instead, they chose not to compete for the best possible cleaning performance.

A case like this can be a powerful deterrent, showing companies that they can’t escape the rules, by colluding in novel ways.


[...] And at a time like this, it’s more important than ever that we keep our markets working fairly and well – not least, by taking firm action to tackle cartels.

That’s why we’re investing so much at the moment, to make sure our work stays relevant. It’s why we’re developing new ways to spot cartels, and why we take an interest in new types of cartel, as well as more familiar ones.

Buyer cartels (ii)

In the last few years, for instance, we’ve dealt with several cartels that manipulated industry reference prices, rather than fixing final prices. Last year, we fined four ethylene buyers more than 260 million euros, for conspiring to reduce the reference price that was applied in long-term contracts.

Buyer cartels like this one may not raise prices for consumers. But that doesn’t make them some sort of victimless crime. They still make our economy work less efficiently. And they still have direct victims – even if it’s suppliers, not consumers, who suffer.

And some buyer cartels do have a very direct effect on individuals, as well as on competition, when companies collude to fix the wages they pay; or when they use so-called “no-poach” agreements as an indirect way to keep wages down, restricting talent from moving where it serves the economy best.

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Friday, October 22, 2021

L2 Mobile Technologies claims Qualcomm chips in Ford, Lincoln cars infringe 3G standard-essential patents originally obtained by ASUSTeK

Ford Motor Company appears to have a history of standard-essential patent (SEP) hold-out. It was unwilling to take an actual long-term license from Nokia a few years ago, so the parties entered into what was more of a standstill than license agreement. Last week I found out about an IP Bridge v. Ford infringement action in Munich. An injunction looms large, and just today Germany's chief patent judge said that a recent amendment to the patent injunction statute was merely "a clarification and consolidation of the case law". One of his side judges told another audience that any proposals to soften patent enforcement should be directed to the legislature. Therefore, Ford can expect to be enjoined in Germany unless it agrees to take a FRAND license or is cleared of infringement of any valid SEP.

Three weeks ago, L2 Mobile Technologies, a subsidiary of a Texas-based non-practicing entity named Longhorn IP, sued Ford in the District of Delaware over a handful of 3G SEPs (this post continues below the document):

21-10-01 L2 Mobile Technolo... by Florian Mueller

L2 announced the complaint on its website, on which it also recently reported a favorable validity determination on one of its Chinese patents and, about six months earlier, an infringement lawsuit against Google. Against Ford, L2 is not seeking an injunction, at least not at this stage, but treble damages. In order for such willfulness enhancement to be awarded, L2 must prove an objective and a subjective prong. The latter is about whether Ford actually had knowledge of its infringements of these patents. It appears that the underlying theory is based on Ford's decision not to take an Avanci pool license:


17. L2MT is a member of the Avanci LLC patent pool. On information and belief, Avanci LLC made Ford a FRAND offer to patents that are essential to the 3G wireless communications standard. On information and belief, Ford declined to take a license to the Avanci LLC patent pool.

The Avanci pool contains the cellular SEP portfolios of dozens of companies, a number of which are way bigger than L2. If L2 prevailed on this objective-willfulness theory, all car makers with significant U.S. sales would have to be extra cautious when rejecting an Avanci licensing offer as they might be liable for treble damages when any Avanci licensors sue them in the United States.

A willful infringer and an unwilling licensee are the same type of market actor, just from different angles. In Germany, courts increasingly deem implementers unwilling licensees if they decline to take a pool license. Therefore, I wouldn't be surprised if a U.S. court considered Ford a willful infringer of any patents in the Avanci pool that the iconic car maker hasn't licensed bilaterally either.

L2's infringement allegations involve Qualcomm chips. Qualcomm is an Avanci contributor as well, but apparently does not have a license from L2. The patents-in-suit were originally obtained by ASUSTeK, a subsidiary of Taiwanese device maker ASUS, and later assigned to a non-practicing entity named Innovative Sonic (also based in Taiwan). That one brought some infringement litigation many years ago, such as against BlackBerry, and in 2018 joined Via Licensing's LTE pool. Via welcomed Innovative Sonic as an innovative leader. Somewhere along the way, Innovative Sonic assigned a bunch of former ASUSTeK SEPs to L2. Maybe Qualcomm had a cross-license in place with ASUSTeK, but Innovative Sonic and L2 obviously never needed a license or chipsets (which wouldn't be available without taking a license first) from Qualcomm.

These are the patents-in-suit:

  1. U.S. Patent No. 7,266,105 on a "method for determining triggering of a PDCP sequence number synchronization procedure" (PDCP means Packet Data Convergence Protocol)

  2. U.S. Patent No. 8,179,913 on a "method and apparatus of handling variable of RLC reset procedure during receiver-side-only re-establishment in wireless communications system" (RLC means Radio Link Control)

  3. U.S. Patent No. RE47,200 on "preventing shortened lifetimes of security keys in a wireless communications security system"

  4. U.S. Patent No. 8,054,777 on a "method and apparatus for handling control PDUs during re-establishing receiving sides in a wireless communications system" (PDU means Protocol Data Unit)

  5. U.S. Patent No. 8,064,460 on a "method and apparatus of delivering protocol data units for a user equipment in a wireless communications system"

The complaint correctly describes these patents as 3G-related. However, its third paragraph confuses 2G (GSM) and 3G--an unusual (but merely clerical) error in a wireless SEP complaint:

"The wireless communications devices in Ford's connected vehicles comply with the GSM wireless communications standard. This standard is also referred to as the '3G' wireless communications standard."

The costs of patent infringement litigation in the U.S. add up, and in the German IP Bridge case, Ford faces the threat of an injunction. It could take an Avanci pool license, but so far appears to have been opposed. It can also enter into bilateral license agreements.

Avanci itself doesn't hold patents and can't assert them, nor does it have the power to direct its licensors to enforce. Patent pools always have an obligation to inform their contributors (licensors) of any license agreements they conclude, and normally also keep them updated as to ongoing negotiations. For example, if Ford had been close to signing a deal with Avanci, L2 and IP Bridge would presumably have known and might then have waited instead of suing. But ultimately those companies are in the licensing business, and they can't let all car makers get away with unlicensed use forever. By suing Ford, they send out a clear message to others.

No coordination is needed for an independent patent holder to decide to sue the same entity after someone else decided to do so. Those companies do not mean to drive Ford out of business; they merely want to get paid. The more patent cases a given company has to defend against, the greater the incentive to settle at least some of them. A company like Apple or Samsung has to deal with numerous NPE cases in parallel, so one more wouldn't make a difference--but Ford is much smaller, and has much less expertise in the field of cellular SEP litigation. To me it just seems a logical choice that companies holding patents in the same field (regardless of whether they're even contributors to the same pool) would be more inclined to sue someone who is already embattled than pick another target.

For that reason alone, I would not attribute to malice (such as conspiracy) what can be adequately explained with natural litigation choices--and which Ford may have had coming because it apparently passed on licensing options of any kind, be it the Avanci pool or bilateral licenses such as with Nokia. Also, Qualcomm is a far bigger contributor to the Avanci pool than L2 (in fact, Qualcomm's portfolio dwarfs L2's), so the mere fact that L2's case against Ford accuses Qualcomm chips of infringement makes it impossible to imagine that Avanci would have orchestrated anything here.

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Germany's chief patent judge: amended injunction statute is merely a 'clarification and consolidation of the case law'

This is a quick but important follow up to my two previous posts on the CIPLITEC conference on Germany's recently-enacted patent "reform" bill:

The final part of the conference provided definitive clarity. First, Presiding Judge Dr. Matthias Zigann of the 7th Civil Chamber of the Munich I Regional Court said that it's his task to apply the law as it is, and it's clear that this year's amendment to the German Patent Act is designed to ensure continuity. In other words (my words), there's nothing disruptive or revolutionary there.

During his closing remark, Munich-based law professor Ansgar Ohly shared the latest information he had just received from a co-worker. At a Shanghai conference, Presiding Judge Klaus Bacher of the 10th Civil Senate of the Federal Court of Justice--the highest-ranking German patent judge--reported said that the 2021 patent bill is merely "a clarification and consolidation of the case law" (i.e., Heat Exchanger).

Let that sink in. It's game over for all those who thought infringers could avoid patent injunctions in Germany. There's not going to be any change on the bottom line. What the judiciary is concerned about is the potential for delay of some proceedings, and I'm not even worried about that: the courts will figure out shortcuts.

Germany's chief patent judge has spoken, as have several other important judges these days (Judge Fabian Hoffmann of the 10th Civil Senate of the Federal Court of Justice, Presiding Judge Andreas Voss ("Voß" in German) of the 6th Civil Senate of the Karlsruhe Higher Regional Court, and Presiding Judge Dr. Matthias Zigann of the 7th Civil Chamber of the Munich I Regional Court and soon--most likely--of the 6th Civil Senate of the Munich Higher Regional Court).

This is a hard reality check for the patent "reform" movement. On June 11, lobby group ip2innovate celebrated the German Federal Parliament's adoption of the "reform" bill with a press release that was as triumphant as it was detached from reality (or maybe we should just call it "spin"). Nvidia's Ludwig von Reiche said that "German patent law has finally arrived in the 21st century" and that "a change in the law is now being implemented that for the first time takes into account the complexity of modern products in the digital age." I'm not at all blaming Mr. von Reiche for trying to give the new statute a certain interpretation. But his interpretation doesn't matter. Nor does mine. What matters is what the judges say. And that just happens to be consistent with what I've been saying for a long time.

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STUNNING: High-ranking German judge publicly states that patent law may do more harm than good, but critics would have to lobby for fundamental reform

Yesterday I reported on the first panel of the CIPLITEC online conference on German patent reform, where it became very clear once again that injunctions will remain the customary patent remedy as I had been predicting all along. The conference is continuing today, and what just happened this morning was nothing short of astounding.

In a virtual panel discussion, Judge Fabian Hoffmann of the patent-specialized 10th Civil Senate of the Bundesgerichtshof (Federal Court of Justice) replied to certain infringer-friendly positions taken by others on the question of how punitive the compensation owed by an infringer to a patentee should be in cases in which an injunction is denied or, far more likely, tailored by means of a use-up or workaround period. Here are the most amazing parts of what he said:

  • Judge Hoffmann acknowledged that "patent law may indeed do more harm than good."

  • He said he could see why some would like to see "more competition."

  • He even went as far as to say thathe was "politically with [those who voice such demands]."

  • Having said that, he explained--and I concur with him--that this year's German patent reform bill is not designed to bring about fundamental change.

  • Judge Hoffmann not only followed but even contributed to the legislative process, such as by participating in a parliamentary hearing (my report on that one did not mention him as I focused on other aspects than the ones he addressed). He recalled today that on the one hand there are academics and lawyers who claim that most companies would rather see a "more balanced" and "more moderate" patent enforcement regime, but at the said hearing--which I had accurately described as a total victory for reform opponents due to a miserable failure by pro.reform forces--there was a widespread consensus in favor of strong patent enforcement.

  • The result is that the legislative intent is clear: there was no political will to depart from German patent enforcement tradition. And that's the law that he as a judge has to apply faithfully (I'm paraphrasing him here, but not straying far from what he actually conveyed).

  • I've previously criticized the absolutely pathetic lobbying and campaigning effort on the part of pro-reform forces like German automotive industry association VDA, the misguided ip2innovate lobbying group, and Apple. It was a mix of amateurs, (in a very few cases) saboteurs, and people who meant well but could not get their companies or their (idiotic) industry associations to make the right decisions. They also had a budget that was not even 5% of what would have been needed to bring about serious change. You won't be surprised that Judge Hoffmann obviously wouldn't make statements like that. But what he said nevertheless validates my scathing remarks on that pro-reform lobbying effort. Judge Hoffmann told the audience that if they wanted to fundamentally rethink patent law, which may indeed be warranted even in his opinion, they need "a second reform" and will have to do what it takes to get a different outcome.

This is a lot of food for thought for some people, and I'd like to leave it at that for the time being. I'm going to continue to make the very same distinction as Judge Hoffmann made today: there's the question of what innovation policy is desirable, and there's the question of what the law--in its current form--says. There's the world in which some would like to live, and the world in which we actually live. The German patent enforcement system is going to be the same except that time and money will be wasted on proportionality arguments (mostly by defendants). There's room for lots of academic discussion, and parts of the CIPLITEC conference--with the greatest respect--were more about the trees than the forest. But patentees will still get the same leverage from bringing infringement cases in Germany as before. In fact, compared to where statutory and case law stood when the reform process began, patentees even have a lot more leverage now.

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Thursday, October 21, 2021

Patent injunctions remain the norm in Germany, judges from Federal Court of Justice and Karlsruhe Higher Regional Court clarify

Today and tomorrow, the Munich-based Center for Intellectual Property Law, Information and Technology (CIPLITEC) is holding an online conference on the impact of this year's German patent "reform" bill.

The short version is that what's been said so far is pretty consistent with the rather skeptical views I have expressed on the botched injunction statute. I'll keep it very brief because the rest is just detail:

  • Professor Axel Metzger from Berlin's Humboldt University diplomatically voiced criticism of the status quo and especially the practical reality of "forum selling." Without a doubt, German courts are so popular with plaintiffs because they give patentees great leverage. Just this week I showed that Germany is the center of gravity of what is presently the biggest 5G patent dispute: Nokia v. OPPO (and vice versa, as OPPO is countersuing--mostly in Germany as well, plus in China, as I reported earlier today).

    However, his opinion on how to strike the right balance in patent enforcement Professor Metzger did not prevent him from a brutally realistic portrayal of the post-reform situation:

    • "no paradigm shift"

    • "injunction remains the norm"

    • "no constraint on effective enforcement: while lawyers will plead [on proportionality] and costs will increase, courts will develop boilerplate (copy-and-paste) passages"

  • Judge Andreas Voss ("Voß" in German), the Presiding Judge of the Patent (and Antitrust) Senate of the Karlsruhe Higher Regional Court (which hears all patent infringement appeals from Mannheim), gave a presentation that I already interpreted as dashing hopes for major change. Shortly thereafter, University of Luxembourg law professor Martin Stierle asked him the key question of whether he believed that much was going to change. For example, to him the most logical interpretation of the term "under the special circumstances of a singular case" is that an injunction can be denied only under the most egregious of circumstances (which has been my perspective all along). Judge Voss really does not expect a departure from Germany's near-automatic injunction regime. He is, however, concerned that defendants may seek to delay the resolution of infringement cases by attempting to "force" courts to take proportionality-related evidence.

    Just like I said on other occasions, Judge Voss noted that the statutory language does not suggest a wholesale denial of injunctions but normally the discussion is going to center on use-up/workaround periods. Judge Voss rightly noted that even though the statute says the claim for injunctive relief is "excluded," the very next word ("soweit") means "to the extent that...".

  • Judge Fabian Hoffmann is widely regarded as the relatively defendant-friendliest judge of the patent-specialized 10th Civil Senate of the Federal Court of Justice (where the patent litigation buck effectively stops in Germany). But even Judge Hoffmann had no good news for the injunction reform movement. First he explained that the hurdle for third-party interests to counsel against the grant of an injunction is not going to be lower than the one that is applicable to a petition for a compulsory license. Judge Hoffmann argues that a compulsory license results in legal use of a patent, but if someone has been convicted of infringement and seeks to be permitted to continue an illegal use, there is no reason why the standard should be easier to meet.

    Then he pointed out that this year's amendment to the German Patent Act was explicitly meant to just codify the case law, and if the legislature says that it wants to preserve the status quo, no one should expect the courts to decide to any different effect. He went on to say that the law would have had to be phrased differently, and certainly wouldn't have been enacted during the last legislative term--if lawmakers had wanted to establish an eBay v. MercExchange type of injunction standard in Germany. That is 100% spot-on whether one likes to hear that simple truth or not. I absolutely concur with Judge Hoffmann that those who wanted to move the patent injunction needle would have had to convince the legislature of the need for a paradigm shift. They failed to do so; they didn't even seriously try. They thought a narrow, limited exception was going to be sufficient. What they got is only a perpetuation of the status quo ante, enshrining the Wärmetauscher (Heat Exchanger) case law by the Federal Court of Justice. Now they'll have to live with the result, which is going to be, plain and simple, more of the same. Plus ça change...

Those judges only spoke for themselves, not for their courts. But what they said spoke for itself.

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Nokia's patent assertions against OPPO in India, Russia, and Indonesia -- and OPPO countersuing in China (in addition to Germany)

5G standard-essential patent (SEP) litigation has already arrived in emerging markets, on top of the traditional venues for wireless SEP disputes. In fact, Nokia and OPPO are now embroiled in 5G patent litigation in three of the four BRIC countries (all but Brazil, and who knows when that might happen as well).

I've discovered four OPPO v. Nokia counteractions in three German courts, and I've now learned from a major Chinese website that OPPO is also countersuing Nokia in China. That article notes that Nokia generates about 8% of its worldwide revenues in China, and attributes the outbreak of litigation to a disagreement on reasonable royalties, especially since OPPO executives have publicly stated their willingness to take license on FRAND terms. It also points out that most of the companies targeted by Nokia with patent assertions don't countersue, but OPPO does have a very significant 5G patent portfolio of its own.

As a follow-up to my list of Western European Nokia v. OPPO cases, here are the lawsuits in India, Russia, and Indonesia that I've been able to find out about:

  • India: Delhi High Court

    • Case no. CS(Comm) 3042021 oover Indian non-SEPs no. 264783 (method for controlling the graphical display of a portable electronic device), 266531 (reduce interference in a terminal device based on information type), and 259932 (arranging handover; same patent family as EP1702486, which Nokia is asserting in Paris)

    • Case no. CS(Comm) 3032021 over Indian SEPs no. 286352 (system and method for providing AMR-WB DTX synchronization), 269929 (method providing multiplexing for data non-associated control channel), and 300066 (additional modulation information signaling for high speed downlink packet access; same patent family as EP2087626, which Nokia is asserting in Mannheim)

  • Indonesia: Commercial Court of Central Jakarta (Pengadilan Negeri Jakarta Pusat)

    • Case nos. 40/Pdt.Sus-HKI/2021/PN.Niaga.Jkt.Pst. and 41/Pdt.Sus-HKI/2021/PN.Niaga.Jkt.Pst over Indonesian Patent No. 000031184 (same patent family as EP2087626, which Nokia is asserting in Mannheim, and Indian Patent No. 300066, which Nokia is asserting in Delhi)

    • Case nos. 46/Pdt.Sus-HKI/2021/PN.Niaga.Jkt.Pst. and 47/Pdt.Sus-HKI/2021/PN.Niaga.Jkt.Pst. over Indonesian Patent No. 000030632 ( media report; apparently from the same patent family as EP3396868, which Nokia is asserting in Munich)

  • Russia: Moscow City Court (Московский городской суд)

    • Case nos. А40-139518/2021 and А40-139528/2021 targeting different defendants (with OPPO and Realme having intervened) over a pair of Russian patents: RU2377742 (arranging handover, from the same patent family as the aforementioned EP'486) and RU2582854 (method and device for providing quick access to device functions; it appears that the European equivalent has not been granted by the EPO so far)

Nokia v. OPPO is already a huge dispute. By comparison, Nokia v. Daimler was just a warm-up exercise. But more escalation unfortunately appears likely and may already have occurred. Nokia's enforcement campaigns against HTC (until 2014) and Apple (until 2017) were even bigger by the time those settlements fell into place--and I don't even want to speculate on what might happen should Apple engage in hold-out against Ericsson...

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Tuesday, October 19, 2021

Nokia tries to drown OPPO in patent infringement lawsuits, makes Germany (15 patents-in-suit and anti-antisuit injunction) center of gravity of multijurisdictional enforcement campaign

Nokia v. OPPO is presently the most massive 5G-centric patent dispute out there. In July, Nokia sued the Chinese smartphone maker--one of the largest in the world--in a multiplicity of European and Asian jurisdictions, and has made additional filings since. OPPO, which holds many 5G patents itself, has started to bring counteractions against Nokia, four of which I have found out about in Germany. The stakes are even higher in Ericsson v. Apple, but those two parties still have a license agreement in place (while the one between Nokia and OPPO expired at the end of June), which is why there aren't any Ericsson v. Apple infringement cases yet.

There is consensus in the wireless industry that Apple underpays. In a UK litigation it turned out that Apple's cumulative patent royalty costs are--and this is just an order of magnitude--at a level of about 1% of its sales. If major standard-essential patent (SEP) holders like Nokia and Ericsson can't seize the 5G opportunity to get Apple to pay a lot more this time around, it won't ever happen--or at least not for approximately another decade.

Compared to major smartphone patent disputes, Nokia v. Daimler (10 patents-in-suit) was just a B movie, though it had an effect of transcendental importance as it proved that the automotive industry can and will take car-level patent licenses in the end. OPPO is no Daimler, though. First, while car makers generally exhibit behavior that exposes them to ever more credible accusations of being unwilling licensees, OPPO does not have any history of infringement: it merely appears to disagree with some patent holders on royalty rates, but there are no signs of hold-out. Second, OPPO alone is a more sophisticated and effective litigant than the totality of Daimler and its tier 1 (i.e., direct) suppliers.

For both Nokia and OPPO, their dispute is about much more than the substantial volume the deal will ultimately represent. Nokia is known to have major renewals coming up with Samsung (where only some sideshows have been resolved) and, especially, Apple. It would benefit from a quick settlement with OPPO--on Nokia's preferred terms--with a view to those other negotiations and potential litigations. OPPO, however, will face royalty demands all the time, from a diversity of patent holders large and small, given its market position. There is no question that both Nokia and OPPO would benefit from a quick settlement, but they wouldn't be fighting each other in courts around the globe if they had already identified a royalty rate that works for either party's purposes.

In late July I found out about the first three Nokia v. OPPO trial dates (all of them in Mannheim and over a total of four patents-in-suit). I'm now in a position to provide further information on the dispute, though I fear that this is already outdated--in the sense of "non-exhaustive"--at the time of publication as Nokia may have made additional filings that haven't become discoverable.

In some cases, Nokia accuses OPPO and OnePlus devices of infringement at the same time, but there are also patents that Nokia asserts against the two affiliate entities in different venues. Presumably, OnePlus devices have higher margins on average than OPPO devices, so Nokia expects to get leverage even from an enforcement against just one of the two product brands (if the courts reach divergent conclusions or if one ruling comes down far ahead of the other). In terms of venue choices, Nokia doesn't have faith in Dusseldorf anymore with respect to SEP cases, though this may change as the Dusseldorf judges are apparently trying to make their forum more attractive for SEP litigation.

  • Anti-antisuit injunction (Germany)

    In case no. 21 O 8690/21, the Munich I Regional Court's 21st Civil Chamber (Presiding Judge Tobias Pichlmaier) granted Nokia an anti-antisuit injunction ("A2SI")--along with the usual A4SI--against OPPO. The Munich court (and more recently even the Dusseldorf court) grants A2SIs/A4SIs to prevent any interference with German patent infringement actions in the form of antisuit injunctions issued by foreign courts, and the factors that go into the analysis include a defendant's conduct in other disputes. OPPO once sought a global royalty determination by a Chinese court in its (meanwhile settled) dispute with Sharp. The Munich anti-antisuit injunction also shields Nokia's actions in other German venues (Mannheim, Dusseldorf).

  • Mannheim enforcement actions

    Mannheim SEP cases:

    • against OPPO and its affiliate OnePlus, a pair of cellular standard-essential patents from the same family: EP2981103 (which won Nokia an injunction against Daimler) and EP3220562 on an "allocation of preamble sequences"

    • against OPPO and OnePlus, EP2145404 on a "method and apparatus for providing control channels for broadcast and paging services" (last year Nokia felt forced to stipulate to a stay of a case against Daimler over this patent, but fared better in the parallel nullity proceeding than the Mannheim court had expected)

    • EP3557917 on a "method and apparatus for providing efficient discontinuous communication", targeting OnePlus devices here while OPPO devices are being accused in a Munich action

    • against OPPO and OnePlus, EP2087626 on "additional modulation information signaling for high speed downlink packet access" (Nokia originally asserted this patent against Daimler in Dusseldorf, but withdrew it on the eve of the trial--as the Dusseldorf court had made a preliminary reference to the ECJ, which potentially would have resulted in further stays--and refiled in Munich, where the case never went to trial due to the settlement)

    Mannheim non-SEP cases:

    • EP1700183 on a "method for secure operation of a computing device", targeting OPPO devices here while OnePlus devices are being accused in a Dusseldorf action

    • EP1741183 on a "front-end topology for multiband multimode communication engines", targeting OnePlus devices here while OPPO devices are being accused in a Dusseldorf action

    • against OPPO and OnePlus, EP1704731 on a "method and apparatus for indicating service set identifiers to probe for" (a WiFi patent)

  • Munich enforcement actions

    Munich SEP cases:

    • against OPPO and OnePlus, EP2070217 on an "apparatus, method and computer program product providing multiplexing for data-non-associated control channel" (not previously seen in litigation, hearing scheduled for June 23, 2022)

    • against OPPO and OnePlus, EP2080193 on "pitch lag estimation" (not previously seen in litigation)

    • EP3557917 on a "method and apparatus for providing efficient discontinuous communication", targeting OPPO devices here while OnePlus devices are being accused in a Mannheim action listed further above

    • against OPPO and OnePlus, EP3396868 on a "method and apparatus for conveying antenna configuration information" (not previously seen in litigation)

    • against OPPO and OnePlus, EP1671505 on a "redundancy strategy selection scheme" (the Munich court previously showed a strong inclination to consider this patent standard-essential and pushed back the trial date in order to await developments in a parallel nullity proceeding, where Nokia fared better than one might have expected; meanwhile Nokia and Daimler settled)

    Munich non-SEP case:

    • EP1728352 on "secure data transfer", targeting OnePlus devices here while OPPO devices are being accused in a Dusseldorf action

  • Dusseldorf enforcement actions

    No Dusseldorf SEP cases discovered so far

    Dusseldorf non-SEP cases:

    • against OPPO and OnePlus, EP2728964 on a "distributed multiradio controller"

    • against OPPO and OnePlus, EP3716560 on "processing transmission signals in radio transmitter"

    • EP1700183 on a "method for secure operation of a computing device", targeting OnePlus devices here while OPPO devices are being accused in a Mannheim action listed further above

    • EP1741183 on a "front-end topology for multiband multimode communication engines", targeting OPPO devices here while OnePlus devices are being accused in a Mannheim action listed further above

    • EP1728352 on "secure data transfer", targeting OPPO devices here while OnePlus devices are being accused in a Munich action listed further above

  • High Court of Justice in England (EWHC)

    London SEP cases:

    • EP2087626 on "additional modulation information signaling for high speed downlink packet access" (also being asserted in Mannheim, listed further above)

    • a pair of cellular standard-essential patents from the same family: EP2981103 (which won Nokia an injunction against Daimler) and EP3220562 on an "allocation of preamble sequences" (also being asserted in Mannheim, see further above)

    London non-SEP case:

    • EP3716560 on "processing transmission signals in radio transmitter" (also being asserted in Dusseldorf)

  • Tribunal judiciaire de Paris

    • EP1702486 on "arranging handover"

    • EP1704731 on a "method and apparatus for indicating service set identifiers to probe for" (a WiFi patent that is also being asserted in Mannheim)

  • Juzgado de lo Mercantil nº 5, Barcelona

    • EP1574024 on "an apparatus and a method for providing information to a user" (not previously seen in litigation)

    • EP2615570 on "a method for secure operation of a computing device" (from the same patent family as EP1700183, a non-SEP that is being asserted in Mannheim)

These are just four Western European jurisdictions, and cases are pending elsewhere, but I have yet to obtain more information.

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Sunday, October 17, 2021

First four OPPO v. Nokia countersuits over 5G patents have been docketed in Mannheim, Munich, and Hamburg

About a month ago, Gizmochina reported on OPPO having filed countersuits over 5G patents against Nokia in China and an unspecified number of European jurisdictions. This is what I expected to happen, especially after I became aware of the litigation prowess the Chinese smartphone maker demonstrated in its recently-settled dispute with Sharp. OPPO is to be reckoned with, and as OPPOsed to letting others push it around, it fights back. I don't know whether OPPO brought any patent infringement counteractions against Sharp, but I have been able to find out about a couple of Dutch declaratory judgment proceedings, such as one targeting Sharp's EP'181.

Now, against Nokia, OPPO is also claiming that its own 5G patents are infringed. While I haven't yet been able to find out enough about the cases in China and other European jurisdictions that I could meaningfully write about them, OPPO's first four offensive cases in Germany have been docketed--by three different courts:

  • Mannheim Regional Court:

    • Case no. 2 O 112/21 (Presiding Judge Dr. Holger Kircher) over EP3624524 on "wireless communication methods, network device, and terminal device"

    • Case no. 7 O 125/21 (Presiding Judge Dr. Peter Tochtermann) over EP3547772 on "data transmission method and apparatus"

  • Munich I Regional Court:

    • Case no. 7 O 11301/231 (Presiding Judge Dr. Matthias Zigann) over EP3563600 on "separate configuration of numerology-associated resources"

  • Hamburg Regional Court:

    • Case no. 315 O 217/21 over EP3557938 on a "method and device for random access"

Three aspects of these first four discoverable OPPO v. Nokia cases stand out, the first two of which relate to venue selection:

  1. Wireless patent cases are very rarely filed in Hamburg. That's why this blog has so far not reported on a single Hamburg patent case other than mentioning an Avago (Broadcom) case against BMW two years ago. In that case, the law firm of Bardehle Pagenberg was on the defending side. Bardehle is one of two law firms representing OPPO against Nokia in Germany. The other is Hogan Lovells.

    For lack of local case law, the Hamburg Regional Court is a dark horse with respect to standard-essential patent (SEP) enforcement--and a case like this is an opportunity for that court to make a decision that might get a lot of attention and attract more filings of that kind.

  2. Both Hogan Lovells and Bardehle have offices in Dusseldorf, and Nokia brought some of its own cases against OPPO in that city. In Mannheim (the center of gravity of that dispute) and Munich, suits are flying bidirectionally. In Dusseldorf, OPPO doesn't appear to have responded to Nokia's cases yet (maybe because it's a much slower court than Munich and Mannheim), and instead elected to go north and open another battle front in Hamburg.

  3. The patent numbers immediately struck me as high: OPPO's patents-in-suit are very young. The window for filing an opposition with the European Patent Office is still wide open.

    This has an interesting procedural effect: even if Nokia makes its opposition filings pretty soon (which I guess it will), the EPO is not going to start the opposition proceedings until the opposition period has expired. That's because it would be inefficient for the EPO to commence the process while there is a possibility of further filings being made with respect to the same patent. As a result, OPPO's infringement cases are almost certainly going to be adjudicated before the EPO's opposition division renders any preliminary validity assessments.

    By the way, the six-month target (merely wishful thinking by lawmakers, not a hard and fast rule) under this year's German patent reform for the Federal Patent Court to hand down a preliminary opinion wouldn't apply anyway (too early for that)--and due to a gaffe by the lawmakers and governmental officials involved with the drafting of that reform bill, patents young enough to be opposed before the EPO wouldn't have been affected anyway. It's a blunder--it's what happens when those make patent law don't really understand how things work in practice. The ministry officials told stakeholders they hoped the incoming government (most likely a new government coalition in light of the outcome of recent elections and early-stage negotiations between the parties) would take an initiative to amend the law during this new legislative term. But that's another story, as these cases were filed too early to be affected by the reform even if Nokia had been able to challenge those patents in the Federal Patent Court.

Nokia tends to double down once someone countersues. Escalation is presumably inevitable in this dispute. There is a lot at stake given the huge unit volume that OPPO and its affiliates (Realme, OnePlus etc.) represent, and at a point at which Nokia has some major renewals coming up (Samsung--with whom they appear to have resolved only peripheral licensing questions, but haven't tackled the real issue (5G) yet--as well as Apple). At the same time, OPPO can't afford to appear to be a soft target: otherwise it will face a neverending barrage of patent assertions by patent holders of all sizes, not just the Nokias of the world but also numerous non-practicing entities.

From a cross-licensing point of view, Nokia's advantage is minimal expose. Nokia's own unit volumes are low because there's a huge number of handsets sold in the world per each base station, and Nokia is only in the latter business now. Today's Nokia phones are made by a third party named HMD, which has a trademark license but is otherwise independent from Nokia. OPPO can therefore sue only over Nokia's base stations.

An escalating multi-jurisdictional SEP dispute between one of Europe's two most important wireless companies on the one hand and a high-volume rising-star Chinese electronics company on the other, while the other European wireless giant--Ericsson--is apparently meeting resistance by Apple to a royalty demand that is tiny compared to Apple's sales and margins, is definitely not the context in which the European Union would be prepared to reduce SEP holders' leverage by weakening enforcement. Europe's automotive industry and other net licensees won't get their way. At the end of the day, policy makers can see clearly that the automotive industry is in a position to resolve its SEP licensing woes at a manageable cost, but car makers largely even refuse to take Avanci's $15/unit pool license. Whether the European economy as a whole is a net licensor or net licensee of SEPs doesn't matter: the thing is that European net licensors very much need to generate revenues from licensing, while for car makers it's just a minor cost of doing business, no matter how much they may be crying--and whatever European car makers end up paying will also have to be coughed up by their competitors on the world stage. Therefore, industrial policy considerations are going to dissuade the European Commission from tampering with SEP enforcement at this juncture.

I'll keep researching and monitoring the Nokia-OPPO dispute, and hope to be able to provide more litigation data in the not too distant future.

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