Tuesday, March 1, 2022

Japan's IP Bridge appears close to license agreement with OPPO, but Ford still holding out: 4G standard-essential patent disputes in Munich

The most interesting news from last week's Munich trials in a couple of 4G patent cases brought by Japan's national patent licensing firm IP Bridge was that Apple has apparently settled and taken a license.

Trials involving two other defendants still went ahead before the Munich I Regional Court's 7th Civil Chamber (Presiding Judge: Dr. Matthias Zigann). Those 4G implementers are high-flying Chinese smartphone maker OPPO (case no. 8133/21) and iconic U.S. car maker Ford (case no. 7 O 9572/21).

I have been able to obtain further information from the court on those proceedings:

  • After the court's introductory explanation of the questions of fact and law in the case, OPPO and IP Bridge stipulated to an adjournment. Their next trial date is March 18, 2022. I'm not sure they'll actually show up then: when parties agree to an adjournment, especially in response to essential guidance from a court, they make use of that extra time to negotiate a settlement. What I don't know is how far apart the parties' positions are, but IP Bridge is a relentless enforcer and would hardly swallow a three-week delay if there wasn't hope that they can work it out.

  • With Ford, the situation looks less promising. While the courtroom was sealed (my guess is they were discussing Ford's FRAND defense, unless Ford made a non-infringement argument that involves technical secrets), it turned out that neither party had sufficiently addressed a particular--unspecified--aspect of the case. The court made counsel aware of that oversight. It turned out impossible to clarify that part during the on going proceedings. As a result, court and counsel agreed that an adjournment was warranted. The oral proceedings will continue on April 22. Both parties have been granted leave to file pleadings until then.

    Unlike the situation between IP Bridge and OPPO, the IP Bridge v. Ford situation is, on the face of it, still highly adversarial. Never say never: they might also make use of the additional time to work out a deal. The court obviously didn't provide any information to me on what the parties appear inclined to do next. But an adjournment that resulted from finding out that they tried in vain to make up for a mutual oversight on the spot (maybe because some documents weren't available) most likely means they just agreed to disagree. For lack of an inside track, I'm just trying to assess the situation based on those procedural facts, including that both requested leave to provide further briefing.

    Ford is currently defending against patent infringement actions by (at least) three Avanci licensors: L2 Mobile Technologies, a Longhorn IP subsidiary, is suing Ford in Delaware, as is Sisvel, some of whose patents-in-suit in a Delaware case Ford claims to be exhausted under an old Nokia-Qualcomm contract. Sisvel is also asserting patents against Ford in Munich.

    This is just an anecdote, but OPPO, while it is (for now) Ford's co-defendant against IP Bridge, is also a contributor of many SEPs to the Avanci pool. As a result, OPPO stands to benefit--in the form of royalty collection--if IP Bridge prevails and Ford elects to take an Avanci license rather than numerous bilateral licenses.

    Just yesterday, Avanci scored a major victory over automotive supplier Continental as the United States Court of Appeals for the Fifth Circuit added insult to injury from Conti's perspective: not only did the appeals court grant effective affirmance to a decision by the United States District Court for the Northern District of Texas to throw out Conti's ill-conceived case based on conspiracy theories rather than actual harm, but it even held Conti wasn't entitled to a component-level FRAND license as it's sufficient from a pragmatic point of view if its customers are licensed and Conti itself isn't barred from making standard-conformant products.

    Times are tough for car makers who shirk their responsibility to take licenses by pointing SEP holders to their suppliers. Avanci's resounding victory in the Fifth Circuit is an endorsement of the patent licensing policies of companies like Qualcomm, Ericsson, and Nokia, who believe the most efficient point in the supply chain for licensing SEPs is the end product--whether we're talking about smartphones or connected cars.

    In this environment, hold-out tactics are not a promising strategy for Ford. The judicial tide is going in the opposite direction. Not only--but also--in Munich.

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