Tuesday, May 17, 2022

Dutch network operator KPN becomes 7th Avanci licensor to sue Ford Motor Company over 4G standard-essential patents: Munich court schedules first hearing for September

KPN, the telecommunications carrier formerly owned by the Kingdom of the Netherlands (long-form name: Koninklijke KPN N.V.), has recently filed a patent infringement lawsuit in Munich against Ford Motor Company's German subsidiary (named Ford-Werke GmbH) over EP2291033 on a "telecommunications network and method for time-based network access." The patent-in-suit has been declared essential to the 4G (LTE) standard, and this particular patent family has been asserted against various defendants over the past ten years.

The Munich I Regional Court's case no. is 7 O 4255/22 (Seventh Civil Chamber; Presiding Judge: Dr. Matthias Zigann). The complaint was served on Ford on May 6. The iconic U.S. automaker has until July 6, 2022, to file its answer to the complaint. Counsel has yet to appear on Ford's behalf. The first of the two hearings that are usually held in patent cases in Munich has been scheduled for September 15, 2022. Normally, a first hearing in a Munich case is focused on claim construction and infringement analysis. The court is currently testing a new approach to cases involving multi-patent disputes between the same parties, with a FRAND hearing in the lead case of a given dispute going ahead first. Here, no other patent infringement complaints by KPN against Ford are known at this stage.

Yet there is a context to this case. Ford is still unlicensed to most if not all of the SEPs in the Avanci pool, unlike several other U.S. car makers:

  • Tesla is widely known (though it has not been officially confirmed) to have taken an Avanci license (as multiple parallel cases by Avanci licensors against Tesla were dismissed within a few days of each other).

  • Rivian has been confirmed by Avanci to be licensed; and

  • just this month, General Motors--Ford's larger neighbor (6 million cars per year vs. 4 million)--was announced as Avanci's latest licensee, with the patent pool firm saying that it has now licensed a total of 37 automotive brands and more than 55 million connected vehicles.

The same week that the Avanci-GM announcement was made, Chief Judge Rodney S. Gilstrap of the United States District Court for the Eastern District of Texas explained in Ericsson v. Apple that an implementer who rejects a FRAND offer, but implements the relevant SEPs anyway, "subject[s] itself to actions for infringement." That's what's happening here. Ford is being sued over SEPs left, right, and center. Here's a non-exhaustive list of blog posts on SEP assertions by six other Avanci licensors (yes, KPN is already the seventh, making me wonder when and where this will end given that Avanci has four dozen contributors) and one non-Avanci licensor:

In alphabetical order, these are the seven Avanci licensors currently enforcing 4G SEPs against Ford:

  • IP Bridge

  • KPN

  • L2 Mobile Technologies

  • MiiCS

  • Optis (alongside PanOptis and Unwired Planet)

  • Sisvel

  • Sol IP

Lucky Seven? It's going to be hard for Ford to persuade the courts--be it in the Eastern District of Texas, the District of Delaware, or in Munich--that it's not an unwilling licensee.

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Saturday, May 14, 2022

Google now has to decide whether to grant Bandcamp (acquired by Epic Games) and Match Group's apps (like Tinder) a grace period of likely less than a year: change of in-app payment policies

On Thursday, Judge James Donato of the United States District Court for the Northern District of California (San Francisco Division) held a case management hearing that he scheduled at the same time he stayed a preliminary-injunction motion by Epic Games relating to Epic's recently-acquired Bandcamp music marketplace, whose Android app Google has threatened to kick out of the Google Play Store unless Bandcamp complies with an in-app purchasing (IAP) policy change (mislabeled by Google as a mere clarification). That same day, Google had to defend itself against allegations of monopoly abuse not only on the West Coast but also on the East Coast, where it came away unscathed with its "Communicate with Care" policy.

All I know about what the judge and the parties said at the San Francisco hearing I learned from Courthouse News reporter Maria Dinzeo's highly informative coverage.

Not only did Judge Donato discuss the Epic v. Google motion but also a more recent one by Match Group (the Tinder company). Shortly after its complaint (on which I commented earlier this week), Match Group filed a motion for a temporary restraining order (PDF).

The Courthouse News report mentions two different types of reservations on Judge Donato's part. One is that the case presents "difficult and challenging issues" he'd rather not decide on the fast track, especially since the Epic Games v. Google trial has been scheduled for next January anyway. The other is that Bandcamp has known since August 2021 of having to switch to Google Billing, and that it appears its new ownership (i.e., Epic, which was already embroiled with Google and Apple in app store antitrust litigation) is the reason for which it now, all of a sudden, needs emergency relief from the court: "You can’t waiver for eight months and come in and say the house is on fire."

Judge Donato also describes this as "a problem of [Epic's] own making," which is a huge issue not only but especially in the Ninth Circuit, where self-inflicted harm weighs strongly against a preliminary injunction. That was Epic's problem in 2020 when it wanted to bring Fortnite back to Apple's App Store.

The house-on-fire metaphor also reminded me of another antitrust case--in the Southern District of California--in which the same vaunted law firm, Cravath Swaine & Moore, literally claimed that its client Qualcomm's house was on fire because of Apple having ordered its contract manufacturers to stop making royalty payments. That one went nowhere because Qualcomm was financially too strong that the cessation of royalty payments could have put the company in jeopardy. Qualcomm's concern related to the possibility of other licensees doing the same, but then there would have been a new situation.

PI motions are part of a vigorous representation of clients, and movants may sometimes like the idea of finding out early how the other side presents its case and on what questions the court still needs to be convinced. But the Bandcamp motion has already made much more of an impact than the aforementioned ones: Judge Donato encouraged the parties to work it out and to show some flexibility so he wouldn't have to adjudge Epic's PI motion and Match Group's TRO motion.

Epic's position is that Google should not kick out Bandcamp until the trial. If Google rejected that demand categorically, the judge would definitely not be amused. What I guess Google will do now is to attach some strings to such a grace period that the court may consider reasonable but that will be somewhat burdensome on Epic and Match Group. However, that is not easy to do: Epic and Match Group have plenty of cash, so if they have to post a bond, they'll do it.

I interpret the Courthouse News report as Judge Donato not being too likely--even if Google disappointed him by being inflexible or making unreasonable demands--to grant Epic's or Match Group's motion. In that case, the question is whether the parties would appeal the matter to the Ninth Circuit. In the Apple case, Epic didn't do so, presumably because of a near-term trial date. For Match Group the calculus may be different.

Judge Donato may even suspect--and if he did, it wouldn't be unreasonable in the slightest--that the app store dispute was the primary reason for which Epic acquired Bandcamp. In the market definition context (also in the Apple dispute), Epic stressed that it offers more than games, but buying Bandcamp has given it another tool for challenging the major app stores' IAP rules, especially with the benefit of standing up for content creators (which, however, also exposes Epic to the accusation of holding those content creators--and end users--hostage).

At any rate, the judge has a point that this here is partly a manufactured conflict. It's not 100% self-inflicted as Google indeed wants to enforce a different policy, but it made its intent known a long time ago and Match Group and Epic's Bandcamp could have filed for a preliminary injunction a lot sooner. Now the deadline is June 1, and of course the court could theoretically enjoin Google by means of a TRO, which would then have to be replaced by a PI.

The key to understanding Epic's strategy here as well as in the Fortnite case against Apple is the following paragraph from its PI motion:

"Under the Ninth Circuit's 'sliding scale' approach, the overwhelming evidence showing Epic's likelihood of success weighs strongly in favor of preliminary relief. See Indep. Techs., LLC v. Otodata Wireless Network, Inc., 836 F. App'x 531, 533 (9th Cir. 2020) ('Where a party can show a strong chance of success on the merits, he need only show a possibility of irreparable harm.')."

If one agrees with Epic on the merits (as I do, without reservation in this case), it's a different picture. The question of whether Bandcamp was essentially preparing to comply with Google's policy change is then doubly irrelevant. First, because the timing of the motion wouldn't lend Google's conduct the legitimacy it lacks. Second, because there is nothing illegitimate whatsoever about Epic simply having the financial strengths to duke it out with Google while Bandcamp was presented with a point-blank situation and would have been forced to cave had it not been acquired. What a party does or agrees to under duress does not and must not count. That is, by coincidence, also the core of Apple's case against Qualcomm over license fees paid by its contract manufacturers, but that case settled during opening argument (a great result for Cravath, though in all fairness it had more to do with Apple's need for 5G chips than anything else).

It's what Epic already argued in the #FreeFortnite context in the summer of 2020. I remember how Cravath partner Gary Bornstein told Judge Yvonne Gonzalez Rogers (YGR) at the TRO and PI hearings in 2020 that a party simply should not have to abide by a contract that was unilaterally imposed upon it in violation of the antitrust laws. It was the same logic. He also insisted--in my opinion, rightly and brilliantly--on the single-brand market definition, which Judge YGR rejected at all stages of proceeding (as it turned out later, she appears to have been utterly confused all along about the Kodak case law), and on the merits of the tying claim. We're now in a similar situation, but hopefully with a judge who will understand Kodak and Epic's related argument.

So it's not a simple question of whether Epic's request for a PI is reasonable. If one agrees with them (and, therefore, by extension with me) on the merits, then there's nothing wrong with the timing, and the court should enter a TRO if need be. I don't think Google should be rewarded for having abused its monopoly power against the likes of Bandcamp: it's actually in the public interest that Bandcamp now belongs to Epic (no matter the motivation for the deal) and that this allows them to stand up to the bully. But if one doubts the merits--and Judge Donato at least isn't comfortable with considering it a slam dunk for Epic--then it all looks a lot more complicated.

What Will Google Do? (Yes, an allusion to a book title.)

To be perfectly honest, I could easily see people on Google's legal team (internal or external) argue that they should rigidly enforce their new rule and kick out those apps if necessary, just to show that they're 100% confident of the strength of their position. For Google the risk of Judge Donato enjoining them on a TRO or PI basis appears limited--and with the trial being on the horizon, Epic might not appeal, just like it accepted the denial of its motion in the Apple case. But Judge Donato wouldn't like that, and he's going to preside over the January trial. And it could also be that this time around Epic will actually try to take the matter up with the Ninth Circuit at the earliest opportunity. It has a better chance of success with a panel of three high-ranking judges than when a single district judge has to make a decision.

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Friday, May 13, 2022

Apple keeps trying to duck infringement claims over three Ericsson 5G patents in Eastern District of Texas: reply brief

Whether in a policy context like the IEEE's standard-essential patent (SEP) policy or in litigation, I often find that Apple will say anything that it believes may advance its agenda--or will even have astroturfers say it. It strikes me as add that one of the most admired companies in history lacks the self-respect to choose its arguments more wisely.

In the multi-jurisdictional 5G SEP dispute with Ericsson, there's now been a pattern of Apple contradicting itself. One might even say that the only thing consistent about Apple's tactics is that they're constantly being inconsistent. Whether one agrees or disagrees with Ericsson's royalty demands (which is for the courts to decide in the end, unless the parties can reach an agreement), Ericsson's actions are straightforward. They have SEPs and non-SEPs that Apple isn't currently licensed to (as the previous contract expired in mid-January), and that's why they're enforcing their intellectual property rights in different venues, all of which have mechanisms in place to protect implementers against so-called patent hold-up. By contrast, Apple will tell one thing to the court in the Eastern District of Texas and another to courts in foreign countries, only to get Ericsson's cases there stayed. Apple even conflated SEPs and non-SEPs (by suggesting that a SEP rate-setting action could dispose of Ericsson's non-SEP assertions, though there is no general entitlement to a non-SEP license) or turned the antitrust concept of tying on its head. That's just not the way to build and maintain credibility with courts and commentators.

The self-contradiction I have to highlight now is that Apple itself challenged three Ericsson 5G SEPs through declaratory-judgment claims back in December, but after Judge Rodney S. Gilstrap perfectly reasonably severed the FRAND claims from that case (and incorporated them into Ericsson's earlier-filed FRAND actions as compulsory counterclaims), Apple was no longer interested in pursuing its own requests for declaratory judgment. Apple's DJ claims forced Ericsson to bring compulsory counterclaims of infringement (in the alternative, Ericsson would have had to "pull a Qualcomm" and just give up on those patents by not bringing compulsory counterclaims, thereby effectively giving Apple a free license). The only surprise here was that Ericsson didn't take Apple up on its offer to stay those DJ claims but is now exuding maximum confidence in those patents--which Apple thought were Ericsson's weakest 5G declared-essential patents--and insisting that the claims be resolved. By not opposing the stay, Ericsson could have avoided a waiver.

Now, Apple has replied in support of its motion for a stay, and I'll share some observations below the document:

22-05-12 Apple Reply ISO Mo... by Florian Mueller

Two of Apple's three reply arguments are about remedies: Ericsson is allegedly neither entitled to monetary relief because Apple will obtain a license anyway (based on a FRAND claim it brought in the very same complaint as the DJ claims, so this is nothing new) nor can it get an injunction (because Ericsson itself, a looong time ago, opposed an ITC import ban over SEPs, which falls far short of setting binding precedent).

The third item is that Apple describes as "incorrect" Ericsson's suggestion that Apple brought the DJ claims just to give the Federal--not Fifth--Circuit appellate jurisdiction. That is something that I already identified as Apple's transparent tactical objective long before Ericsson said so. It's just too obvious. Now Apple says it "filed the -460 Action with both FRAND-based and patent-based claims because it believed that the merits of the patent claims were relevant to determining a FRAND rate," but as the court severed the claims and the two-way FRAND case "is set for trial first," Apple says "it will be far more efficient to stay the -460 Action pending resolution of the -376 Action."

The implausible part here is that, given the size of Ericsson's portfolio, a sample of three patents that Apple itself handpicked could hardly ever have been relevant to the FRAND rate. Whether Apple would have prevailed on all three DJ claims, or Ericsson on all three of those patents, or something in between would have been the outcome, I can't see what productive purpose those determinations would ever have served.

Also, given that either decision can be appealed and no one can predict today how long it will take for a case to be really resolved, it is still quite possible that the licensing situation remains unclarified at the time a patent infringement decision becomes enforceable.

When Judge Gilstrap denied Ericsson's (somewhat unusual) motion to confirm Apple's commitment to be bound by the court's FRAND decision, he clearly said that Apple, by its own representations, would remain free not to take a license from Ericsson. So Apple's reply in support of its motion to stay the three-patent infringement case looks a little bit like a motion for clarification or even reconsideration of Judge Gilstrap's recent order. We'll see whether he takes the bait or is getting tired of this.

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D.C. District Court doesn't sanction Google for abuse of attorney-client privilege through 'Communicate with Care' policy: United States v. Google antitrust case

In March, the United States Department of Justice brought a motion to sanction Google for misuse of the attorney-client privilege, and to compel it to produce documents withheld under such privilege. You can find the motion (PDF) and a 39-page memorandum (PDF) on CourtListener.com. The short version is that Google had for a long time--about a decade--instructed and trained its employees, under a "Communicate with Care" program, to involve counsel in communications related to the types of practices that the DOJ as well as numerous state attorneys-general are challenging in an antitrust case that is, by any objective measure, way bigger than Epic Games v. Apple is or FTC v. Qualcomm ever was.

Google is clearly on the opposite of the spectrum to Epic, which in my opinion did not communicate with the prerequisite degree of care about its 2020 Nineteen-Eighty-Fortnite stunt (provoking the ejection of Fortnite from the major mobile app stores in order to file prepared lawsuits and publish a campaign video). Somewhere in the middle between Google and Epic one would find Apple, some of whose internal emails about the App Store or its iMessage-related lock-in strategy were quite revelatory.

The DOJ had a point when bringing its motion. The attorney-client privilege is important. It even involves fundamental constitutional rights. But the "silent-attorney email" practice of just copying lawyers in order to later claim privilege is simply a means of obstructing (future) discovery.

From a legal-policy perspective, one could have an interesting debate over whether government plaintiffs should have better access to pre-litigation company-internal communications in antitrust cases, given that they--unlike an Apple or a Google--never have a competitive agenda other than protecting the competitive process itself. But that's another topic with wide-ranging ramifications.

Judge Amit P. Mehta of the United States District Court for the District of Columbia resolved the DOJ's motion in two steps. First, on April 12, he summarized the DOJ's attack vectors on Google's Communicate with Care policy as "seek[ing] one form of relief—an order compelling Google to produce in unredacted form all communications between non-attorneys where an in-house attorney was included but did not respond in the chain of communications—through two different mechanisms: a motion for sanctions and a motion to compel."

That April 12 order reiterated a concern Judge Mehta had already stated at an April 8 motion hearing: "whether [the D.C. District Court] has the inherent authority to impose sanctions for pre-litigation conduct of the type at issue here." The parties were given the opportunity to "identify any cases they believe support their respective positions on this issue by April 19, 2022"--but the judge made it clear that this should not be tantamount to "additional briefing." Just a case list.

Google's April 19 filing was short. The search engine monopolist declared itself unaware "of any reported decision where a court (1) used its inherent authority to sanction alleged pre-litigation conduct regarding marking business documents as subject to claims of attorney-client privilege or otherwise involving conduct relating to privilege issues, or (2) imposed the sanction of categorically removing attorney-client privilege and/or work-product protection over documents irrespective of whether they are privileged or work product in the absence of bad-faith litigation misconduct, typically involving violation of a court order."

It's impossible to prove a negative, so the intuitive thing for Google to do would have been to present decisions in which courts denied motions to compel, or motions for sanctions, in such a context. Additionally or alternatively, Google could have shown decisions in which courts granted such motions, but still enaged in some line-drawing consistent with Google's position by distinguishing those other cases from the kind of situation relevant here. I mean, it's not like Google's army of lawyers wouldn't have the resources to conduct a proper case-law research.

By contrast, the DOJ--which compared to Google is at an unbelievable resource disadvantage, listed nine decisions by federal appeals courts and six by district courts. The most recent appellate decision is the Fifth Circuit Snider v. L-3 case:

"(“[A] per se rule against sanctions for prelitigation conduct is inconsistent with the justifications for inherent-authority sanctions. A court’s inherent authority to impose sanctions serves goals beyond the specific litigation at hand. It exists also to protect the integrity of the judicial process writ large. A court should be free to sanction conduct that undermines that process, whether it occurred during litigation or before it."

The other decisions cited by the DOJ are also interesting, and let me just highlight one more because it's from the appeals court this blog has mentioned more frequently than any other--the Federal Circuit (Micron v. Rambus, 2011):

"[I]t was not clear error for the district court to conclude that the raison d’être for Rambus’s document retention policy was to further Rambus’s litigation strategy by frustrating the fact-finding efforts of parties adverse to Rambus." (the district court had held that Rambus engaged in spoliation)

Unfortunately, the DOJ's motion in the Google case has nevertheless been denied. Yesterday, the court entered the following decision:

MINUTE ORDER. For the reasons stated during the status conference held on May 12, 2022, [317] [326] Plaintiffs' Motion to Sanction Google and Compel Disclosure of Documents Unjustifiably Claimed by Google as Attorney-Client Privileged is denied. Google is ordered, however, to ensure that all of the "silent-attorney emails" at issue in the Motion have been re-reviewed to the same extent as the sample of 210 emails provided to the court for its in camera review. Signed by Judge Amit P. Mehta on 5/12/2022. (lcapm2)

A failure by Google to "ensure" a proper re-review of all of the roughly 21,000 "silent-attorney emails" at issue could still lead to sanctions. In his April 12 order, Judge Mehta had ordered Google to produce directly to the court "on a thumb drive" "(1) a random sample of 210 'silent attorney' emails (including the surrounding email chain), of which all or a portion has been withheld on privilege grounds (approximately 1% of the 'roughly 21,000' emails that 'fit [the] silent attorney description that [Google is] maintaining a privilege claim over,' [...]), and (2) a single spreadsheet with privilege log entries as they pertain to that sample of emails."

That was in-camera review by the court, and the re-review that Google has been asked to perform now will simply be done by Google itself. This means the DOJ isn't really going to be able to ascertain that all of the Google-internal emails that should have been disclosed will be produced.

If the court had decided against Google, there would have been different ways for Google to take the matter up with the D.C. Circuit (discretionary appeal, mandamus, or appealing a sanctions order). The DOJ, however, isn't going to suffer the kind of immediate harm that a party ordered to produce allegedly-privileged documents can claim to suffer. It can seek appellate review of that decision in the event of an adverse final judgment.

While the DOJ will be rightly disappointed, I remain optimistic that the government plaintiffs will likely establish some serious antitrust violations by Google even without piercing through Google's abuse of the shield that is the attorney-client privilege.

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Thursday, May 12, 2022

Apple and other WiFi implementers pressuring IEEE not to abandon its 2015 patent policy--but serious impact of negative Letters of Assurance can't be denied

Early last week, largely the same Apple-led crowd that is behind the "Save Our Standards" campaign (whose deceptive lobbying I've recently called out) sent a letter to Sophia Muirhead, the General Counsel of the Institute of Electrical and Electronics Engineers (IEEE). I'm in possession of that six-page PDF, which is dated May 3 and entitled Industry and Public Interest Support for Maintaining 2015 IEEE-SA Bylaw Updates. It's a pressure group effort ahead of a (fairly confidential) meeting of the IEEE-SA's Standards Board; the letter was allegedly authored by outside counsel for Apple; and from what I heard, it's more or less unprecedented for industry players to lobby the IEEE in that fashion.

It looks like some folks are panicking, though a little over a year ago they had reason to celebrate: the Biden DOJ silently downgraded a letter that the Trump DOJ (specifically, then-Assistant Attorney General for the Antitrust Division, Makan Delrahim) had sent to IEEE, urging it to undo significant parts of its 2015 policy change favoring implementers. As I noted at the end of the post I just linked to, the wrangling over IEEE's standard-essential patent (SEP) policy was sure to continue. Mr. Delrahim is now a Latham & Watkins partner (oddly, a firm frequently used by Apple), so he's no longer in a position to push IEEE in the direction he outlined while in public office. But IEEE still has a problem on its hands that no one with an interest in a functioning standard-setting system can responsibly ignore or convincingly explain away.

We'd be having a totally different conversation now if the following sentence from the first paragraph of Apple et al.'s letter were true:

"The IEEE-SA’s Patent Policy is and remains the model for standard setting organization (SSO) IPR policies, particularly following the 2015 update to the patent policy."

The letter says "IEEE-SA distinguished itself positively" in 2015. Now, if SSOs like ETSI had gone in a similar direction, Apple et al. would be in a position to make that claim of IEEE's 2015 policy being and remaining "the model for [SSO] IPR policies." But the reality--certainly a sad one from the implementers' perspective--is that seven years on, IEEE is still an outlier among SSOs. That may simply be due to the fact that other SSOs are more consensus-driven than IEEE, where a majority can just brush aside objections no matter their merit.

Neither does the last sentence of the first paragraph withstand scrutiny once one looks at the broader picture:

"By almost any measure, standardization work at IEEE has thrived in the wake of these updates."

Via a footnote, that sentence refers to a 2018 IPlytics report (PDF) that says "contributions to IEEE standards and technical work within IEEE working groups have only increased since the updated patent policy was approved." But as standards grow more complex, the number of contributions are on the rise--and more than anything, that conclusion reflects a disconnect:

A number of major wireless SEP holders and innovators (including, but not necessarily limited to, Ericsson, GE, Huawei (notably, a large-scale WiFi implementer as well), InterDigital, LG, Nokia, Orange, Panasonic, and Qualcomm (in alphabetical order)) have declined to provide Letters of Assurance ("LOAs") that would force them to adhere to the IEEE's 2015 policy. Some if not all of them clarified that they remained willing to abide by the prior policy (which was more similar to what is still found in the cellular standards space). But a refusal to be bound by the new policy is deemed a "negative LOA," regardless of a contributor's stance on a superseded version of that policy.

The disconnect here is that there wasn't a major disruption on the technical side (though Professor Ron Katznelson, a member and past Chair of the IEEE's U.S. IP committee, did identify some negative impact in his paper The IEEE controversial policy on Standard Essential Patents -- the empirical record since adoption) despite those negative LOAs. That approach is not sustainable. Sooner or later, an SSO runs into a serious problem if a significant part of all technical contributions isn't subject to positive LOAs.

We're talking about a legal issue, a licensing problem--not just a political one that may simply be solved by an Administration overriding its predecessor's policies.

Unlike in politics, where a majority vote is often the answer, that won't work here either. Apple et al.'s letter stresses that there are far more companies favoring implementer-friendly policies than a proposal to revert to the previous one. That means nothing. Seriously, there are more people out there buying bread than owning or working at bakeries, yet customers can't just set the terms on which they want the supply side of the market to do business with them. The fact that there are so many implementers makes successful standards valuable. It doesn't devalue them. And even if a vast majority of SEP holders preferred a policy (typically because they are net licensees), in the end implementers need a license to all the SEPs, not just some or most of them.

WiFi 6 is the first generation of IEEE 802.11 to have been affected by negative LOAs. WiFi 7, which is now in the works, will be the first one to have been developed with some companies having submitted negative LOAs at the outset.

Those negative LOAs--coupled with the continuation of standards development as if nothing had changed--are a ticking time bomb. Arguably, it has detonated in some places already. IEEE ran into problems with the American National Standards Institute (ANSI) finding itself unable to approve as national U.S. standards those IEEE standards that were clearly impacted by negative LOAs. The International Organization for Standardization (ISO) has similar problems according to a JDSupra article and a LinkedIn article (both by the same author, David Cohen)). It's not a question of whether those organizations like IEEE's patent policy: it's all about the fact that there are negative LOAs in place, normally a no-go in standard-setting, for good reason.

The current situation is a mess. Contrary to what Apple et al.'s letter claims (asking this rhetorical question: "Why would IEEE-SA want to return to a world in which the cost of implementing IEEE-SA standards like 802.11 was uncertain, inevitably discouraging adoption?", negative LOAs are anything but a path to legal certainty. That is not a question of whether or not one would like to bring down SEP royalties. Apple et al.'s letter fails to present a solution as it only advocates perpetuating the problem. With Apple's annual litigation budget in the billions of dollars, that may be workable. For the technology industry at large it is not.

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Wednesday, May 11, 2022

Patent licensing firm K.Mizra suing Pokémon GO maker Niantic (Google/Nintendo) over cloud architecture patent: Munich trial scheduled for July

The Landgericht München I (Munich I Regional Court) has informed me of a pair of patent infringement cases by U.S.-based patent licensing firm K.Mizra against Pokémon GO maker Niantic, a Google-Nintendo joint venture. The case numbers are 7 O 13977/21 and 7 O 10368/21 (Seventh Civil Chamber; Presiding Judge: Dr. Matthias Zigann), and the patent-in-suit is EP2433414 on "servers for device identification services."

The two cases will be heard on July 14. Counterintuitively, there is no prayer for injunctive relief in those cases, though I remember that Nokia didn't initially request an injunction against Daimler, but later amended its complaints accordingly. In German patent infringement proceedings, plaintiffs are even free to seek additional remedies during the appellate proceedings (as German appeals are rather broad in scope).

The name of the game is the claim--and claim 1 is usually the broadest one. This is what it covers (or just click here to skip the claim language):

A system for identifying proximate devices arranged for detecting a sensory identifier and transmitting request messages comprising representations of the detected sensory identifier, the system comprising:

  • means for correlating representations of the detected sensory identifiers from the request messages received from the devices so as to match two or more of those devices, and

  • means for carrying out an application involving devices that have been matched by said means for correlating representations,

wherein said means for correlating are at least one correlation server and said means for carrying out the application are at least one application server, the at least one correlation server and the at least one application server being distinct servers,

wherein the proximate devices are arranged to include, in the request messages, an indication of an application to be executed, the at least one correlation server being configured to compare the applications indicated by the request messages, and causing a transmitter to transmit the match message based on the match to an application server identified by the matching indications of the application in the matched request messages.

The TL;DR is that there are different types of servers,

  • with one type having the task of identifying users who are in the same vicinity and

  • the other providing the actual application that those geographically close users are using--and "sensory identifiers" (meaning something you can see, hear, smell...) are used to figure out whether users are really next to each other.

Pokémon GO was a blockbuster from the outset. A few years ago, Niantic added a "Buddy Adventure" feature. Here's a YouTube video from Santa Monica that wonders whether this is "[t]he FUTURE of Pokémon GO" and in which you can see the use of QR codes (such as on the title picture but also in the video, especially around 8m15s):

The user who initiates a multiplayer session then shows the QR code to others who must scan the code with their phones to join. The QR code is an imagine, so it undoubtedly represents a sensory identifier.

A quick Google search for information Pokémon GO's cloud architecture leads to--guess what--a Google blog post, "How Pokémon GO scales to millions of requests?"

When I became involved with patent policy in 2004 as a campaigner opposing the proposed EU directive on computer-implemented inventions (aka Software Patents Directive), I was an adviser to an open-source software maker (MySQL) and frequently raised the concern that open-source program code was available for inspection by patent holders looking to identify potential infringements. Reverse engineering often works as well, but it takes a lot more effort. Generally speaking, software makers can be too open for their own good if they reveal the inner workings of their products. Here, the defendant didn't open-source Pokémon GO in its entirety, but disclosed a whole lot of information in an interview published on a Google website. That wealth of information would normally require pretrial discovery in the United States. It may have been unwise to reveal so much. Also, Google's Kubernetes Engine, which is mentioned in that Google interview, is a piece of open-source software.

It's been more than nine years since I attended a Munich trial--before the same division, Presiding Judge Dr. Zigann's Seventh Civil Chamber--involving Google's infrastructure: Microsoft was asserting a patent against Google Maps and on the winning track with respect to infringement, but the patent was later deemed invalid by the Federal Patent Court. The Google Maps case raised a question of first impression: whether a cloud service that is partially provided by servers located outside of Germany can infringe the German part of a European patent. There have since been various German court rulings that have developed a certain standard for what constitutes an infringement in such setups.

Pokémon GO was a smash hit from the moment it launched and had to scale its server infrastructure to huge numbers of concurrent users more quickly than any previous game. What Google did was--and still is--admirable. I remember how at the height of the Pokémon GO frenzy there were groups of children running around trying to catch Pokémons. It's an augmented-reality game, and when I tried it out, I caught a first Pokémon on my desk and the second one in the garden. However, there was one aspect of it that I found highly objectionable (I didn't experience it myself but read about it): the random generator that decides where to place those Pokémons sometimes picked places like graveyards or private properties, resulting in trespassing or at least in inappropriate behavior. I believe it was highly irresponsible and reckless on Niantic's part not to ensure that Pokémons would be found in public spaces only.

Now Pokémon GO is facing what could be a serious and costly patent infringement problem. Google's go-to law firm for defending against patent lawsuits is Quinn Emanuel. The daughter of John Quinn (the "Quinn" in "Quinn Emanuel"), Megan Quinn, joined Niantic's board in late 2017 according to Wikipedia.

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Nokia suing Vivo in two German courts over standard-essential patents--despite limited market presence--and Vivo countersuing Dusseldorf

[Erratum] Originally, the Dusseldorf case was listed as a Nokia v. Vivo case. It is, however, a countersuit by Vivo. [/Erratum ]

Market size is one of several factors attracting patentees to Germany. However, the direct economic impact of a patent injunction is a function of the revenues and profits a party is actually generating in the relevant geographic market. Conventional wisdom would, therefore, not really suggest that a patent holder should sue Vivo in Germany. The Chinese company is among the world's largest handset makers owing to its tremendous success in a number of Asian markets, but generates only about 1% of its worldwide sales in Europe--of which Germany is just one market, so unless Vivo's European presence is more or less confined to Germany, we're talking about a fraction of a percent of its global sales.

In March, Nokia's patent litigation campaign against Vivo became known. And indeed, the first jurisdictions in which some Nokia v. Vivo cases surfaced were India and Indonesia, with IAM reporting on a Chinese rate-setting action that Vivo had initiated.

But the three major German patent infringement courts have now informed me of a number of cases brought by Nokia against Vivo (Munich and Mannheim) and a countersuit by Vivo (Dusseldorf):

  • Munich I Regional Court

    • Case no. 21 O 2816/22 over EP3396868 on a "method and apparatus for conveying antenna configuration information" (also being asserted against OPPO and OnePlus in Munich) (trial date: February 8, 2023)

    • Case no. 21 O 3172/22 over EP3457586 on a "method and apparatus for conveying antenna configuration information via masking" (granted in September 2021) (trial date: February 8, 2023)

  • Mannheim Regional Court

    • Case no. 2 O 36/22 over EP2981103 on an "allocation of preamble sequences" (last week, the same panel of the Mannheim Regional Court--under Presiding Judge Dr. Holger Kircher--held a Nokia v. OPPO trial over this patent) (trial date: February 7, 2023)

    • Case no. 2 O 37/22 over EP2087626 on "additional modulation information signaling for high speed downlink packet access" (Nokia is also asserting this one against OPPO in Mannheim) (trial date: March 14, 2023)

    • Case no. 2 O 65/22 over EP3220562 on n "allocation of preamble sequences" (same patent family as EP'103, which was mentioned above; therefore, same trial date)

  • Dusseldorf Regional Court

    • And a countersuit by Vivo against Nokia (presumably targeting its base stations):

      Case no. 4b O 25/22 over EP3618530 on a "resource mapping method for demodulation reference signal, base station and computer readable storage medium" (granted in October 2021) (trial date TBD)

The substantial overlap between these patent assertions and the ones against OPPO (and its affiliate OnePlus) may lead to cost-saving synergy effects on Nokia's side. Still, the scope and scale of the German part of Nokia's patent litigation campaign against Vivo is counterintuitive.

I'll try to find out if there are even more cases.

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Tuesday, May 10, 2022

Google's rapid response to Match Group's U.S. antitrust complaint talks about User Choice Billing--but what is truly needed is Developer Choice

Yesterday (Monday), dating app provider Match Group (known for Tinder and other services) filed an antitrust complaint in the Northern District of California against a policy change by Google that would now require Match Group to use Google's in-app payment system, after a decade during which Android dating apps enjoyed the freedom to rely on their own billing, avoiding Google's app tax. Match Group previously complained with Dutch competition authority Autoriteit Consument & Markt (ACM, Authority for Consumers & Markets), which is now also investigating Google (while already going into another round with Apple). I strongly doubt that Apple is out of compliance in the Netherlands, and actually think Match Group's own conduct warrants an investigation.

Match Group's U.S. complaint raises some of the same issues as Epic Games already did almost two years ago, with Match Group's complaint coming across as more emotional and vitriolic. There will be a case management hearing before Judge James Donato in the Northern District of California on Thursday. I was thoroughly disappointed to see Judge Donato order a "stay" of Epic's motion for a preliminary injunction, given that the issue is urgent (Bandcamp, a music marketplace recently acquired by Epic, might be kicked out of the Google Play Store on June 1), but there would still be time before June 1, especially for a temporary restraining order. Just like Match Group's dating apps, Bandcamp would be affected by a policy change that Google incredibly mischaracterizes as a mere clarification of its rules.

Google was quick to respond publicly to Match Group's complaint, which makes sense given that Match Group's acerbic complaint was clearly directed not only at the district court but also at the court of public opinion, including politicians and competition authorities. Wilson White, Google's Vice President of Government Affairs & Public Policy, published a detailed and emotional blog post, Setting the Record Straight on Match Group's Cynical Campaign Against Google Play. I guess that one aspect of Match Group's complaint that really hurts Google way beyond the context of Android in-app payments is the pressure the monopolist tried to exert on Match Group ahead of the latter's testimony before a Senate Subcommittee in April 2021. Some senators were outraged at the time, and now that incident is part of the story of a private antitrust lawsuit and quite possibly the subject of depositions. Depending on what comes out, Google could even get into serious trouble with the United States Senate.

Google's blog post contains some of the same red herrings as always, such as arguing (in other words) that with Android itself being free, Google's Android business model depends on its app tax, and pointing to alternative Android app stores and sideloading, though Epic and the three dozen state attorneys-general suing Google over its Android app distribution policies have already shown--partly by virtue of pretrial discovery--to what extreme lengths Google goes in order to disadvantage those alternatives.

Two of Google's bullet points focus on "user choice billing"--and all I'm going to do in the remainder of this post is to show why Google's claims in those paragraphs are somewhere between grossly misleading and utterly nonsensical:

  • "Match Group isn’t interested in true user choice billing. While Match Group claims to support user choice, it has yet to offer its users that option in South Korea, where user choice billing is now available on Google Play. Likewise, they inaccurately allege that users “sometimes” pick Match Group’s billing 3 to 1 over Google Play. But many of their apps only offer Match Group’s billing. In the cases where Google Play is theoretically a user choice, it isn’t presented as a fair choice and is hidden in small text at the very bottom of the app."

  • "We’re the only major app store piloting true user choice billing. We recently announced a pilot to invite developers to help us test and iterate on user choice billing in other markets outside South Korea. We started with Spotify as our first partner as they have made substantial investments in the platform and have deep product integrations across all of Android’s form factors. We are actively looking to add more partners in the coming months and developers can express interest."

There are details here that don't make sense. The claim that Google Play is "the only major app store piloting true user choice billing" ignores that Microsoft already announced in June 2021, at the unveiling of Windows 11, that developers would be free to implement their own billing system. But the worst part is Google's criticism of Match Group not offering "user choice billing" in South Korea. In that country, the legislature requires Google to allow alternative payment systems, but the law wasn't waterproof, so Google charges developers a commission that renders the use of alternative billing systems unattractive for developers as well as users. That's the same issue as with the enforcement of the Dutch ACM's antitrust ruling against Apple.

"User choice billing" is a fallacy. Users have always had a choice of payment systems: different credit cards, PayPal, or buying Google Play gift cards.

Courts, lawmakers, and regulators shouldn't get confused by that smokescreen.

The problem isn't that users need a choice among billing systems. If a user wants to pay with a Visa card, the user will pay with a Visa card whether it's Google Play or, say, Match Group's own billing system.

What the worlds really needs--and what will ultimately also benefit consumers--is Developer Choice.

Developers must have a choice, including the choice of not using Google's billing system at all. Developers must be able to offer end users lower prices, and what enables them to do that is the freedom not to use billing systems like Google's or Apple's that effectively impose a tax (as Elon Musk has repeatedly pointed out).

If developers decline to use Google's billing system, the question is what Google should be allowed to charge them for using the Android platform. But so-called user choice billing doesn't solve the real issue.

Developer Choice goes beyond billing systems. It also involves a level playing field for third-party app stores. But even if one focuses narrowly on billing, the question simply isn't "user choice"--much less if it's a kind of choice (such as between Visa and Amex, or Paypal and gift cards) that users have always had.

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Thursday, May 5, 2022

Optis/Unwired Planet group sues Ford Motor Company over five 4G standard-essential patents in Eastern District of Texas: sixth Avanci licensor to go after Ford

This is now the third post in a row on standard-essential patent (SEP) litigation in the Eastern District of Texas. The two previous ones were about Ericsson v. Apple. As I was checking on the E.D. Tex. docket, I also discovered a new automotive SEP lawsuit: a group of patent licensing firms named Optis Wireless Technology, Optis Cellular technology, Unwired Planet, and PanOptis Patent Management has brought an infringement complaint over five 4G SEPs against Ford Motor Company.

That group of patent holders has a strong track record in litigation. most famously involving the UK Supreme Court's Unwired Planet v. Huawei decision. An Optis v. Apple FRAND trial (setting the terms of a conditional injunction) will soon be held in London. And now the Optis-Unwired group has become the sixth Avanci licensor to go after Ford--and the second one in the Eastern District of Texas, where Korea's Sol IP is already asserting a whopping 21 patents against the car maker. Other Avanci licensors to be enforcing their intellectual property against Ford include MiiCS (Munich), Sisvel (Delaware and Munich), IP Bridge (Munich), and Longhorn IP subsidiary L2 (Delaware). The Delaware cases will go to trial only sometime in 2024, but holdout won't work for Ford because the patent injunction hammer will likely come down in Germany long before, and I also expect Sol IP's and Optis-Unwired's cases in the Eastern District of Texas (which are about damages, for now) to go to trial much sooner.

According to the latest complaint, both Optis-Unwired and Avanci have been trying for about five years to strike a license deal with Ford:

"For several years dating back to 2017, Plaintiffs themselves and also as part of a licensing pool through Avanci LCC ('Avanci') have attempted to negotiate with Ford to reach an agreement for a FRAND license to Plaintiffs’ cellular patent portfolios. However, Ford has declined to date to take a license. In contrast to Ford, several other automobile manufacturers have taken a license.

"Plaintiffs have also sought to have Ford take a license to its patents on FRAND terms as part of a broader pool of essential cellular patents through Avanci. On information and belief, starting in August 2017, Avanci has made extensive efforts to have Ford take a license on FRAND terms."

The complaint notes that "[i]n contrast to Ford, several other automobile manufacturers have taken a license." That fact ups the ante for Ford, which really comes across as an unwilling licensee by now. Just two days ago, Avanci announced a license agreement with General Motors, the largest U.S. car maker. When IAM reported on that deal, it also stated what I've been saying for some time (Tesla must be an Avanci licensee given that multiple cases brought by Avanci licensors were withdrawn near-simultaneosuly last year) and said that electric SUV and pickup truck maker Rivian Automotive is an Avanci licensee.

These are the patents asserted by Optis and Unwired against Ford:

  • U.S. Patent No. 8,149,727 on a "radio transmission apparatus, and radio transmission method" (originally filed by Panasonic, currently assigned to Optis Wireless Technology)

  • U.S. Patent No. 8,199,792 on a "radio communication apparatus and response signal spreading method" (originally filed by Panasonic, currently assigned to Optis Wireless Technology)

  • U.S. Patent No. 8,223,863 on a "method and arrangement in a cellular communications system" (originally filed by Ericsson, currently assigned to Optis Wireless Technology)

  • U.S. Patent No. 8,254,335 on a "radio communication apparatus and radio communication method" (originally obtained by Panasonic, currently assigned to Optis Wireless Technology)

  • U.S. Patent No. 8,320,319 on a "semi-persistent scheduled resource release procedure in a mobile communication network" (originally filed by Panasonic, currently assigned to Optis Wireless Technology)

Optis-Unwired's complaint was filed by McKool Smith, which also (together with Irell & Manella) won a $300 million damages verdict against Apple for the same plaintiff and in the same district.

For as much as I would like to show you the complaint (though there's no major information in it beyond what you can find in this post anyway), I haven't been able to upload it to Scribd. While Scribd did successfully process the court document in my previous post (Ericsson's opposition to Apple's motion to stay a case over three 5G patents), it entered into an endless loop after claiming that the upload of the Optis-Unwired complaint (and previously, an Ericsson-Apple court order) had been completed "100%." I don't know whether this is due to my new computer, but the fact that one of those three court documents from the Eastern District was successfully published on Scribd makes it unlikely that I have a firewall problem (I can also upload files to other websites without problems). I'll try to solve the problem. If all else fails, I'll have to find an alternative to Scribd. Apologies.

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Ericsson insists on proving Apple's infringement of three 5G standard-essential patents Apple itself once elected to challenge in Eastern District of Texas

Ericsson means business and just isn't going to be outmaneuvered by Apple. In a move that demonstrates the company's confidence in its 5G patents, Ericsson is opposing a motion by Apple to stay a second case in the Eastern District of Texas. The first case is about the parties' dueling FRAND claims and will proceed to trial in December. The second one is the part of Apple's countersuit that did not get consolidated into Ericsson's case. The remaining claims in that case stem from Apple's declaratory-judgment attack on three of Ericsson's 5G patents. Apple's DJ initiative left Ericsson with no other reasonable choice but to counterclaim that those patents (which Apple handpicked because it presumably thought it could easily prove them not to be standard-essential) are valid and indeed infringed by Apple's 5G products.

In the first case (FRAND), Judge Rodney S. Gilstrap (the Chief Judge of the United States District Court for the Eastern District of Texas) denied an Ericsson motion to firm up Apple's commitment to a license, but as I explained in the post I just linked to, the upside for Ericsson outweighed the downside because the court stated that Apple subjects itself to infringement litigation by not taking a license. Basically, Ericsson just needed to avoid a situation in which Apple would dissuade courts in various jurisdictions from letting Ericsson's infringement cases go forward because the Texas action would resolve the dispute anyway.

Ericsson has already started leveraging that "denial"--in the same district, in fact. In the second E.D. Tex. case, Ericsson has now filed its opposition to Apple's motion to stay the proceedings, quoting from the same judge's most recent order in the FRAND case (this post continues below the document):

22-05-04 Ericsson Oppositio... by Florian Mueller

Ericsson wants to proceed with that second Texas case and prove Apple's infringement of those three 5G patents, with a trial scheduled to take place in the summer of 2023. Toward the end, Ericsson tells the court is that Apple may just have brought those DJ claims for the purpose of appellate forum-shopping, a thought I already had in January. Apple would rather litigate the second round in the Federal Circuit than the Fifth (where Ericsson scored a major victory over HTC last year, creating a precedent that doesn't bode well for Apple's defenses).

While it's obvious that Ericsson has an interest in making progress with its infringement actions including--but not limited to--the ones in the Eastern District, I still find Ericsson's opposition remarkable for one reason: those three patents aren't Ericsson's chosen patents-in-suit. They may have been among the hundreds of exemplary SEPs Ericsson presented to Apple during the course of negotiations, but still, it was Apple who thought those patents could be easily attacked. Out of hundreds of pre-selected Ericsson patents, these are presumably the three that Apple considered to be weakest, yet Ericsson isn't ducking Apple's DJ claims but instead cherishes the opportunity to prevail on its compulsory counterclaims. It would have been easy for Ericsson to simply not oppose Apple's motion for a stay, citing any number of reasons such as that there already are infringement cases pending before the ITC (with companion complaints in the Western District of Texas), Germany, and other countries. But it appears that Ericsson, after taking another close look at those patents, feels pretty good about its prospects.

No matter what Apple may have surprisingly stated in some of its filings in recent months, it simply doesn't like to deal with patent infringement cases in the Eastern District of Texas (nor in the Western District, but that's another story). In this case, however, Apple itself chose to bring DJ claims in that forum. It made its bed and now has to lie in it. Apple's strategy backfired. I'd be surprised if the case over those three 5G SEPs got stayed over Ericsson's objection, given that Judge Gilstrap rightly considers it the normal course of business that a patent holder keeps enforcing its rights while there is no license agreement in place.

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Wednesday, May 4, 2022

Federal judge: if Apple doesn't take Ericsson's licensing offer but implements Ericsson patents anyway, it 'subject[s] itself to actions for infringement'

Before I share the latest information regarding Ericsson v. Apple, here's some information further to my previous post (on a Nokia v. OPPO 4G/5G case): the Mannheim Regional Court has scheduled a decision for July 5, 2022. Two months from trial is relatively long for German patent infringement ruling, but the court's Second Civil Chamber is extremely busy--not least with a number of Ericsson-Apple cases.

Most of the time, if a party brings a motion and the court denies it, it has reasons to be disappointed. There are, however, exceptions to that rule. In my view, one of those exceptions is the fact that Judge Rodney S. Gilstrap (the Chief Judge of the United States District Court for the Eastern District of Texas) yesterday denied a somewhat unusual Ericsson motion to confirm Apple's commitment to be bound by the Texas-based court's decision on whether Ericsson offered Apple FRAND licensing terms last year. While it would have been ideal for Ericsson if it knew that Apple would (have to) take that $5-per-iPhone deal (provided that the court deems it to be FRAND), the denial of that motion actually deals a blow to Apple's credibility with various foreign courts. That's because Apple, according to Ericsson, asked courts in different jurisdictions to stay Ericsson's patent infringement cases, claiming that the Texas case would inevitably result in a license agreement on FRAND terms, so the other courts should just let the Texas FRAND case (with a trial scheduled for December 2022) run its course.

Based on Judge Gilstrap's order (signed on May 2 and filed yesterday, May 3), Ericsson can now tell all those courts that Apple mischaracterized the inevitability of the Texas case putting the global SEP dispute to rest. The key passage of Judge Gilstrap's order says this:

"Indeed, as in any contractual negotiation, the offeror’s offer only becomes binding on the offeree when it is accepted by the offeree. Here, if Ericsson’s offer is found to be FRAND, then Apple may accept it and create a binding contract; Apple may reject it and not implement Ericsson’s patented technology; or Apple may reject the FRAND offer, implement Ericsson’s technology without the benefit of a license and subject itself to actions for infringement. The Court knows of nothing unique to the SEP scenario that alters these principles of black letter contract law." (emphasis added)

It's not the end of the world, but simply the normal course of business, if Ericsson has to enforce its SEPs (and non-SEPs, which are a separate topic) against Apple in various jurisdictions. It's what not only Ericsson but also other SEP holders have to do all the time. But what Ericsson--in my observation--seeks to avoid is that Apple points to the Texas case as the "be all and end all" of Ericsson-Apple patent cases in order to dissuade other courts (and also the USITC) from doing their jobs while actually not being prepared to commit to Ericsson's proposed way forward, which is for the court to decide whether Ericsson has discharged its FRAND obligations. Ericsson has previously--in that case, by means of correspondence between the parties as opposed to a motion--exposed Apple's newfound love of the Eastern District of Texas as being only skin-deep: when push came to shove, Apple wouldn't say "yes, withdraw your cases in the Western District and let's sort it all out in the Eastern District." I believe Ericsson's motion to confirm Apple's commitment was equally about just not letting Apple get away with contradictory positions. Ericsson doesn't want Apple to have it both ways and keep all of its options open in Texas while telling courts in other jurisdictions (U.S. and abroad) that the case in the Eastern District is going to dispose of the entire global dispute pretty soon.

The latest order cuts both ways. If Apple doesn't have to enter into a license agreement in case Ericsson prevails on its own key FRAND claim, why should Ericsson have to grant Apple a license based on a FRAND determination that could have an unpredictable outcome? If Apple can walk, why shouldn't Ericsson have the same right?

Judge Gilstrap is prepared to help the parties, but what he can't do is make their decisions as to what agreement to conclude. If Apple thought Judge Gilstrap was going to be outraged at the fact that Ericsson is enforcing its patents in some other jurisdictions, it was wrong.

I'd like to show you the entire order but haven't been able to upload it to Scribd yet. I have to figure out whether it's a problem with Scribd or with a Firewall setting on my end. But rest assured that there's nothing really instructive or enlightening in it other than the passage I quoted above.

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Microsoft Excel table (part of 4G specs) unearthed by OPPO may render Nokia patent non-standard-essential: Mannheim trial

Yesterday (Tuesday) was the first courtroom clash between Nokia and OPPO in Mannheim (a FRAND hearing had already taken place in Munich). The patent-in-suit in that first case is EP2981103 on an "allocation of preamble sequences" (originally declared essential to 4G and later also to 5G). Given that the same court had ordered an injunction over this patent against Daimler in 2020 (which never got enforced), and that the Federal Patent Court of Germany had rendered a preliminary opinion according to which it was valid (and the EPO upheld another patent from the same family in an opposition proceeding), I thought the technical merits were going to be clear. But no.

To my surprise, OPPO has developed a more elaborate non-infringement argument than Daimler. To be fair, the smartphone giant had the benefit of being able to learn from what had happened in the Daimler case, but even if all other things were equal, OPPO--which is a major SEP holder itself by now--would almost always outperform any automaker by virtue of a far deeper understanding of the relevant technology and of standard-setting processes.

Before yesterday's Mannheim trial, I re-read the 2020 judgment in the Daimler case as well as parts of the nullity case file, which I had obtained from the Federal Patent Court. Against that background combined with what was said yesterday, I firmly believe this is a case in which Nokia would simply have to drop the patent from an ITC case, and even the vast majority of U.S. district judges would presumably throw it out on summary judgment (otherwise, the Federal Circuit would enter JMOL). By U.S. standards, it's not even close: the patent might simply be found invalid for indefiniteness, but at any rate, no court could arrive at an intellectually honest claim construction that would result in an infringement finding. The problem in Germany is that the courts don't follow the Markman procedure and firstly put down in writing an interpretation of the disputed claim limitations. In more than ten years of watching German patent infringement cases, I've seen a proper (by U.S. standards) claim construction only once--in Mannheim, but from a different panel (Presiding Judge Andreas Voss ("Voß" in German), in an Apple case over slide-to-unlock if I recall correctly). What is normally done there is that claim construction and infringement analysis become amalgamated without the court performing the important mental exercise of formally resolving a dispute over the interpretation of a claim limitation by writing up new claim language that would address the relevant question. And that shortcoming of the German approach is Nokia's (only) chance here, as a more systematic approach would simply render the patent non-standard-essential.

Not only didn't I expect to reach this conclusion before the trial started but I even agreed with Presiding Judge Dr. Holger Kircher's introductory remarks on the infringement (here, essentiality) allegations. He discussed three different non-infringement contentions by OPPO, all of which take aim at the final part of the claim language:

"ordering the sequence in each subset according to their cubic metric values, wherein the sequences of adjacent subsets are ordered with alternating decreasing and increasing cubic metric values" (emphases added)

The patent is all about arranging number sets called preambles. In other words, it's a sorting patent. These are--more specifically--the two issues I've already mentioned:

  • The sort criterion--in Excel, that would be the "Sort by" column--is called "cubic metric value" or just "CM value." OPPO doesn't affirmatively say that the specifications of the 4G and 5G standards don't contain CM values, though they did present an alternative set of CM values calculated by an expert witness. Judge Dr. Kircher said that the patent specification doesn't prescribe a particular formula with which to derive the CM values, and that's why OPPO's non-infringement argument is irrelevant unless and until OPPO officially--and under the German equivalent of Rule 11--disputes that the numbers in the standard are CM values.

    I do understand the court's perspective on the pleading standard. However, if a number-sorting patent doesn't even define the very type of number by which a set is to be sorted, that to me represents a potential case for an indefiniteness argument. I'd have to re-read the patent document to be 100% sure, but at this point I strongly suspect that this patent lacks a clear boundary and would, therefore, be indefinite by (strict) U.S. standards.

  • The reason for which I believe the patent doesn't map to the 4G/5G specs is that "decreasing and increasing" are mathematically clear directions (numbers go down or up), which depending on the segment of a chart that you look at would give you roughly the shape of a V (decreasing, then increasing) or a reverse V (the other way round). But an Excel table that is part of the specifications of the standards shows that in a few instances, there are apparently microscopic bumps in the road.

    The problem is now that those bumps are literally microscopic: there is a table in the specs of the standard that has a limited degree of precision, which is why you don't see bumps but just consecutive numbers that--up to the ninth post-point digit--are identical.

    Those identical consecutive numbers were already raised by Daimler, and I would agree with the court that an occasional plateau doesn't break a decreasing or increasing order. I would also agree with the court that it doesn't mean too much that neither the claim language nor the specification of the patent provide instructions as to how to deal with pairs of identical numbers. However, OPPO explained that the numbers aren't really identical. The appearance of equality results from the limited degree of precision of the output, but the specifications of the standard are not just a text document: there's also an Excel table that's part of it, and the numbers in the table are unique--and those numbers break the "decreasing and increasing" order that would be required to infringe the patent.

    I've looked at the 2020 Nokia v. Daimler judgment again, and in that one, Excel is mentioned only in connection with the accounting that Nokia demanded from Daimler (in order to calculate a damages claim). So, if Daimler never pointed the court to the fact that the actual numbers in the relevant Excel table are irreconcilable with the claim language, then OPPO has presented hard evidence of non-essentiality and is entitled to a different outcome. Potentially, they could get an injunction stayed rather quickly by the appeals court on that basis.

    From my own usage of Excel, I know exactly what the problem is: internally, Excel stores floating-point numbers that can be extremely precise; but normally the column width doesn't suffice for numbers with many post-point digits. In that case, Excel does and does not round: it does round in the sense of displaying a rounded number, but it doesn't actually round internally until you use the ROUND() function in a formula. I have indeed used the ROUND function on some occasions. A good example is Value-Added Tax: if you have multiple items with, say, 19% VAT, you arrive at many numbers with more post-point digits than the maximum of two that you can put on an invoice (example: if the net invoice amount is 325.99, 19% VAT amounts to 61.9381, but an invoice would round this to "61.94" and then arrive at a bottom-line amount of 387.93). Now, if you have multiple such items and round each line in this case, you really store 61.94 in that example, while in the other case you still have greater internal precision (albeit invisible), which in the sum of many lines could result in a wrong aggregate amount (just a rounding error, but still enough to get into trouble in the event of a tax audit).

    The specification of the standard is not like a law where only a text document is relevant. If the standard-setting organization provides an Excel table with exact numbers, then those numbers are the ones that matter, and the text document merely provides a first overview.

    I don't know whether OPPO (or previously Daimler) made that argument, but as someone who back in the 1980s reverse-engineered an operating system and BASIC interpreter and did some other coding over the years, I know how computers sort floating-point numbers. The way they do it is that they run a loop and compare the digits in the same position (for instance, the first post-point digits of both numbers), starting at the highest level. If one number is greater than the other, that determines the result. If the numbers in that position are identical, the loop continues until it finds a difference--and if it never does, it returns "equal." So, a number-sorting algorithm doesn't simply stop after an arbitrary number of digits. It makes use of all the data it has available.

    In a U.S. patent infringement case, the court would now have to construe "decreasing and increasing" as OPPO would give it the plain and ordinary meaning while Nokia's position would be that the numbers just have to be "materially" decreasing and increasing, with a level of tolerance that has scope for microscopic bumps. Now, "materially" or "largely" wouldn't be acceptable language, neither in a claim as granted by a patent office nor in a construction of a disputed claim limitation by a court or the ITC. Therefore, Nokia would have to propose some rather complicated language that would define a level of tolerance (such as "up to 0.000000001") for deviations from the "decreasing and increasing" rule. In that case, the numbers in the standard would be consistent with the (new) claim language, but the exercise of attempting to rewrite the claim language would make it clear that this is not what Nokia's patent actually covers. There wouldn't even be any support for that in the description. That's why I said further above that a sequential approach--first claim construction, then infringement analysis--would make Nokia lose the case. Nokia can win this only if one conflates the two steps and says that "decreasing and increasing" doesn't have to be applied with absolute mathematical precision.

OPPO's FRAND defense was discussed in a sealed courtroom. I'll try to find out what happened, but I don't have much hope given that the parties probably have a strict NDA in place. The resolution of the dispute will have to be a license agreement, as Nokia will sooner or later prevail on some SEP (and there is every indication that OPPO is prepared to pay FRAND royalties), but contrary to what I thought before, I no longer believe that EP'103 entitles Nokia to a 4G/5G injunction.

Finally, I'd like to show you two pictures taken before the court was officially in session. I'm sorry that I missed the moment when the judges had briefly taken off their masks, but I really did want to show you the Mannheim Regional Court's Second Civil Chamber for two reasons: there are many interesting cases pending before that division (not only those Nokia-OPPO but also numerous Ericsson-Apple cases, and maybe the most absurd patent-related antitrust case ever, Deutsche Telekom v. IPCom), and Judge Dr. Kircher never or only very rarely speaks at conferences and webinars. In the pictures below you see Presiding Judge Dr. Kircher in the middle, and his side judges are Judge Boettcher ("Böttcher" in German) to his left and Judge Elter (the judge rapporteur in this case) to his right:

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