Thursday, September 1, 2022

OPPO keeps trying to overturn Nokia's four German patent injunctions: overview of issues before Karlsruhe and Munich appeals courts

OPPO's withdrawal from the German market due to patent injunctions has been described as temporary, but no official date has been set for the return of OPPO's products to that market. Presumably it depends on what happens in litigation, especially but not only in the dispute with Nokia.

Last week it became known that OPPO is now seeking multiple patent injunctions of its own against Nokia in Germany. The related complaints were already pending and, by way of amendments, the smartphone maker added claims for injunctive relief.

Besides following the old adage that a good offense is sometimes the best defense, OPPO clearly hasn't given up on the defensive-defensive side either. As I learned from the Karlsruhe Higher Regional Court's press office, Nokia had until yesterday to respond to the first of OPPO's motions to stay enforcement. So far, Nokia has won two injunctions each in Mannheim and Munich, while the Dusseldorf Regional Court stayed two cases pending parallel nullity actions. Appeals from Mannheim patent cases are heard by the Karlsruhe Higher Regional Court; Munich has an appeals court in the same city (Munich Higher Regional Court).

At this procedural juncture I've tried to find out a little more about what issues could give rise to orders staying enforcement, particularly of the two Mannheim injunctions (which came before the two Munich judgments).

EP1704731 (WiFi non-SEP): invalidity argument

Ahead of the May trial in this case, I expressed my skepticism as to whether that patent protects an actual invention. Nokia engages in serious innovation, but that particular patent looked more like an "injunction gap play" to me: an opportunistic attempt to gain leverage based on a patent that shouldn't have been granted in the first place.

The patent basically teaches this: there are WiFi networks that broadcast messages to make their presence felt, and there are some that wait until an end-user device asks around, and if you know that a network proactively indicates its presence, don't send a message asking whether it's there. While this is undoubtedly efficient, it's also a very obvious thing to do--and the patent broadly claims any implementation of that simple principle. But that's just my thinking as a software developer, and courts want to see prior art rather than just rely on common sense. Here's a Github print-to-PDF document that shows an open source project did the same thing as EP'731 teaches--and a couple of days before that patent's priority date:

I haven't found out why the Mannheim court's Second Civil Chamber didn't arrive at the conclusion that the patent was rather unlikely to be valid. We'll see what the appeals court makes of this. One doesn't even have to understand the program code I just showed you: the comments in the source code are sufficient to anticipate the claimed invention.

2. EP2981103 (4G/5G SEP): non-essentiality argument based on Excel spreadsheet

EP'103 won Nokia a Mannheim injunction against Daimler in August 2020, and against OPPO a couple of months ago. I have my doubts that things would gone quite this smoothly for Nokia with EP'103 if the first defendant had been a smartphone maker like OPPO with many thousands of SEPs of its own and lots of expertise in standardization. I can't help but suspect that the primary reason why Presiding Judge Dr. Holger Kircher was unreceptive to OPPO's non-essentiality (and, by extension, non-infringement) argument is that a holding of non-essentiality in Nokia v. OPPO would mean that the opposite conclusion in Nokia v. Daimler was wrong. But as I wrote in my commentary on that trial, OPPO made at least one argument in a more elaborate and compelling form than Daimler did.

The short version is that what is claimed is a sort order of numbers, but the sort order prescribed by the 4G standard (and 5G, where nothing changed about this) deviates. I've now found out that OPPO told the Mannheim court that there were inconsistencies in more than 48% of cases. OPPO's research dug deeper than Daimler's, and that's why I think a different outcome would have been warranted.

As I explained in the trial report I just linked to, OPPO looked not only at the PDF documents describing the 4G standard, but also at a Microsoft Excel spreadsheet that--just like the PDFs--is an official part of the standard. Some numbers that appeared to be identical actually aren't in the internal representation: the raw material has a higher resolution (15 post-point decimals) than what is displayed (which is rounded to 9 post-point decimals). I've meanwhile obtained Appendix B to standardization proposal R1-081044, which is related to Ordering Table 5.7.2-4 of the 4G standard. In the following two screenshots, you can see that a more precise number is shown in the input box above the table when one selects a cell--and while the two exemplary cells appear to contain identical numbers, they actually don't the moment one selects a given cell (click on an image to enlarge):

3. EP'103 (4G/5G SEP): validity still being challenged

The procedural history of this patent is that the Federal Patent Court issued a preliminary opinion last year, according to which the patent was likely valid. Daimler wasn't going to pursue its nullity complaint after its settlement with Nokia, but two of its suppliers--Continental and TomTom--also withdrew their nullity complaints between the preliminary opinion and the nullity hearing (even though they did carry on with their challenges to some other Nokia patents).

Nokia's lead patent counsel on this one is df-mp co-founder David Molnia, who is qualified both in Europe and the United States, and about whose work I've heard very positive things even from former adversaries (in fact, as outside patent counsel to IPCom he used to be adverse to Nokia for many years, and the quality of his work apparently convinced them that it was better to have him on their side).

So there are factors in place that suggest it's not going to be easy to get EP'103 invalidated--but it seems OPPO believes that just like it has a fundamentally stronger non-essentiality argument than Daimler, it can also achieve a better result in the parallel nullity proceeding. This could still get interesting.

4. FRAND arguments

The part that's hardest to research is FRAND, given the parties' confidential business information at stake. Only sparse information comes to light, but I was provided with translations of a few FRAND-related passages from the Mannheim court's EP'103 judgment. The only specific criticism of OPPO's counteroffer that I know the Mannheim court considered to indicate an unwillingness to take a license on FRAMD terms is this:

"In view of OPPO's substantially increased sales figures, any blanket license for the cellular portfolio on which the counteroffer is based is clearly not FRAND."

In my opinion, the attitude reflected by that sentence amounts to dual standards:

  • On the one hand, the Mannheim court (like other German courts, and also the courts in the UK and some other European jurisdictions) applies the ECJ's Huawei v. ZTE guidance to the effect that implementers must take a global license because it's common industry practice (while country-by-country piecemeal resolution is not).

  • On the other hand, the court then tells OPPO that a lump-sum offer "is clearly not FRAND"--though it's extremely common in wireless SEP licensing as it reduces administrative overhead and provides the licensor with predictable recurring revenues for the duration of the license agreement.

Again, most of the FRAND part of the case isn't known. But this part is known and suggests that an appeals court may very well reach a different conclusion.

Also, it won't be lost on the appeals courts in Karlsruhe and Munich that not a single implementer has been deemed a willing licensee in Munich and Mannheim in several years (the last exception were Philips v. TCL and Philips v. HTC, both in Mannheim and more than four years ago). That is implausible. There are hold-outs, sure. But they can't all be unwilling licensees. I already raised that issue in January.

So there are various reasons for which the appeals court's decisions on OPPO's motions to stay Nokia's injunctions could be very interesting, and might change the situation.