Wednesday, March 1, 2023

OPPO asserting patents from Huawei against Nokia in Germany while Indian court notes OPPO's rejection of Nokia's recent arbitration proposal

Approximately 20 months after Nokia sued OPPO, the two companies' positions appear to be further apart than ever. Time is on OPPO's side, however:

  • Nokia's financials are affected by not getting any patent royalties from OPPO (and Vivo, a dispute on which I provided an update a few days ago).

  • A Chinese court in Chongqing will in the not too distant future make a FRAND determination that Nokia seems to try hard to avoid: Nokia's strategy is to gain leverage in the meantime, which is why Nokia obtained a preliminary injunction in Brazil (I mentioned this latest escalation of the dispute on LinkedIn).

  • At some point OPPO may beat Nokia at its own game and get decisive leverage from an injunction--not because that was OPPO's original idea, but as a result of a protracted dispute.

It became known about a week ago--as I mentioned on LinkedIn first--that OPPO brought three additional patent assertions against Nokia in January. They all involve patents that belong to Huawei but have been exclusively licensed to OPPO, which is sufficient to confer standing in Germany. These are the patents-in-suit:

  • EP3386131 on an "information transmission method and device"

  • EP2863570 on a "method, user equipment, and base station evolved node for determining precoding matrix indicator"

  • EP3582567 on an "indication method and device for physical resource block (prb) grid"

With respect to the last one of those patents, the Mannheim Regional Court has confirmed that OPPO amended an existing complaint to assert that patent. The other two patents are being asserted in Munich.

Nokia issued a statement, the first sentence of which holds this strategy against OPPO's own portfolio:

"The fact that OPPO has had to resort to using another company’s patents to bring these actions against us significantly undermines OPPO’s arguments on the strength of its own 5G patent portfolio."

I believe the reason OPPO is asserting those Huawei patents is not that it doesn't have confidence in the value of its own patents. The primary benefit that OPPO gets out of this strategy is that it adds an element of unpredictability. Unlike assignments, exclusive licenses are not registered. No one knows what exclusively-licensed patents (and from whom) OPPO may assert in the next countersuit. As for the value of the portfolio for FRAND purposes, the courts will have to consider exclusively-licensed patents just like homegrown patents or assets that were reassigned to OPPO.

I understand what Nokia wants to say, but German patent cases are not like U.S. jury trials, where psychological elements can impact the outcome. The German judges will just look at those patents in terms of whether they're valid and infringed.

In December, Huawei signed patent cross-license agreement with both OPPO and Nokia.

There is an indication now that Nokia wants more--potentially a whole lot more--from OPPO than under the previous (2018-2021) license agreement. As IAM was first to report (paywalled), Nokia made an arbitration proposal in India, but the court noted that OPPO is going to decline. The first provision of that proposal--as quoted by the Delhi High Court--is the following:

"Oppo pays the same amount as under the 2018 Agreement directly to Nokia as an interim payment. This interim payment will obviously will not be reflective of the full FRAND rate for the new licence agreement."

In November, the Indian court denied a Nokia motion to force OPPO to make such interim payments. The passage from Nokia's proposal that I just quoted is probably not the only reason why OPPO is unreceptive to the idea. But if OPPO accepted that one, it would imply that Nokia is now entitled to a higher royalty rate.

Nokia's proposal would have involved a stay of all pending litigation around the world while arbitration would be taking place in Hong Kong or Singapore. Contrary to de-escalation, however, Nokia obtained a preliminary injunction in Brazil as I mentioned further above.

What represents far more of a contradiction is that Nokia makes an arbitration proposal in 2023, but in 2022 Nokia told a UK court that "it was now too late to arbitrate this dispute given the passage of time since 1 July 2021 and the substantial investments made by the parties in litigation in the national courts."

In an IAM interview, OPPO's IP chief Adler Feng stressed that OPPO wanted to start mediation even before Nokia's first 2021 lawsuit against OPPO. And he pointed to a passage from a UK court ruling that I had also quoted in November 2021 and according to which "the Chongqing Court, if and when it rules on royalty rates, will do so justly."