Tuesday, May 31, 2022

Ford Motor Company settles seven patent disputes in one go by taking Avanci license to 49 SEP portfolios: Munich injunction may have been major catalyst, but just one factor

Precisely four weeks after Avanci announced a 4G standard-essential patent (SEP) license agreement with General Motors, the patent pool firm has just announced a license deal with Ford. Both companies are "Motown" icons, and between the two of them make about 10 million cars (GM: 6 million; Ford: 4 million) per year. But the backdrop of those license agreements couldn't be much more different. GM signed without any prior litigation. By finally taking a license, Ford Motor Company puts a number of patent infringement cases behind it: seven out of Avanci's 49 licensors were asserting patents in the District of Delaware, the Eastern District of Texas, and in Munich.

As a result, Avanci has now licensed 41 automotive brands and 65 million vehicles. All well-known U.S. car makers with the sole remaining exception of Chrysler (a Stellantis brand) are Avanci-licensed. It's never been officially confirmed for Tesla, but it would not just be a statistical anomaly--more like paranormal--if several Avanci licensors had withdrawn their U.S. and German cases against Tesla near-simultaneously as a result of bilateral agreements (and no other Avanci licensor has since filed suit against Tesla).

I'll share my observations on two aspects of this announcement. First, on the role that the recent Munich injunction may have played. One should neither under- nor overrate it. Second, I'll comment on the different schools of thought in the automotive industry with respect to Avanci's one-stop licensing offer.

Munich court makes patent holders money--but Ford had any number of reasons to sign

Just last week, it turned out that Presiding Judge Dr. Matthias Zigann (Munich I Regional Court, Seventh Civil Chamber) had told a mobile device maker that implementers must "promptly" seek a SEP license upon receiving an infringement notice--lest they be enjoined. While Ford didn't act quite as swiftly as Judge Dr. Zigann recommends, it is interesting to see today's announcement less than two weeks after Judge Dr. Zigann and his panel had entered the aforementioned injunction in IP Bridge v. Ford (one of various recent SEP wins for the Wildanger firm).

As a result of Ford's Avanci license, that injunction won't ever have to be enforced. When the news broke (on this blog first), Ford's stock price went down by about 3%--an overreaction in my view as it was always clear that Ford could--and at some point responsibly would--take an Avanci license. Chances are that this caught the attention of the company's C-level execs.

Presumably the Munich injunction was a catalyst more than anything else. It would never have come down if Ford had decided at the outset to resolve this situation through licensing rather than to provoke litigation through continued infringement. At no point was there a clear endgame for Ford (other than taking the pool license). How was protracted litigation going to save the company money? Did they expect to get a better deal by negotiating bilaterally with roughly four dozen Avanci licensors? They faced dozens of patent assertions in the U.S. alone, and additional injunction were looming large in Germany.

GM's decision to avoid such litigation altogether may also have been part of the consideration: that's what they call benchmarking.

Munich will continue to be an automotive patent litigation hotspot. For patentees seeking leverage from injunctions, it's a great venue. I guess a number of SEP holders will take note of IP Bridge v. Ford and how quickly the dispute got settled after the injunction. All of that makes sense, but let's not forget about the broader picture, which is that continued infringement litigation simply wasn't going to be profitable for Ford. A road to nowhere.

Two schools of thought: Daimler/Ford/Tesla v. General Motors/Volkswagen

To date, three car makers have taken Avanci licenses after initially appearing to be prepared to embark on multi-year litigation: Daimler, Tesla, and now Ford. By contrast, General Motors took a license without litigation (as did others, such as BMW, before it), and Volkswagen was an early adopter, but for its volume brands it had only licensed 3G despite actually implementing 4G--a problem it solved in March after a couple of lawsuits had been filed (but long before any trial, let alone decision).

There is no indication whatsoever that Daimler, Ford, and Tesla ended up saving money on the bottom line. Their litigation expenses must have been huge, with Daimler clearly having overspent. So, Ford is not alone, and at least it pulled the plug at a time when litigation costs could have exploded.

In light of the Daimler disaster I actually adjusted my views of what Avanci is all about. Also, I never subscribed to Continental's conspiracy theories, and have been clear about that for almost three years.

At a recent Auto IP & Legal World Summit in Frankfurt, Avanci executive Laurie Fitzgerald explained Avanci's role to the audience. She said that Avanci's terms already represent a compromise: numerous patent holders agreed to a set of terms based on which Avanci can offer a pool license to automakers--and obviously a pool administrator always needs to work with licensors so the pool as a whole won't price itself out of the market.

The result of that exercise is then not just a set of financial terms (in Avanci's case, it's totally transparent: they publish their rates on their website) but actually an entire license agreement that implementers can opt to sign. They don't have to: they can--if they so choose--pursue bilateral licensing. They can risk infringement litigation, as Daimler, Tesla, and Ford have. The pool license is an option, not an obligation. But there is a pattern here: companies either don't want to license at all, or they take the one-stop license. I'm not aware of any car maker that would have entered into numerous bilateral license agreements. Pools are all about efficiency gains (see also my recent post on the implications of Via Licensing's exit from the wireless patent pool business).

Continental v. Avanci: GM, Ford license deals further weaken Conti's position

Next week, Avanci's response to Conti's petition for rehearing en banc of a Fifth Circuit panel decision dismissing the automotive supplier's antitrust complaint against Avanci is due. There was no shortage of reasons for the Fifth Circuit to reject that petition anyway, but now that GM, Ford, and Tesla have all taken an Avanci license, it's going to be even harder for Conti to get a U.S. federal appeals court interested in a case that hasn't gone anywhere in almost three years.

Conti's case is another example of wasteful litigation--not as costly maybe as some of those infringement disputes, but Conti brought it proactively and has nothing to show.

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Monday, May 30, 2022

Nokia placing transparent bet on German injunction gap with non-standard-essential WiFi patent against OPPO in Mannheim

Tomorrow (Tuesday, May 31) the Mannheim Regional Court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher) will hold its second Nokia v. OPPO trial. As I already reported last summer, the patent-in-suit in case no. 2 O 73/21 is EP1704731 on a "method and apparatus for indicating service set identifiers to probe for." I was clear all along that it's a WiFi patent. What I have meanwhile researched is that this patent hasn't been declared essential to WiFi (IEEE 802.11).

On the first of this month I expressed skepticism regarding the impact of the new Art. 83 of the German Patent Act, which calls on the Federal Patent Court to provide a preliminary summary of the issues in a nullity case within six months of service of the complaint. It's illusory to expect the court to reach a preliminary conclusion after six months on virtually 100% of all challenged patents when it so far needs years to form such an opinion in only about half of all cases. However, in some outlier situations such as tomorrow's Mannheim case (to which the new rule doesn't apply; it only affects cases filed this month or later) the Federal Patent Court would indeed be able to tell quickly and easily that a patent has serious validity issues.

I want to be clear and fair: Nokia has invested, and continues to invest, a lot in innovation. The company deserves respect for that, and respect for IP ultimately means royalty payments. But this doesn't mean that Nokia wouldn't also take an opportunistic win over a patent that is rather unreflective of its substantial investments in innovation. EP'731 is the technically thinnest European patent I've ever seen in litigation, even less technical than a patent Qualcomm asserted against Apple's Spotlight search in Munich (a fitting analogy as Qualcomm is one of the most innovative companies in the entire technology sector, yet sought leverage from partly underwhelming patents).

The number one reason why true innovators like Qualcomm and Nokia resort to patent assertions of that kind is that Germany's bifurcated patent litigation system and the "injunction gap" it entails encourages deep-pocketed plaintiffs to just play the lottery. The "German gamble" is that you assert--additionally or alternatively to more serious patents--a bunch of patents that should never have been granted in the first place. The hit rate may be low, but if you prevail on one or two such patents, you may get leverage--and, at a minimum, a news cycle about your adversary using your "intellectual property" without a license.

While we're on the subject of "intellectual", let's take a look at what that patent is all about. Obviously a page count alone doesn't answer the question. Sometimes an incredibly good idea can be described briefly. Here, however, even nine pages is epic when considering what the claimed invention amounts to:

In a nutshell, some WiFi networks identify themselves proactively by broadcasting an "I'm here" message while some others will only respond if a device asks "are you [stating a specific network name] around?"--and what the patent "teaches" is that you shouldn't ask that "are you around?" question with respect to a network that proactively tells you "I'm here" (just with respect to those that wait to be asked).

The alleged technical effect is that you save bandwith and power by not asking unnecessary questions. In light of worldwide efforts to combat climate change, energy efficiency is undoubtedly relevant. However, the starting point--"don't ask if it tells you anyway"--is obvious, and what's also obvious is that a device would use a "flag" (which is typically a 0/1 binary value). It would be a different story if this patent taught a particularly efficient way of doing this. But what it does is to cover all implementations. It says: use a binary flag, or some other data point--just store the information that a certain WiFi network will identify itself and doesn't have to be asked.

In light of how unbelievably uninventive that patent is, I'm not going to attend the Mannheim trial. The Nokia v. OPPO/OPPO v. Nokia dispute is generally very interesting. For instance, Nokia's EP'103 was successfully asserted against Daimler, though OPPO has dug up an Excel table that is part of the specification of the standard and, in my view, renders the patent non-essential. Whether or not I'm right about non-essentiality, EP'103 is a patent to be reckoned with. Also, an OPPO patent that is being asserted against Nokia in Munich was described as a groundbreaking innovation that enables low-latency 5G network communications. By comparison, I very strongly doubt that there will ever be an injunction against any defendant over EP'731. It's a lottery ticket, and even if it worked out, it could be worked around by simply checking for the presence of all WiFi networks on the list, even those that self-identify. That workaround would result in unnecessary carbon emissions--and there might be some logistical challenges if a chipset had to be replaced with a modified one. But it could be done.

The odds are long against this lottery ticket winning Nokia the jackpot, especially before judges that have a pretty good feel for what constitutes true innovation. I was really impressed with how easily Judge Dr. Kircher identified the non-technical nature of Qualcomm's "amended" claims of a patent relating to electromigration. That Qualcomm patent was actually rocket science compared to EP'731...

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Thursday, May 26, 2022

Epic Games to appeals court: the Government--not Apple--is in charge of national security and, like Epic, advocates opening up app markets: Ninth Circuit antitrust appeal

In the Epic Games v. Apple antitrust appeal before the United States Court of Appeals for the Ninth Circuit, the Fortnite maker (which obtained a significant concession from Google last week, though not with respect to Fortnite) has filed its reply brief. I may comment on that one in more detail some other time, but wish to quickly show it to you (and will share a very few observations further below):


To be very precise, it's Epic's second and final brief on appeal, and it is a reply brief in support of its own appeal of the rejection of its federal antitrust claims and a responsive brief to Apple's appeal of the state Unfair Competition Law injunction Epic had won. I basically agree with either appeal: Epic should prevail on the federal antitrust claims (though I only consider the "tying" part a Sec. 1 issue), but the California UCL stuff should be tossed.

At this stage let me highlight only two aspects of Epic's brief (again, I may write more about it some other time):

Footnote 10 is an appropriate response to that "national security" pretext I'm really getting tired of:

"Apple’s amici argue that removing Apple’s restrictions could risk national security. (See Former Nat’l Sec. Officials Br.) This fearmongering is based almost entirely on alleged facts outside the trial record and disconnected from the issues presented here. If true, the United States would have surely noted this risk in its amicus brief. The district court found that most protections against cyberattacks and malware 'are performed by the operating system or middleware independent of app distribution.'" (link to DOJ brief added)

The other part is that Epic also raises some issues I had previously raised here. I've criticized the terrible mistakes that Judge Yvonne Gonzalez Rogers made especially in connection with Epic's single-brand market definition, where she misrepresented what the Supreme Court said in Kodak as well as what Epic said in the case before her. And I actually just became aware of those inexcusable misconceptions because Apple's mistake to concede that iOS competes with Android (a blatant contradiction to its otherwise dogged denial of the existence of a smartphone operating system market) led me to re-read certain passages. Now, Epic's reply brief, too, says that Apple has conceded the existence of that market:

"Even Apple finally admits the obvious: iOS’s “‘main competitor’ in the relevant market [is] Android.” (Apple Br. 82 (quoting 1-ER-147).) These concessions confirm Epic’s foremarket."

Also, footnote 20 is worth noting in this context:

"Apple elsewhere concedes—as did the district court—that iOS competes with Google’s Android. (See Apple Br. 79 (quoting 1-ER-149).)"

Epic also notes that Judge YGR got Epic's foremarket wrong ("The district court misunderstood Epic’s foremarket theory"), and without saying anything like that, Epic also points to a sentence I found utterly nonsensical in the district court ruling. Just like what I wrote in March, Epic says "Apple’s share of the smartphone market is identical to its share of the smartphone operating system market." And beyond the "'main competitor' in the relevant market" part (which I highlighted shortly after reading Apple's brief and Epic refers to in the sentence I just quoted), Epic's footnote 20 points to another passage in Apple's brief that essentially says customers choose between iOS and Android devices based on certain criteria.

That's it for now, but I did want to share those observations immediately.

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Wednesday, May 25, 2022

VoiceAge EVS scores unprecedented winning streak against HMD's Nokia-branded phones: 6 out of 6 German standard-essential patent cases resulted in injunctions--but holdout continues

At a time when policy makers on both sides of the Atlantic are weighing SEP policy statements and initiatives, this post here is going to tell a tale of caution. The TL;DR version is that no matter how much concern may be voiced about hold-up, I've now come across an extreme case of hold-out that needs to be considered before weakening SEP enforcement.

The hit rate of standard-essential patent (SEP) assertions is normally not too high (often just about 10%-20%), which is why I applauded InterDigital last year for its "hole-in-one" in a UK dispute with Lenovo. The second InterDigital v. Lenovo case resulted in an invalidity finding, but one win is enough to be entitled to a UK FRAND trial. Not only is it remarkable when a SEP holder prevails on the merits of the first asserted patent but even more so when it wins more than two cases in a row--just like the maximum number of serial Super Bowl or UEFA Champions League wins in recent history has been three (New England Patriots, Real Madrid).

Today I was in a Munich courtroom and listened to the announcement of the sixth VoiceAge EVS v. HMD injunction in Germany in a row. A 100% hit rate for the U.S.-based licensing firm and its outside counsel, the Wildanger firm that was named German Patent Law Firm of the Year 2021 by Juve Patents and obtained a high-profile injunction for IP Bridge against Ford Motor Company--the news of which sent the car maker's stock price down by 3% on Friday.

As far as I've been able to research this, every single VoiceAge EVS patent that has been asserted to date (from five different patent families) has been upheld (whether in the original or an amended form)--and has been found to be truly essential to the Enhanced Voice Services (EVS) standard. To expect a similar performance of LTE or WiFi SEP holders would be an apples-to-bananas comparison. Each field of technology is different, and codec patents generally tend to be more sophisticated than the average protocol patent. But even in codecs, this spotless track record is, to the best of my knowledge, unprecedented. This is the information I've been able to obtain from the press offices of the Munich and Mannheim courts:

  • Mannheim Regional Court (Seventh Civil Chamber under Presiding Judge Dr. Peter Tochtermann)

    • July 23, 2021: injunction in case no. 7 O 116/19 over EP2707687 on a "transform-domain codebook in a CELP coder and decoder"

    • September 10, 2021: injunction in case no. 7 O 32/20 over EP1509903 on a "method and device for efficient frame erasure concealment in linear predictive based speech codecs" (encoding-side claims; see April 1, 2022 decision for decoding-side claims)

    • March 1, 2022: injunction in case no. 7 O 33/20 over EP2162880 on a "method and device for estimating the tonality of a sound signal"

    • April 1, 2022: injunction in case no. 7 O 90/21 over EP1509903 on a "method and device for efficient frame erasure concealment in linear predictive based speech codecs" (decoding-side claims; see September 10, 2021 decision for encoding-side claims)

  • Munich I Regional Court (Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann)

    • August 19, 2021: injunction in case no. 7 O 15350/19 over EP3132443 on "methods, encoder and decoder for linear predictive encoding and decoding of sound signals upon transition between frames having different sampling rates"

    • TODAY, May 25, 2022: injunction in case no. 7 O 14091/19 over EP2102619 on a "method and device for coding transition frames in speech signals"

Most SEP disputes simply don't last enough for even the most successful plaintiff to sustain such a series against a single defendant. At some point the parties would normally settle. HMD, however, is an outlier. VoiceAge EVS claims to have licensed more than half of the smartphone market. I can see just based on information from German courts that VoiceAge EVS#s disputes with Apple, Lenovo/Motorola, and TCL settled ahead of trial. HMD is still holding out--even after two contempt fines that the Mannheim Regional Court levied (in late 2021 and early 2022).

What makes this even more counterintuitive is the fact that HMD is the company that makes today's Nokia-branded phones. Nokia is an investor in HMD (as are Google and Qualcomm), but doesn't have a controlling interest. Nokia itself has a rather different philosophy than HMD when it comes to patent licensing.

Standard-setting organizations recommend EVS support. Various major carriers around the globe demand it. In order for a call between two persons to get the benefit of EVS, the end-user devices and at least one carrier must support it. If someone with an iPhone calls my Google Pixel, it's going to be an EVS call (on 4G and especially 5G). But if I called someone with a non-compliant phone, the devices would have to fall back to a lower-quality codec. The result is a quality degradation--and potentially an environmental impact (carbon footprint).

In the German patent law community, the Mannheim court's contempt orders (though officially sealed) have been widely read. Patent infringement disputes rarely reach that stage. I found nothing surprising there. I remember from various Mannheim cases that device claims (more formally called "apparatus claims"--but I say "device claims" because the word "device" is found more often in the relevant claims than "apparatus") are infringed by simply selling a device that is equipped to perform a certain functionality unless there's the equivalent of a brick wall between the user and the relevant functionality. That analogy was used by then-Mannheim now-Karlsruhe judge Andreas Voss ("Voß" in German). Here, HMD failed to dissuade Judge Voss's successor (and former deputy), Presiding Judge Dr. Peter Tochtermann, from ordering contempt sanctions by arguing that the EVS codec on the devices in questions wasn't going to be activated for calls initiated or received in Germany. The practice of German courts is actually pretty clear that even if the infringement occurs after exporting the product, the infringing act is the sale. HMD appealed the fines, but the one to review the decisions will be...Judge Voss.

In Brazil, the injunction was lifted and not lifted at the same time. There is a per diem of approximately US$20K. It's not being collected by the court for now, but should VoiceAge ultimately prevail (and all it would take would be for the Brazilian court to take similar views as the German judges), it will apply retroactively.

There is criticism of EVS license fees, and it's not limited to VoiceAge EVS. IAM reported on it. I believe the problem has a psychological component: some major EVS patent holders like Huawei also hold cellular SEPs, and then they obviously license entire portfolios (no "piecemeal"). But there are some, like VoiceAge EVS, whose portfolios are EVS only--no wireless protocol patents. One can't just extrapolate from the number of patent families in an EVS portfolio to a total wireless portfolio involving 4G (and/or 5G) plus technologies like EVS. If all those patents were worth about the same, the 6-out-of-6 hit rate that VoiceAge EVS now has in Germany would also be the norm for other SEP disputes--but it's not. And that's because in other fields of technology there are numerous overdeclarations--and higher invalidation rates.

I'd like to get full circle back to the first paragraph. VoiceAge EVS v. HMD is an example of SEP enforcement not being nearly as easy some would have policy makers believe. If HMD was publicly traded like Ford, the Street might get nervous--and lose confidence in a company that displays such brinkmanship. Here, there is a company with a battle-tested portfolio, with more than half of the smartphone market licensed (including the likes of Apple, anything but a soft target), yet the dispute hasn't ceased to be.

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Implementers must 'promptly' seek standard-essential patent license to avoid being deemed unwilling licensees and enjoined: Munich I Regional Court

Subsequently to this post, I'll report on the latest injunction that standard-essential patent (SEP) licensing firm VoiceAge EVS has obtained against smartphone maker HMD (Nokia trademark licensee). I originally didn't intend to write about today's VoiceAge EVS v. Xiaomi trials, which I attended purely for research purposes, but something was said there that is relevant far beyond that particular dispute as it relates to the willing licensee standard in the world's #1 SEP litigation hotspot, the Landgericht München I (Munich I Regional Court).

A couple of VoiceAge EVS v. Xiaomi cases are pending before the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judge Dr. Hubertus Schacht and Judge Benjamin Kuttenkeuler, the judge rapporteur in the cases heard today). In accordance with the court's new "lead case" program for multi-patent SEP disputes, the Seventh Civil Chamber held a VoiceAge EVS v. Xiaomi FRAND hearing about a month ago. Today, Xiaomi's counsel in that dispute, Noerr's Dr. Ralph Nack, moved for a preliminary reference to the European Court of Justice in order to clarify

  • which party (SEP holder or implementer) has to act first and

  • whether a SEP holder must negotiate with an implementer for a certain period prior to seeking an injunction.

Judge Dr. Zigann gave that motion short shrift because the question is not whether an infringement notice is needed: the Munich court recognizes that the ECJ established that requirement in Huawei v. ZTE. There is only a factual dispute in VoiceAge EVS v. Xiaomi as to whether such notice was properly given. As to the second part, Judge Zigann believes that Huawei v. ZTE and Germany's Sisvel v. Haier I and II decisions provide sufficient clarity.

What's interesting here, however, is how Dr. Nack sought to justify his motion. He quoted Judge Dr. Zigann form the late-April FRAND hearing as having stated that implementers must "promptly" seek a license to the SEPs they implement lest they be deemed unwilling licensees and, as a result, enjoined. The German word Judge Dr. Zigann used (according to Dr. Nack's uncontradicted quote) was "zackig"--it's a colloquial term that means to act swiftly, without hesitation, like lightning.

While Xiaomi's concern over implementers potentially having to move first by seeking a license (which was actually the legal standard in Germany under Orange-Book-Standard, a decision by the Federal Court of Justice that predated Huawei v. ZTE) has been alleviated, it nevertheless sounds like implementers will pay a high price in Munich for not going out of their way to obtain a license on FRAND terms once they've received an infringement notice. And with every new SEP injunction the court enters, such as in IP Bridge v. Ford last week, implementers around the globe (provided they do business in Germany, which most of them do) are reminded of their obligations.

I felt I had a duty to inform you all of this standard.

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Friday, May 20, 2022

IP Bridge wins 4G patent injunction against Ford's German subsidiary: Munich I Regional Court announced bench ruling at end of yesterday's trial

In the second half of 2020, Daimler was slapped with four German standard-essential patent (SEP) injunctions with only 11 weeks between the first and the fourth. Three of them came down in Munich, and one in Mannheim. Quinn Emanuel--a firm that boasts a sky-high ratio of trial wins on its website--unsuccessfully represented Daimler in each of those cases.

Yesterday (Thursday, May 19), the Landgericht München I (Munich I Regional Court) entered the latest SEP injunction against a maker of connected cars. A few hours after the OPPO v. Nokia 5G trial I've already reported on, the same division of the court--the Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann (and again with Judge Dr. Hubertus Schacht as the rapporteur and Judge Kuttenkeuler as the second side judge)--resumed the proceedings in case no. 7 O 9572/21, Godo Kaisha IP Bridge 1 v. Ford-Werke GmbH. Japan's national patent licensing firm IP Bridge won a Germany-wide permanent (though appealable) injunction against the German subsidiary of Ford Motor Company over a patent found essential to the 4G (LTE) standard, EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator." The patent-in-suit was originally obtained by Japanese electronics maker Panasonic, which declared it essential to 4G. The same patent has previously been asserted against smartphone makers OPPO and HTC, and various other defendants.

As I'll mention again further below, the decision has ramifications beyond these two parties: the fact that Ford didn't make the Avanci patent pool a counteroffer was fatal to Ford's FRAND defense.

I saw the IP Bridge v. Ford case on a list of hearings and trials right outside Judge Zigann's courtroom (501, for those who've been to the Munich court and/or like the iconic Levi's jeans). I later asked the court what happened, and received a highly informative answer today.

The injunction came down as a bench ruling, with the full-length written decision expected to issue in the near term. Even if Ford appeals, IP Bridge can enforce by providing collateral (in the form of a bond or by depositing the amount on the bank account of the Local Court of Munich) to the amount of 226.935 million euros (approximately US$240 million). Ford could try to persuade the Oberlandesgericht München (Munich Higher Regional Court) to stay the injunction, but the hurdle for that is high: a defendant needs to persuade the appeals court of its likelihood of success on the merits. Failing that, Ford could ask the appeals court to increase the security amount, but $240 million is already a significant number.

Not only is Ford enjoined from making or selling infringing cars in Germany but it also has to recall infringing products from retailers and destroy infringing products (if IP Bridge elects to enforce those parts), and it owes IP Bridge an accounting of the infringing sales so as to enable IP Bridge to calculate a damages claim (liability is has been established, but the amount is yet to be determined).

While it may take a while before the full-length written judgment becomes available, Presiding Judge Dr. Zigann explained the underlying reasons at yesterday's announcement. I'm now going to summarize the court's explanations.

The Bundesgerichtshof (Federal Court of Justice) upheld this patent on January 18, 2022 (decision in German) on appeal from the Bundespatentgericht (Federal Patent Court). The appellees were two of the three nullity complainants (presumably, Daimler is the third one that dropped out, and the other two may very well have been Continental and TomTom). The Munich court relied on the claim construction adopted by the Federal Court of Justice in that case, which was consistent with the way the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court) interpreted the patent in a different case (case no. 6 U 104/18).

Not only did Ford and its intervenors raise new non-infringement arguments in Munich but they also claimed that the patent was exhausted under some agreement between Panasonic and an unnamed third party. However, like the Karlsruhe appeals court, the Munich I Regional Court concluded that the patent-in-suit does not fall within the scope of that agreement.

Ford's FRAND defense failed because the court deemed it an unwilling licensee (and denied that a "patent ambush" defense could be raised against a post-standardization owner of the patent). The court's decision to throw out Ford's FRAND defense appears to be based on more than one reason, but the one that was mentioned is that Ford failed to make Avanci a counteroffer. It is unclear whether IP Bridge also offered a bilateral license, but with this holding by the Munich court it apparently didn't even have to.

There isn't even the slightest sign of last year's German patent injunction "reform" having played any role. German car makers and some other organizations lobbied heavily for an amendment to Germany's patent law, but simply failed to achieve anything that would have moved the needle.

IP Bridge is represented in this action (and some--but not all-- of its other German patent cases) by Wildanger, arguably the German law firm with the strongest track record in enforcing SEPs (and a go-to firm for non-SEP assertions as well. The lawyers on yesterday's winning Wildanger team were Peter-Michael Weisse, Jasper Meyer zu Riemsloh, and Ole Dirks. Ford relied on Hogan Lovells. There are some intervenors, but I don't know exactly which suppliers made an attempt to support Ford. I do, however, recall a speaker from Continental discuss this case at a recent Frankfurt "Auto IP" conference.

Munich is arguably he world's #1 SEP enforcement hotspot, also when automakers are the defendants. Just this month, Dutch telecoms carrier KPN joined other Avanci licensors suing Ford in Munich. Ford is also defending in Delaware and the Eastern District of Texas. But in those other venues, it will take some time before we see any decision.

Let me first show you the order in a narrow sense (i.e., the remedies without the reasons) in the original version (in German), which the court thankfully provided to me upon request, followed by my own (obviously unofficial) translation of the injunction (except for the claim language, which I didn't translate because the German nullity actions resulted in a narrowed version that is now unique to that jurisdiction). You can also skip the original and go straight to my translation.

Original IP Bridge v. Ford injunction

I. Die Beklagte wird verurteilt,

1. es bei Meidung eines für jeden Fall der Zuwiderhandlung fälligen Ordnungsgeldes bis zu 250.000 Euro, ersatzweise Ordnungshaft bis zu 6 Monaten oder Ordnungshaft bis zu 6 Monaten, im Wiederholungsfalle Ordnungshaft bis zu 2 Jahren, wobei die Ordnungshaft am jeweiligen Geschäftsführer der Beklagten zu vollstrecken ist,

z u   u n t e r l a s s e n,

LTE-fähige Kraftfahrzeuge mit mobilen Endgeräten, insbesondere solche mit dem Ausstattungsmerkmal „FordPass-Connect“,

die ausgebildet sind, das folgende Verfahren auszuführen:

Verfahren, umfassend die nachfolgenden Schritte, die von einem mobilen Endgerät durchgeführt werden: Empfangen eines Steuerkanalsignals von einer Basisstation, wobei das Steuerkanalsignal einen (im LTE-Standard so bezeichneten) „MCS“-Index (Modulation and Coding Scheme MCS, Modulations- und Codierschema), Information über Ressourcenblöcke in Form eines „resource indication value (RIV)“-Wertes, die zur Übertragung von dem mobilen Endgerät an die Basisstation verwendet werden, und einen Kanalgüteinformationsauslöser zum Auslösen einer Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation umfasst, dadurch gekennzeichnet, dass das Verfahren des Weiteren umfasst: Bestimmen ob der Kanalgüteinformationsauslöser gesetzt ist und ob das Steuerkanalsignal einen vorbestimmten Wert des MCS-Indexes anzeigt und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich einer vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, wobei

das Steuerkanalsignal nur für den Fall als Befehl zur Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne Multiplexieren des aperiodischen Kanalgüteinformationsberichtes mit Uplink-Shared-Channel-Daten interpretiert wird, dass der Bestimmungsschritt ein positives Ergebnis bringt, demzufolge der Kanalgüteinformationsauslöser gesetzt und das Steuerkanalsignal den vorbestimmte Wert des MCS-Indexes und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich der vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, und Übertragen des aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne Multiplexieren des aperiodischen Kanalgüteinformationsberichtes mit Uplink-Shared-Channel-Daten für den Fall, dass der Bestimmungsschritt das positive Ergebnis bringt

umfassend einen Empfänger, der ausgelegt ist zum Empfangen eines Steuerkanalsignals von einer Basisstation, wobei das Steuerkanalsignal einen (im LTE-Standard so bezeichneten) „MCS“-Index (Modulation and Coding Scheme MCS, Modulations- und Codierschema), Information über Ressourcenblöcke in Form eines „resource indication value (RIV)“ - Wertes, die zur Übertragung von dem mobilen Endgerät an die Basisstation verwendet werden, und einen Kanalgüteinformationsauslöser zum Auslösen einer Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation umfasst, wobei das Endgerät des Weiteren umfasst einen Prozessor, der ausgelegt ist zum Bestimmen, ob der Kanalgüteinformationsauslöser gesetzt ist und ob das Steuerkanalsignal einen vorbestimmten Wert des MCS-Indexes anzeigt und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich einer vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, wobei das Steuerkanalsignal nur für den Fall als Befehl zur Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne Multiplexieren des aperiodischen Kanalgüteinformationsberichtes mit Uplink-Shared-Channel-Daten interpretiert wird, dass der Bestimmungsschritt ein positives Ergebnis bringt, demzufolge der Kanalgüteinformationsauslöser gesetzt und das Steuerkanalsignal den vorbe-stimmten Wert des MCS-Indexes und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich der vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, und einen Sender, der ausgelegt ist zum Senden des aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne den aperiodischen Kanalgüteinformationsbericht mit Uplink-Shared- Channel-Daten zu multiplexen, falls die Bestimmung das positive Ergebnis bringt,

(Anspruch 9; eingeschränkte Fassung)

in der Bundesrepublik Deutschland herzustellen, anzubieten, in Verkehr zu bringen, zu gebrauchen oder zu den genannten Zwecken einzuführen oder zu besitzen;

2. der Klägerin darüber Auskunft zu erteilen, in welchem Umfang die Beklagte die vorstehend zu Ziff. I.1. bezeichneten Handlungen seit dem 7. November 2012 begangen hat, und zwar unter Angabe

a) der Namen und Anschriften der Hersteller, Lieferanten und anderer Vorbesitzer,

b) der Namen und Anschriften der gewerblichen Abnehmer so- wie der Verkaufsstellen, für die die Erzeugnisse bestimmt waren,

c) der Menge der ausgelieferten, erhaltenen oder bestellten Erzeugnisse sowie der Preise, die für die betreffenden Erzeugnisse bezahlt wurden,

wobei zum Nachweis der Angaben die entsprechenden Kaufbelege (nämlich Rechnungen, hilfsweise Lieferscheine) in Kopie vorzulegen sind, wobei geheimhaltungsbedürftige Details außerhalb der auskunftspflichtigen Daten geschwärzt werden dürfen;

3. der Klägerin in einem chronologisch geordneten Verzeichnis darüber Rechnung zu legen, in welchem Umfang die Beklagte die vorstehend zu Ziff. I.1. bezeichneten Handlungen seit dem 7. Dezember 2012 begangen hat, und zwar unter Angabe

a) der einzelnen Lieferungen, aufgeschlüsselt nach Liefermengen, -zeiten, -preisen und Typenbezeichnungen sowie den Namen und Anschriften der Abnehmer,

b) der einzelnen Angebote, aufgeschlüsselt nach Angebotsmengen, -zeiten, -preisen und Typenbezeichnungen sowie den Namen und Anschriften der Angebotsempfänger,

c) der betriebenen Werbung, aufgeschlüsselt nach Werbeträgern, deren Auflagenhöhe, Verbreitungszeitraum und Verbreitungsgebiet sowie bei Internetwerbung der Schaltungszeiträume, der Internetadressen sowie der Zugriffszahlen,

d) der nach den einzelnen Kostenfaktoren aufgeschlüsselten Gestehungskosten und des erzielten Gewinns,

wobei zu lit. a) bis d) Belege (wie beispielsweise Ausgangsrechnungen, hilfsweise Lieferscheine, Angebotsschreiben, Eingangsrechnungen, hilfsweise Lieferscheine) vorzulegen sind, wobei geheimhaltungsbedürftige Details außerhalb der rechnungspflichtigen Daten geschwärzt werden dürfen; und wobei der Beklagten nach ihrer Wahl vorbehalten bleibt, die Namen und Anschriften der nichtgewerblichen Abnehmer und der Angebotsempfänger statt der Klägerin einem von der Klägerin zu bezeichnenden, ihr gegenüber zur Verschwiegenheit verpflichteten, in der Bundesrepublik Deutschland ansässigen, vereidigten Wirtschaftsprüfer mitzuteilen, sofern die Beklagte dessen Kosten trägt und ihn ermächtigt und verpflichtet, der Klägerin auf konkrete Nachfrage mitzuteilen, ob eine bestimmte Lieferung oder ein bestimmter Abnehmer oder Angebotsempfänger in der Aufstellung enthalten ist;

4. die vorstehend zu Ziffer I. 1. bezeichneten, seit dem 7. November 2012 in Verkehr gebrachten Erzeugnisse von den gewerblichen Abnehmern zurückzurufen;

5. die in der Bundesrepublik Deutschland im unmittelbaren oder mittelbaren Besitz bzw. Eigentum der Beklagten befindlichen Erzeugnisse gemäß Ziffer I.1. zu vernichten, oder an einen von der Klägerin zu beauftragenden Gerichtsvollzieher zum Zwecke der Vernichtung auf Kosten der Beklagten herauszugeben.

II. Es wird festgestellt, dass die Beklagte verpflichtet ist, der Klägerin allen Schaden zu ersetzen, der der früheren Patentinhaberin Panasonic durch in der Zeit vom 7. Dezember 2012 bis zum 25. April 2017 sowie der Klägerin durch seit dem 26. April 2017 begangene, in Ziff. I.1. bezeichnete Handlungen entstanden ist und noch entstehen wird.

III. Die Beklagte trägt die Kosten des Rechtsstreits, die Nebenintervenientinnen tragen ihre außergerichtlichen Kosten selbst.

IV. Das Urteil ist in der Ziffer I. gegen einheitliche Sicherheitsleistung in Höhe von 226.935.000,00 EUR (Zweihundertsechsundzwanzigmillionen, Neunhundertfünfunddreißigtausend) und in Ziffer III. gegen Sicherheitsleistung in Höhe von 110 Prozent des jeweils zu vollstreckenden Betrages vorläufig vollstreckbar.“

---   ---   ---

Unofficial and shortened English translation

I. Defendant is ordered

1. at penalty of a contempt fine of up to 250,000 euros, imprisonment of up to 6 months [if the fine cannot be collected] or imprisonment of up to six months [regardless of whether a fine could be collected], in the event of repeated violation of up to 2 years, whereas Defendant's relevant managing director is the person to be imprisoned,

t o   c e a s e   a n d   d e s i s t

from, within the borders of the Federal Republic of Germany, manufacturing, offering, releasing into commerce, using or, for said purposes, importing or possessing

LTE-capable vehicles with mobile user equipment, particularly those that come with the "FordPass-Connect" feature,

that are equipped to execute the following method:


(Claim 9; narrowed version)

2. to provide an accounting to Plaintiff as to the extent to which Defendant has committed the acts set forth in Section I.1 hereof since November 7, 2021, stating therein

a) the names and addresses of manufacturers, suppliers, and other prior owners,

b) the quantities of the delivered, received, or ordered goods as well as the prices paid for said goods,

whereas Defendant is to produce copies of proofs of purchase (to wit, invoices, alternatively delivery slips), whereas confidential business information beyond the data Defendant is required to provide may be redacted;

3. to provide, in the form of a chronological list, an accounting to Plaintiff as to the extent to which Defendant has committed the acts set forth in Section I.1. since December 7, 2012, stating therein

a) the individual deliveries by quantities, times, prices and product types as well as the names and addresses of the purchasers,

b) the individual offers by offered quantities, times, prices and product types as well as the names and addresses of the recipients of the offers,

c) its advertisements by circulation, period of distribution, and region, as well as in the case of online advertisements the periods of placement, the Internet addresses, and access numbers,

d) manufacturing costs by the cost types and profits made,

whereas [further details regarding the requirements for photocopies of documents and potential redactions]

4. to recall from commercial purchasers the goods set forth in Section I.1 that have been released into commerce since November 7, 2012;

5. to destroy the goods in accordance with Section I.1 it directly or indirectly owns in the Federal Republic of Germany or to surrender them to a bailiff (whom Plaintiff would have to ask) for the purpose of destroying those goods at Defendant's expense.

II. It is adjudged and decreed that Defendant is liable to make Plaintiff whole for all demages that have arisen from the acts set forth in Section I.1 between December 7, 2012 and April 26, 2017, and will arise from such acts in the future.

III. Defendant has to bear the costs of the proceedings. Intervenors are to bear their own costs. [Explanation: since the intervenors are Ford suppliers who intervened to support the losing party, they're not entitled to a fee award.]

IV. Section I of this Judgment is provisionally [i.e., during an appeal] enforceable against a unitary security of 226,9935,000.00 euros (two-hundred twenty-six million nine-hundred and thirty-five thousand), and Section II against a security of 110% of the amount to be collected.

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BREAKING: Google blinks in in-app payments antitrust fight with Epic Games, will keep Bandcamp music marketplace on Google Play Store to moot Epic's motion for preliminary injunction


It sometimes appears that the "A" in "Apple" means "adamant" (about certain principles as well as non-principled pretexts). By comparison, Google has always tried to strike a less belligerent tone with respect to app distribution antitrust issues. Google wasn't necessarily much softer on substance, but at least more diplomatic. This Friday, however, Google made the first significant concession in the app store antitrust context: between 1 and 2 AM Pacific Time, Epic Games and Google submitted, by stipulation, a proposed order to Judge James Donato, who really really didn't want to have to adjudicate Epic's motion for a preliminary injunction over this issue. If approved (and I can't see anything in it that the judge would foreseeably take issue with), this stipulation will have the following effects--note that this is strictly just about Bandcamp, not Fortnite:

  • For the time being, Google won't kick the Bandcamp app out of its Google Play app store for Android for continuing to circumvent Google Billing. Google had allowed certain types of apps, such as that one, to use the billing system of their choice for many years, but last year announced that come June 2022, Google would rigidly enforce its requirement that all in-app purchasing (IAP) be handled by Google Billing. Google described it as a mere clarification, though I would agree with Epic and others that in reality it constituted a policy change, an about-face.

  • By "[f]or the time being" I meant that this is just temporary, like a moratorium:

    • At the very latest, this agreement terminates when the United States District Court for the Northern District of California has entered final judgment in, or otherwise disposed of, Epic Games v. Google.

    • Either party can also terminate the agreement before, with 60 days written notice.

    • Epic can seek a preliminary injunction not only after any termination of the agreement but also if the agreement "is breached by Google."

  • Both parties make it very clear in the proposed order that they don't give up any rights. Epic has to put into escrow the 10% of in-app purchases in the Bandcamp app that it would owe Google as a (reduced) commission if the new rule was enforced as of June 1. Depending on what the final outcome in the dispute is, Google might get even more than the escrow amount, or less, or nothing. If necessary, a balancing payment will be made by Epic; alternatively, the escrow account will be returned to Epic in whole or in part (if in part, Google gets the balance).

While I'm sure Google would not officially agree with my analysis that it blinked, it's a fact that Judge Donato expressed serious doubts about whether Epic could prove irreparable harm, and he was reluctant to make a determination on the merits at this stage. In order for Epic to win, he'd actually have had to find a very high likelihood of success on the merits in order to offset other shortcomings such as that Bandcamp, prior to being acquired by Epic, was preparing to comply with Google's rule. So Google could have played hardball and declined to make any meaningful concession, as I explained about a week ago. Instead, Google is now going to accept, even if only on a provisional basis, what it would normally consider a serious breach of its app distribution terms--serious enough to kick out non-compliant apps.

Judge Donato had called on the parties to be "willow trees, not redwoods" on this issue, as the Courthouse News Service reported a week ago. Google has clearly heeded what he said. What Google has stipulated to is materially consistent with what Epic's counsel asked for at the case management hearing (according to Courthouse News, quoting Cravath's Lauren Moskowitz): "If Google would agree to withdraw this policy until trial, that's all we're asking." The escrow arrangement is part and parcel of agreements in such situations, and Epic has billions of dollars in the bank, so this is not an issue. And it's not a "win" for Google that it can later seek damages for a breach of its rules (should it prevail). The bottom line is that Google wanted to vigorously enforce its new rule (mislabeled as a clarification) as of next month, and is going to refrain from doing so for the time being. The trial will take place next January, but a decision would likely still take a number of months, so this interim agreement could be in place for about a year.

What about other apps?

This here is just an inter partes agreement, not a decision by Google to generally waive its rule. But other app makers than Epic will also be affected by the new rule. One of them is Match Group (best known for Tinder). Match Group filed a motion for a temporary restraining order. Google has struck largely the same kind of agreement with Match Group, though it's unclear how soon the trial in the Match Group case will take place (theoretically the court could try to rush things the way Judge Yvonne Gonzalez Rogers did in Epic Games v. Apple, and then the Match Group complaint could be tried at the same time, or right after, Epic's case, but that would be a highly ambitious schedule).

The fact that others might now ask for the same kind of grace period must have played a role in Google's analysis of its option, which further supports my take that Google has blinked.

To be clear, I don't mean it negatively when a company tries to work out solutions rather than exacerbate problems and escalate conflicts. Apple might try that for a change.

Just this week, Microsoft President Brad Smith gave a speech in Brussels on Microsoft's attitude, which he elaborated on in a blog post, Microsoft responds to European Cloud Provider feedback with new programs and principles. Professor (and well-known EU antitrust attorney) Damien Geradin discussed Mr. Smith's speech on the Platform Law Blog and would also like to see other players "[e]mbrac[e] rather than fight[] digital regulation."

The most optimistic way to look at both Microsoft's speech and Google's interim agreement with Epic is that cooperation trumps confrontation and that this is now a trend--with everyone waiting for Apple to join.

Finally, here's the Epic-Google stipulation:


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Thursday, May 19, 2022

OPPO says Nokia base stations infringe patent that is foundational to 5G as key enabler of ultra-reliable low-latency communication (URLLC): Munich litigation

This morning, the Landgericht München I (Munich I Regional Court) held a first hearing in case no. 7 O 14390/21, Guangdong OPPO Mobile Telecommunications Corp.. Ltd. v. nokia solutions over EP3598819 on a "method, apparatus and system for transmitting periodic uplink information/signals." The asserted claim is (apparatus) claim 9. OPPO's lead counsel, Professor Tilman Mueller-Stoy, was accompanied by attorney-at-law Dr. Jan Boesing ("Bösing" in German) and patent attorney Tobias Kaufmann. The Bardehle Pagenberg team squared off with Boris Kreye of Bird & Bird, another lawyer (presumably from Bird & Bird) I didn't know, and Samson patent attorney Alexander Muenster ("Münster" in German).

While Nokia is pursuing injunctive relief against OPPO in numerous cases around the globe, it turned out that OPPO has not (yet) requested injunctions in its countersuits in Germany, though Professor Mueller-Stoy reserved his client's right to do so at a later stage if need be. For the time being, OPPO is just seeking a judgment on the merits, i.e., a finding that it's entitled to damages for past infringement (with the amount to be determined further down the road).

Whatever the remedies may ultimately be, this was a historic event. Unless I've missed something in an exotic jurisdiction, this was the first time in history for a court to hear a case in which OPPO is enforcing a patent. It's not that OPPO doesn't have plenty of them: it's a major SEP holder especially but not only in 5G, and owns numerous non-SEPs, too. But it makes huge volumes of consumer electronics products, so OPPO is a net licensee despite a formidable patent portfolio that it calls its own.

I hadn't seen Professor Mueller-Stoy in action for almost a decade. I've linked to a few of his write-ups, and today I saw him again in the vey same place and courtroom where he achieved great results for Microsoft v. Motorola in the early 2010s. His performance was impeccable: structured, coherent, compelling.

His counterpart Mr. Kreye was also very good (and the two treated each other with great respect and civility), but fighting an uphill battle on some issues. When Mr. Kreye argued that OPPO should have picked other defendants from the Nokia group than the two German legal entities it's presently suing in Munich, he insisted that the official minutes (in German proceedings, there's no transcript--it's up to the presiding judge to dictate the minutes) should mention that the same law firm representing OPPO, Bardehle Pagenberg, was representing Vivo in another case against Nokia, but targeting two Finnish entities (Nokia Corp. and Nokia Solutions and Networks). That's a Dusseldorf case I also found out about this month. But pointing to an unrelated case (with the overlap being limited to outside counsel) is not a substitute for clearly denying that the defendants in the present case have a hand in the allegedly infringing actions, which is why Judge Dr. Zigann (who previously alerted Nokia to the insufficiency of its attempted denial) asked: "So, what's your point?"

There are a couple of disputed claim constructions in the case, but Nokia's attempts to narrow the scope of the claims didn't appear to get much traction. Unless Nokia manages to persuade the court that the disputed limitations should be interpreted narrowly, the focus at the second hearing--the actual trial--on March 9, 2023 will likely be on the infringement analysis. While I don't mean to say that this is going to be a get-out-of-jail-free card for Nokia, this here is one of a minority of German SEP cases in which the defendant denies that its devices actually implement the relevant part of the standard. Most of the time, those cases turn on whether the SEP-in-suit reads on the standard that the accused devices are advertised to be compliant with. (In the event of an enforcement proceeding, actual infringement does come into play--but normally not before.)

A key term brought up by OPPO's counsel in this regard was URLLC: ultra-reliable low-latency communication. Here's a Nature Electronics article on the subject--and the Wikipedia article on 5G states in its "Application areas" section that URLLC is about "using the network for mission critical applications that require uninterrupted and robust data exchange."

Professor Mueller-Stoy started his argument today by stressing that low latency is absolutely key to the advantages 5G offers over 4G, and that the patent-in-suit covers a groundbreaking invention enabling low latency by minimizing the number of messages going back and forth between a base station and a handset seeking permission to send data on an uplink channel, and by organizing such coordination in a way that allows the base station to release some of its resources by determining it doesn't have to listen to a particular end-user device in a given situation.

In cellular SEP cases one can increasingly see 4G patents that also read on 5G (at least allegedly). 4G was named LTE: long-term evolution. LTE was a paradigm shift from 3G and meant to serve as a basis for several future standards. Some 4G techniques are found in 5G as well. A good example is EP'103, the patent the Mannheim court discussed at the recent Nokia v. OPPO trial. Presiding Judge Dr. Holger Kircher said that the implementation of the same technique in 5G didn't differ from the one in 4G to the extent that the court would even have to make a distinction for the purposes of that case.

5G-only patents like OPPO's EP'819 (today's patent-in-suit) are deemed particularly valuable. Based on what I heard in that Munich courtroom today, I start to see why: if a major performance increase can indeed be attributed to a specific patented invention, and if that performance enables particular applications such as fully autonomous driving, that means something.

Nokia pointed to the fact that the patent had only been granted last summer, so any infringement allegations would have to relate to the period since then. And Nokia asserts that the part of the standard that OPPO says the patent reads on isn't mandatory. However, in order for OPPO to win the case, it's sufficient if there are some scenarios in which an infringement occurs. OPPO appears convinced that the patent is infringed when 5G is used for low-latency communication, and in this context pointed to a private 5G network that Nokia set up for Volkswagen at its Wolfsburg HQ. I've googled a December 6, 2021 press release by Nokia on the Wolfsburg deployment, which indeed touts "reliable high-bandwidth and low-latency connectivity for sensors, machines, vehicles and other equipment".

The Munich court is so busy--in general, but also with this Nokia v. OPPO/OPPO v. Nokia dispute, in which there'll basically be hearings and trials every month now--that it couldn't give the parties a sooner trial date than next March. This means the parties now have several months for the next pleadings. Mr. Kreye stressed that Nokia had a "bunch" of defenses. But it's not a numbers game. If they have an availing defense, one is enough. Today it seemed like Nokia was on the defense, which is a rare sight--even more so in Munich.

By now I'm sure Nokia has realized that OPPO is an adversary of a different caliber than Daimler. I have no doubt that Nokia will ultimately earn very significant royalties as OPPO's exposure to patent assertions is far greater. But the question is how much more Nokia can get under the next deal than under the one that expired last summer--and at some point Nokia will have to ask itself whether protracted litigation is likely to be profitable. OPPO's countersuits make the FRAND analysis more interesting than in cases where you have only one licensor and one licensee.

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FTC chair Lina Khan tells ITC 'exclusionary relief is [...] against the public interest where a court has been asked to resolve FRAND terms and can make the SEP holder whole': Philips v. Thales et al.

It's hard to think of a standard-essential patent (SEP) holder I trust less to be fair than Philips. Before Philips settled with Xiaomi, there were clear signs of Philips just seeking leverage from injunctions and trying to prevent Xiaomi's licensing negotiators from knowing the terms of comparable license agreements. There also appear to be interesting issues in the multijurisdictional dispute between Philips and French industrial giant Thales, and this week the Chair of the Federal Trade Commission, Lina Khan, filed a public-interest statement in the investigation of Philips's complaint against Thales and several other defendants. She was joined by Commissioner Rebecca Kelly Slaughter (like her, a Democrat--and that party now has a 3-2 majority of the votes as the Senate confirmed Álvaro Bedoya).

SEPs have so far not really been a priority topic for Ms. Khan (nor for Jonathan Kanter's Antitrust Division of the DOJ). Also, it's important to note that the statement in ITC investigation no. 337-TA-1240 is not based in antitrust law per se: the two commissioners make it clear that they are not claiming to have identified a violation of the federal antitrust laws (Sherman Act, FTC Act). There's also a disclaimer regarding the specific issues in the case. But the bottom line is that they urge the ITC, a U.S. trade agency with the quasijudicial power to order import bans against infringing products, to seriously consider whether monetary relief would be sufficient to make SEP holders (in this case, Philips) whole. Administrative Law Judge David P. Shaw recommended an import ban, though he also recommended that it "be delayed by 12 months" in order to "mitigate its effects on third parties" by giving the respondents sufficient time not only to develop workaround products but also to have them (re-)certified. A 12-month workaround period is unusually ong by ITC standards, but if any truly essential patent was at issue, it couldn't be worked around even in 12 months.

All of this is, of course, subject to whether the decision made by the Commission, the ITC's top-decision making body, results in a finding of a violation at all.

Assuming that the ITC's final determination comes down to an infringement finding and an import ban is ordered (with or without a grace period), there'll be a Presidential review. And at that stage the FTC's input could make a decisive impact. U.S. presidents typically delegate the authority to veto ITC import bans to the U.S. Trade Representative.

Just yesterday, IPWatchdog published an opinion piece by former two-term ITC chair Deanna Tanner Okun warning against weakening the ITC's Sec. 337 remedy (import bans) with respect to SEPs. That article expresses concern over the new SEP policy statement that is in the making. But I'm sure Mrs. Tanner Okun isn't happy about the two FTC commissioners' public-interest statement in the Philips case either.

Finally, let me show you the document (for the first time I'm using DocumentCloud to publish a document here, as I continue to have issues with Scribd):

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Huawei, Nokia antitrust dispute over component-level licensing of automotive suppliers: Dusseldorf complaint over standard-essential patent license withdrawn

In retrospect, Nokia's standard-essential patent (SEP) dispute with Daimler was just a distraction, but its net effect is that car-level SEP licensing has won. In the end, even Daimler simply took an Avanci pool license--a result it could have had sooner and cheaper. Continental is still throwing good money after bad in its U.S. antitrust and contract lawsuits that aren't going anywhere (even if Conti's petition for a rehearing was granted despite the case as a whole being meritless, Conti would still be a far cry from making the slightest headway, after almost three years of suing). "Incompetental" might be a more appropriate name in this context. Thales made the mistake of suing in Munich, a venue where the judges had taken a pretty clear position on the issue already during various infringement proceedings. And as we speak, Ford--which has already been sued by seven Avanci licensors--is defending itself against IP Bridge before the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) of the Munich I Regional Court. Component-level license deals have been made and will continue to be struck--but in one of the clearest signs that policy makers and competition regulators don't take issue with most SEP holders' preference for granting licenses at the end-product level, the European Commission recently told a Member of the European Parliament that SEP holders should simply sue automakers if they don't get paid--a position that the Commission wouldn't possibly have taken if the licensing level was a hot-potato issue.

There was only one initiative in recent years that might have been a game-changer: Huawei's third-party counterclaim against Nokia. Huawei was one of the intervenors in Nokia v. Daimler. Unlike Continental, which supplied Daimler directly, Huawei was a tier 2 supplier that sold network access devices to the likes of Conti. Huawei wanted to protect its indirect customer Daimler. For example, roughly 85% of all Daimler cars were covered by a component-level license agreement between Huawei and Sharp. Huawei had a cross-license in place with Nokia, but not necessarily one that bailed out Daimler by extension. Huawei wanted legal certainty and brought that Dusseldorf case, with a legal theory that Judge Dr. Thomas Kuehnen ("Kühnen" in German), the Presiding Judge of one of the two patent-specialized divisions of the Dusseldorf Higher Regional Court (regional appeals court) had outlined in an academic article.

Presiding Judge Sabine Klepsch of the lower Dusseldorf court's 4c Civil Chamber severed that antitrust counterclaim from the patent infringement action that gave rise to a referral to the European Court of Justice (which never resulted in a decision as Nokia and Daimler settled). Huawei v. Nokia was assigned case no. 4c O 17/19. The fate of that case was potentially linked to the preliminary reference in Nokia v. Daimler, but after Daimler settled with Nokia, Huawei would still have been free to demand that Nokia make a FRAND offer for an exhaustive component-level license.

I was wondering what ever happened to that case, and contacted the Dusseldorf Regional Court's press office. The court's spokeswoman informed me today of the voluntary dismissal of Huawei's complaint. [Update] I subsequently reached out to Nokia for comment. Nokia informed me that the complaint was withdrawn in late 2021. "Huawei voluntarily withdrew the complaint without any settlement between the parties," Steve Bartholomew (Head of Communications and Marketing for Nokia's licensing business) insists. Now, this doesn't necessarily mean to me that the dismissal wasn't part of some broader arrangement between the parties. But it sure does mean that no agreement on a license covering automotive components was struck. [/Update]

In the end, both Huawei and Nokia are major SEP holders. Huawei has a much larger product business, but is currently--as a result of trade sanctions and the overall chipset shortage--unable to serve customers in the Western hemisphere the way the company otherwise could. If Huawei and Nokia put the Dusseldorf dispute aside, it's a safe assumption they're not going to sue each other over patents anytime soon.

Instead of relying on the preliminary reference in Nokia v. Daimler and the severed Huawei v. Nokia antitrust action, the likes of Thales and Continental could have filed their own Judge Kuehnen-inspired antitrust complaints in Dusseldorf. Instead, as I noted further above, Conti decided to waste huge amounts of money on U.S. lawsuits that lacked substance from the get-go, and Thales sued in Munich, compared to which it would even have made more tactical sense to sue Nokia in its home country of Finland (to its credit, Thales did make a smart and really interesting venue choice for its action against Philips and ETSI, a Paris case that may end up complicating Philips's aggressive patent monetization efforts).

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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 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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