Wednesday, September 14, 2022

Ericsson calls Apple's App Store security claim into question in patent infringement case that may get WhatsApp for iOS banned in Germany

This morning, the Munich I Regional Court held a first hearing (a prelude to a trial that has been scheduled for April 19, 2023) in the first Ericsson v. Apple case to be heard by a German court as part of the current dispute. The patent-in-suit is EP2220848 on "mobile access to internet-based application with reduced polling" (a non-standard-essential patent). The accused technology is not the iPhone per se, but an iPhone running the iOS version of WhatsApp. Ericsson is seeking an injunction, and if it succeeded (as it very well might), Apple would be precluded from providing WhatsApp (and potentially other apps with similar technical characteristics) to its German users.

The hearing went pretty well for Ericsson as the court's 21st Civil Chamber (Presiding Judge: Dr. Georg Werner) agrees with the plaintiff's--not Apple's--claim construction and Apple so far doesn't seem to be able to deny the infringement contentions with sufficient specificity.

As an app developer who frequently criticizes Apple's App Store monopoly and especially the app review tyranny at the heart of it, I really loved to see Apple's security pretext--which comes up in all litigations, regulatory processes, and political debates over the App Store monopoly--being debunked by Ericsson in open court. Obviously, Ericsson just wants to win its case in order to reach an agreement with Apple on a renewed license agreement; the Swedish company isn't pursuing the agenda of App Store complainants like Epic Games. But that doesn't make Ericsson's litigation strategy any less helpful to the app developer community.

Apple's marketing claim that all App Store apps are secure because of Apple's manual app review plays a role here only because Apple denies knowledge of WhatsApp's internal communications protocols. In a U.S. patent case, that wouldn't matter: there would be third-party discovery, and WhatsApp (a Meta/Facebook subsidiary) would have to provide documents, answer written questions, and provide witnesses. Not so in Germany where a patent infringement case is resolved based on the parties' pleadings and representations.

Ericsson's lead counsel in this case, Kather Augenstein co-founder Dr. Christof Augenstein, masterfully exposed the contradiction between Apple touting the security of the App Store on the one hand while then denying to know how WhatsApp actually works when it hopes to avoid a patent infringement finding.

Dr. Augenstein raised very valid questions:

"On Apple's website we can see how much security matters to Apple. They're talking about the security of all apps that are available on the App Store. Well, then you should also know those apps' communications protocols. But then, all of a sudden, Apple now says WhatsApp is a black box to them. If that is so, what's the basis for that marketing claim? How can Apple be sure that all those apps are secure if it doesn't even know how they work? How can Apple say so?"

He went on to discuss the Developer Program License Agreement--excerpts of which he handed out to the court and Apple's lawyers as an additional exhibit--that all iOS app developers are forced to sign. Dr. Augenstein explained that under that contract (which Apple unilaterally dictates) developers are required to answer Apple's questions about the inner workings of the apps they submit to Apple's app review.

While he didn't say this, I'd like to add one thing here: during the pendency of this litigation, which began in January, WhatsApp for iOS has presumably been updated many times. Every single time, Apple could have withheld the approval of an updated version--and, under the terms of its anticompetitive DPLA, could even have threatened to eject WhatsApp for iOS from the App Store--if it had not been provided with definitive answers on the questions raised by Ericsson's patent assertion in Munich.

Also, the fact that Apple is defending itself against Ericsson while still distributing WhatsApp for iOS in Germany shows that Apple doesn't apply consistent standards to app developers whose products are accused of intellectual property infringement. If the same had happened with respect to a less popular app, Apple would simply have pulled it from the store, even if the allegations had not been meritorious. However, WhatsApp is by far and away the most popular messenger in Germany: virtually everyone uses it there. That's why kicking WhatsApp out of the App Store would even have the potential to reduce demand for the iPhone, and could lead many German users to switch to Android.

Apple is being defended against the German Ericsson cases by a Hogan Lovells team led by Dr. Andreas von Falck. Today, most of the defense argument was delivered by Dr. Benjamin Schröer, who then had to admit the obvious: that Apple obviously can't employ "a billion software engineers" to look into the inner workings of each and every iOS app. In other words, Apple claims to be able to guarantee security, but it's just common sense that manual app review can't make a major difference. If one divides the number of personhours in Apple's App Review department (of about 500 people) by the number of apps (most of which are updates to existing apps) reviewed per week, it comes down to something like 10 minutes per manual app review (on average). It's not like app review never detects any security issue: from time to time, they will find something. It's just that a minor--if not even negligible--security benefit cannot reasonably justify an app distribution monopoly and an app review tyranny with partly nonsensical rules that are just designed to squeeze developers and capitalize on consumer lock-in.

As an app developer I obviously don't like the idea of Apple or other device makers being sued by patent holders over third-party apps as opposed to hardware or operating system features (or Apple's own apps). However, it's an inevitable consequence of Apple's app distribution monopoly. Others will likely do the same as Ericsson. Apple wouldn't be liable for WhatsApp if it was installed directly ("sideloading") on iPhones or distributed only by third-party app stores.

At this procedural juncture, Ericsson is more likely than not to prevail on this patent. Another hearing (over a standard-essential patent) is about to begin now.

Dr. Augenstein really impressed me today. I knew of his reputation as one of the best patent litigators in Germany. Just about 24 hours before this hearing, he moderated an event at the AIPPI conference in San Francisco. I saw a video on LinkedIn in which he apologized to the audience for having to leave early. This morning he was the most energetic person in the room and super-focused. One would never have thought that he had just been on a 10-hour flight.