Thursday, September 21, 2023

Unified Patent Court's Helsinki Local Division denies preliminary injunction request over patent opted out despite previously filed (and still pending) national litigation

As I first predicted and then mentioned on LinkedIn, the Unified Patent Court's Helsinki Local Division today denied an application for provisional measures (the equivalent of a preliminary injunction request) in AIM Sports v. Supponor. The plaintiff had opted out the patent-in-suit from the UPC system despite previously filed national litigation (UK, Germany) that is still pending (before the appeals courts). The four-judge panel found that the opt-out had preclusive effect on the patent's assertion in the UPC, an effect that could not be undone by later seeking to reverse the opt-out.

I attended the first part of the hearing and quickly saw that the motion was a long shot. Apparently the national injunctions that are in force have not served to strengthen AIM's competitive position, particularly with a view to an ongoing tender (which will come to its conclusion in a matter of months) by European soccer body UEFA for digital stadium perimeter advertising technology. This is a case between direct rivals, making a licensing-based settlement unlikely.

The funny coincidence is that I am actually now on my way to a soccer match (Brighton and Hove Albion vs. AEK Athens, a Europa League group stage match). That's why I didn't stay in Helsinki until the decision was announced at 4:30 PM local time (2:30 PM UK Time, 3:30 PM Central European Time).

Let me show you the judges. From left to right: Judge Samuel Granata (Belgium), Presiding Judge Petri Rinkinen (Finland), Judge Mélanie Bessaud (France), and Technical Judge Éric Augarde (France):

If the case had surmounted this procedural hurdle and other jurisdictional challenges, it would have raised the interesting question of a so-called springboard injunction, which is an injunction that prohibits commercial activity that benefits from prior infringing acts (while injunctions are normally just a prospective remedy in every respect).

But the court would have had other ways of disposing of the motion. For instance, the urgency part looked weaker than in last week's Vienna case (where the question wasn't resolved either) and UPC Munich case (one such case resulted in a preliminary injunction on Tuesday while a parallel case is under advisement, with Presiding Judge Dr. Matthias Zigann having said in open court that the question of urgency could be decided either way).

It is easy to understand why the Vienna and Helsinki Local Divisions resolved the PI requests based on only a single issue in each case. It is the fastest way to adjudicate a PI motion, and especially the "smaller" local divisions may prefer to leave it to the likes of Munich to decide legal questions of first impression, which will ultimately be adjudicated by the Court of Appeal anyway.

AIM was represented by four law firms (Roschier, Powell Gilbert, Rospatt, and--only by video conference--Noerr). Supponor's lead counsel was Hogan Lovells' Dr. Henrik Lehment, whose English rhetoric was concise, easy to follow, and persuasive. During the limited part of the hearing that I attended, he was the only lawyer to speak for the defendant, but that is not meant to discount the potential contributions made by Gleiss Lutz' Dr. Matthias Sonntag and Hannes Snellman's Panu Siitonen.

It remains to be seen whether AIM will appeal. I don't think an appeal is likely to turn this case around, but many people--judges and practitioners alike--would appreciate the clarification that it could provide.

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Tuesday, September 19, 2023

BREAKING UPC NEWS: 10x.Genomics wins preliminary injunction against NanoString

The Unified Patent Court's Munich Local Division (Presiding Judge: Dr. Matthias Zigann) just announced a preliminary injunction in 10x Genomics v. NanoString. That is the case that was heard two weeks ago. The parallel case heard today raises some new questions, particularly also concerning urgency, with a decision scheduled for October 10.

I may add more detail later. For now I just wanted to share the information at the earliest opportunity. This is the first announcement of a UPC injunction in open court. In Vienna last week, an announcement was also made, but an injunction was not granted.

An appeal to the UPC's Court of Appeal in Luxembourg (Presiding Judge: Dr. Klaus Grabinski) pretty much a given.

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Monday, September 18, 2023

Avanci 5G doubles number of licensees, quadruples number of licensed brands as BMW signs up: Volkswagen/Audi next?

The Avanci 5G automotive standard-essential patent (SEP) pool revealed Mercedes-Benz as its first licensee last month. Today the licensing program announced that BMW has joined as well, which takes the number of licensed brands from one to four: Mercedes, BMW, MINI, and Rolls-Royce. Today's press release also indicates that the number of licensors has increased from 58 to 61.

By now, almost the entire automotive industry has an Avanci 4G license. But back in 2017, BMW became Avanci's first 4G licensee. It took a while for that pool to be widely adopted. Things appear to be going significantly faster with Avanci 5G now.

In retrospect, BMW's decision made business sense unless one believes in the illegal concept of group boycott: Mercedes (then named Daimler) and Volkswagen did not save money by opposing the Avanci model. They ended up choosing the pool license over bilateral licensing negotiations and disputes, but unlike BMW they incurred litigation expenses (in Volkswagen's case, the dispute was short-lived and due to the fact they licensed only 3G patents for most of the cars the group makes). BMW saved money, time, and energy. They stayed above the fray.

While I have not yet seen a German SEP infringement case targeting BMW, they are clearly not a soft target for non-SEP holders. Typically represented by Bardehle Pagenberg's Professor Tilman Mueller-Stoy ("Müller-Stoy in German), BMW is known to defend itself vigorously against patent infringement assertions, though most of the time the outcome is, obviously, a license agreement. If such a company takes a license without litigation, it must have concluded that the licensed patents are valuable.

Germany's remaining three automotive brands are Volkswagen, Audi, and Porsche, all of which belong to Volkswagen Group. Audi and Porsche clearly compete in some of the same market segments as BMW and Mercedes. It would make a lot of sense for VW to join the pool now. Sooner or later, some 5G SEP holders will start to enforce their rights against unwilling licensees. Just like German judges pressed Mercedes (then named Daimler) to explain why a license that had been taken by their closest (and equally German) competitors: BMW and Audi. I doubt that Audi would want to have to justify--particularly in front of the same judges who heard Nokia v. Daimler--a refusal to take a license that Mercedes and BMW deem to make economic sense.

Just like actions speak louder than words, real-world license deals are way more meaningful than spin doctoring and political propaganda. Mercedes-Benz told the EU that the proposed SEP regulation (or something even more lopsided) was badly needed, yet became the first Avanci 5G licensee because they deemed it prudent. Similarly, BMW Group is now an early adopter of the Avanci 5G license, yet it is a member of the Fair Standards Alliance and of certain automotive industry organizations that take similar positions.

There's nothing difficult to understand: every company would like to bring any cost category--here, cellular SEP license fees--down, even if such costs are already fair and reasonable. Automakers are no different. That is unrelated to the merits of Avanci providing a one-stop solution that Mercedes and BMW have twice (4G and now 5G) considered superior over dozens and dozens of bilateral deals. And opportunism by some car makers certainly doesn't make the EU proposal any less misguided. Case in point, a single Nokia v. OPPO decision in Sweden (which went in the defendant's favor) showcases at least four of the countless flaws of that bill.

Accurate and holistic analysis needs to look at what those companies say and what they do. License deals that are concluded in the absence of litigation--and presumably even without the slightest threat of litigation other than the fact that any infringement may sooner or later become the subject of enforcement action.

Europe's and particularly Germany's automotive industry is facing undeniably large problems. Cellular SEP licensing is none of them, though. Even if those costs were reduced through political intervention (which I don't see happening, though it is some people's agenda), that wouldn't help to address any of the fundamental challenges facing the European auto sector, particularly because there's no comparative advantage for companies selling cars in a given target market in which certain patents must be licensed.

Today's Avanci-BMW announcement is good news for those who argue that the market can and will find solutions, as are other recent license deals such as Huawei's recent agreement with Xiaomi.

Patent pools exist to simplify licensing--which must have been the reason why BMW entered into one agreement rather than 60+ bilateral deals--while some EU officials and politicians are trying to complicate the process and mistakenly view pools as part of the problem, not part of the solution.

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Saturday, September 16, 2023

Four of numerous flaws of proposed EU SEP Regulation are illustrated by OPPO's Swedish victory over Nokia: binary register won't reflect non-binary world, and jurisdictional differences matter

This is a follow-up to my Thursday post on a Nokia v. OPPO decision by the Swedish Patent and Market Court that held a pair of declared-essential patents (from the same family) invalid, but also an addition to my commentary (since March) on the unbelievable fundamental flaws of the proposed EU regulation on standard-essential patents (EU SEP Regulation).

The two SEPs in question were deemed invalid by the Swedish court, which was a major win for OPPO, but Nokia had obtained and enforced a German injunction over them. Due to Germany's bifurcation system, the infringement ruling came down prior to the resolution of a parallel nullity action. Nokia had also successfully asserted those patents against OPPO in the Netherlands and the United Kingdom, two jurisdictions where a full invalidity defense is available. Nevertheless, the four-judge panel in Sweden made its own decision and begged to differ from their colleagues in a couple of other countries.

Let's briefly look at this from the EU SEP Reg angle--actually, from four angles related to that ill-conceived legislative proposal:

  1. If the EU SEP Reg was already in force, and if the envisaged SEP Register had been implemented, those two patents would have to be removed from the register if Nokia made a request pursuant to Art. 25(1)(b): "invalidation of the patent by a competent authority" (which the Swedish Patent & Market Court undoubtedly is).

    The proposal does not say anything about how to resolve conflicting decisions from different jurisdictions.

    As a result, Nokia would be allowed to enforce those patents without having to comply with any of the provisions of the EU SEP Reg. Simply put, those patents would be treated as a non-SEPs with a view to the regulation, though national courts might nonetheless apply Huawei v. ZTE. The patent holder might consider that flexibility gain to far outweigh the negative effect of a lower essentiality rate and reduced number of declared-essential patents. Here, with Nokia having a huge SEP portfolio, the removal of a couple of patents from the database wouldn't adversely impact the overall valuation of the relevant portfolio.

  2. The fact that the Swedish decision differs from the ones in the UK and the Netherlands, and from the probability assessment of the Mannheim Regional Court, doesn't make it necessarily wrong. But it clearly cannot be ruled out that a Swedish appeals court might overrule the Patent and Market Court, given that some other judges have also deemed those patents valid. I personally believe the Swedish decision is very well-reasoned and other jurisdictions should be persuaded by it, but you don't know until they have all decided. Assuming only for the sake of the argument that the decision was reversed, the EU SEP Reg--based on the current proposal--would not even have a mechanism in place for putting those two patents back.

  3. When criticizing the EU SEP Reg, I've said repeatedly that the outcome of essentiality checks can depend on what jurisdiction's claim construction and other legal standards are applied. The proposal does not specify that, and there is no uniform standard across the EU. The Swedish decision was based on validity, and an invalid patent is by definition non-essential. What happened here can also happen in connection with an infringement analysis. The starting point is always claim construction. And after that one, there are other steps that can differ between countries.

    It doesn't make sense to assume that a patent is essential or not. It's not binary. It may be essential in some jurisdictions and non-essential in others.

    While I agree with the criticism voiced by one of the researchers commissioned by the EC's Directorate-General for the Internal Market, Dr. Justus Baron, of the aggregate royalty determination part of the proposal, Dr. Baron and I have expressed different views on whether jurisdictional differences make a practical difference for the envisioned essentiality checks of samples of patents. The fact that a Swedish court invalidated two SEPs deemed valid in a couple of other European jurisdictions supports my view that jurisdictional differences pose a confidence problem: you need even larger samples then, and even the assessment of all patents of a given portfolio may be unacceptably unreliable if each European patent is analyzed under only one jurisdiction's standard while in litigation you may get one outcome in the Netherlands and another in Sweden.

  4. At a recent SEP conference in Warsaw, Bardehle Pagenberg's Professor Tilman Mueller-Stoy ("Müller-Stoy" in German) said something I also mentioned in the post I just linked to: essentiality determinations are not too meaningful if validity isn't analyzed as well. The Swedish Nokia v. OPPO situation is now the latest example.

An EU proposal that treats a dynamic environment as static and a non-binary world as binary is not going to do any good. It's going to be a waste. The courts of law may in the end not be persuaded that the EU's essentiality checks, essentiality ratios, aggregate royalty rates, and bilateral FRAND determinations are relevant or helpful. If something flies in the face of what the real experts (as opposed to those who drafted the proposal) know, the actual decision makers may mimimize the impact of the EU SEP Reg, just like the 2021 patent injunction "reform" in Germany has made no real-world impact.

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New FTC initiative and very recent D.C. Circuit dismissal of FTC antitrust case relate to use of patents in connection with Abbreviated New Drug Applications

On Tuesday (September 19), the Munich Local Division of the Unified Patent Court (UPC) intends to adjudge a preliminary injunction request in a life sciences case. I will do my best to share the news quickly. A preliminary injunction looms large according to what various observers (including specialized newsletters) say. We will see, but only one thing would really surprise me: if the antitrust-based affirmative defense in that case succeeded. While the UPC is a European court, defendant NanoString's lawyers argue that their client may prevail on a U.S. antitrust claim against patent holder 10x Genomics. Under U.S. law, those seeking to enforce antitrust law against patent holders exercising their monopoly rights face a very high hurdle to say the least.

From the West Coast (Qualcomm v. FTC, 9th Cir., 2020) to Texas (Continental v. Avanci et al., 5th Cir., 2022) to the East Coast (FTC v. Endo Pharmaceuticals, D.C. Cir., 2023), federal appeals courts have been rather clear in recent years that antitrust law does not trump patent law. Patents are monopolies, but there is a strong presumption that they are lawful monopolies. It is not 100% inconceivable that a patent holder may run afoul of U.S. competition rules. That, however, hasn't been the outcome in any recent case. It wasn't even a close call in any of those recent cases.

In this post I want to be nonjudgmental and simply analyze the state of affairs, which some may consider desirable while others may have different policy views. What some may deem judgmental (but is not intended as such) is my take that on the bottom line U.S. appeals courts effectively put patent law above antitrust law. They say things that suggest both are on equal footing. But in practice, if the monopoly rights conferred by patents on their holders are treated with enormous deference so that traditional anti-monopoly rules hardly ever apply, there isn't much of an opportunity for public or private antitrust enforcement. Whether for better or for worse is in the eye of the beholder.

Let's take a quick look at two very recent developments, both of which happen to involve the concept of Abbreviated New Drug Applications (ANDA), a fast-track approval process for generic drugs.

August 25, 2023 decision by the United States Court of Appeals for the District of Columbia Circuit in FTC v. Endo (appeal no. 22-5137)

The D.C. Circuit affirmed the D.C. District Court's dismissal of an FTC case over an exclusive license agreement between Endo Pharmaceuticals (represented by a Dechert team led by George Gordon) and Impax Laboratories (represented by a Kirkland & Ellis team led by Jay Lefkowitz).

The FTC had brought the case based on the observation that prices for a certain category of drugs (and I'm not going to take a position on opioids here as the focus is on the intersection of patent and antitrust law) increased after a patent holder (Endo) exited the market and granted someone (Impax) an exclusive patent license. Price hikes like that are often indicative of consumer harm. But in this case, both the district court and the appeals courts determined that a single patentee (as opposed to a research consortium) is free to grant an exclusive license to a licensee, even if it means that there will be only one market actor left.

There had been a patent infringement dispute between the two companies, provoked by an ANDA that disputed that the relevant Endo patents were valid and infringed. That one was settled in 2017 in the way that gave rise to the FTC's enforcement action.

The FTC tried to describe the Endo-Impax deal as very similar to an exclusive license agreement that the Supreme Court deemed an illegal noncompete contract in Palmer v. BRG of Georgia (1990). In footnote 1, the D.C. Circuit explains why the two cases are distinguishable:

"[In Palmer] an exclusive licensing agreement was a pretext for a noncompete agreement between two competitors, because the parties in Palmer did not require one another’s intellectual property to participate in the market for bar preparation courses. Here, by contrast, Impax’s ability to compete was completely contingent on the clarity of its license to use Endo’s patents, and the complaint itself alleges that Endo surrendered the right to press its suit against Impax through the 2017 Agreement."

Palmer was not about patents. The material in question was presumably protected by copyright, but copyright law is narrow and the Supreme Court took issue with the fact that the net effect was horizontal geographic market division.

Therefore, Palmer is of limited help if we want to find out where patent license agreements might run afoul of the antitrust laws. There could be a hypothetical case where company A licenses to company B a patent (or patent portfolio) P that it doesn't really need to license to make a certain product or offer a service, but the license agreement contains clauses that amount to geographic market division.

The FTC couldn't make that showing. The closest argument to the license being pretextual was that the settlement precluded the licensee from challenging the patents in question, which is, however, a standard term of patent license agreements as the licensing practitioners among you can confirm. Only because a party is contractually precluded from challenging certain patents doesn't mean such challenges would necessarily have succeeded. Even without such a contractual clause, someone who has taken a license often doesn't even want to challenge the licensed patents as the main (or only) beneficiaries would be unlicensed competitors. And it doesn't prevent any third party from challenging those patent rights in an effort to compete in the relevant market.

The D.C. Circuit provides some high-level guidance:

"In a future case, the Commission is free to plead that a licensing agreement results in unjustifiable competitive harms, so long as it explains how those harms exceed what the Patent Act and settled precedent permit, which it has failed to do here."

So the starting point of any U.S. antitrust analysis of an exclusive license agreement will be that "both the Supreme Court and the Patent Act have blessed [such contracts] as lawful," and there must be something more--in fact, something egregious--than exclusivity to establish an antitrust violation. A pretextual license such as in Palmer (where the relevant price, by the way, increased from $150 to $400 as a result of horizontal geographic market division) is presumably not the only such scenario, but for now there's no other example of an exclusive IP license being anticompetitive. It would take "allegations establishing that [an agreement] created anticompetitive effects greater than that authorized by settled law and precedent" that is favorable to exclusive IP licenses.

September 14 policy statement by the FTC on brand pharmaceutical manufacturers' improper listing of patents in the Food and Drug Administration's (FDA) 'Orange Book'

On Thursday, the FTC issued a policy statement (PDF), press release, and an additional statement by Chair Lina Khan (PDF) concerning "improper" patent listings in the FDA's Orange Book.

The idea of the fast-track approval process called ANDA is that generic drugs should be approved quickly, but not so quickly that a patent holder cannot enforce its rights. That's why there is an automatic 30-month stay of approval in the event of patent litigation by the manufacturer of the original product. I find the term "brand drug manufacturer" a bit misleading as there are generics companies with fairly well-known brands, too.

The FTC believes to have identified a rampant form of abuse in the form of drug makers including patents in the FDA's Orange Book that aren't really needed. This is somewhat comparable to an overdeclaration of allegedly essential patents in connection with industry standards, but with the effect that the approval of competing products can be delayed (while standard-essential patent owners can only sue after an implementer has released an unlicensed product).

What lends the FTC initiative significant credence is that the FDA supports the new statement, effectively making it an inter-agency initiative.

Unlike in FTC v. Endo, which involved Sherman Act Section 1 and 2 claims, the FTC intends to tackle such improper listings as unfair methods of competition under Section 5 of the FTC Act. In any event, the D.C. Circuit's FTC v. Endo decision does say that anticompetitive behavior that goes beyond what is lawful under patent law can be an antitrust violation.

Where I see a practical challenge for the FTC is that any overdeclarations would have to be shown to have been made in bad faith. However, patent law is sufficiently subjective (for example, a fairly high percentage of claim constructions are overturned on appeal) that drug makers will often be able to argue that even though their position on the inevitability of an infringement of a certain patent by a type of drug may have been wrong, it wasn't wholly unreasonable in the first place. That is, for example, what defendants sometimes argue in order to escape willfulness enhancements of damages verdicts. The FTC says that patents are sometimes listed in the FDA's Orange Book even though their claims just don't read on the drug in question--but what will the courts of law say in a given case?

The FTC's policy statement may now dissuade drug makers from adding patents to the FDA's Orange Book that they'd have listed before. In that case, the FTC may achieve a positive effect without having to litigate. But if it does have to go to court, those cases threaten to become rather difficult to decide--and possibly even more difficult to win.

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Thursday, September 14, 2023

UPC's Vienna Local Division demonstrates its potential to become attractive, efficient, inexpensive patent litigation forum

Yesterday I attended the UPC's Vienna Local Division's first-ever court session: a preliminary injunction hearing (CUP&CINO Kaffeesystem-Vertrieb GmbH & Co. KG vs. Alpina Coffee Systems GmbH) over a patent on a device to produce high-quality milk foam. The PI request was denied, but that does not mean to suggest that plaintiffs don't have a chance to obtain great results there. The reason was technical and highly case-specific. The outcome didn't surprise any of the lawyers in the audience that I talked to during breaks nor me.

There are various interesting takeaways, particularly for in-house counsel looking to identify venues complementary to the "usual suspect" fora such as Munich and for law firms seeking to expand to other UPC venues. In the past, there wasn't much to gain from enforcing patents in a market that's only 10% the size of Germany. In the UPC era, I could see two reasons for suing in Vienna:

  • It would make sense as a mix of multi-venue enforcement campaigns. If you put all your eggs in only two or three baskets, some of your cases won't come to judgment too soon. As for judicial philosophy, if you bring a case in Vienna and German is the language of proceedings, you're likely to find one German judge on the panel.

  • While court fees are obviously the same, you can find local litigation talent in Austria at lower rates--and if you identify the right people, you may even like them to become involved in one form or another with your German cases.

Before I go into more detail, let me show you yesterday's judges. From left to right: Judge András Kupecz (from the Netherlands; he's very fluent in German and also served on the Munich LD last week; Presiding Judge Dr. Walter Schober (Austria); Judge Professor Maximilian Haedicke (Germany):

In Austria, Presiding Judge Dr. Schober is an appellate judge. Austrian appeals courts generally don't conduct hearings: they decide on the pleadings. Make no mistake: the way he managed yesterday's hearing was highly efficient (it took only one morning, with the bench ruling come down shortly after noon). He's a "no bullshit" facts-focused type of judge with an analytical approach--and makes it quite clear how his court views the outcome-determinative issues in a case.

One pattern that has already emerged after the Munich and Vienna PI hearings is that side judges play a more active role than in German courts, where they may also ask questions but the conversation is typically dominated by the presiding judge. Those international UPC panels have different dynamics. Also, some of the UPC side judges are or were presiding judges on national courts.

Like at last week's Munich hearing, Judge Kupecz pressed counsel to take clear positions. In particular, he insisted on some clear line-drawing concerning claim construction and infringement analysis, and that turned out to be the outcome-determinative issue. Judge Haedicke, who is the editor of a German patent law treatise but also has ample experience as a Dusseldorf appellate judge, als contributed greatly to the discussion. A long time ago I criticized him for his work as an expert witness on Google's behalf, but that's water under the bridge.

All three members of yesterday's panel are legally qualified judges. The patent-in-suit clearly lacked the technical depth that would have required a fourth judge from the pool of technically qualified judges.

The panel could have denied the PI motion as non-urgent. The plaintiff failed to show how an upcoming trade show (HostMilano) and the presence of two of the defendant's coffee machines at Oktoberfest (some kind of promotion by a reseller) represented an imminent threat of irreversible harm, and the accused product has been on the market--in one form or another--since 2019. But the UPC has yet to develop its PI case law. Judge Dr. Schober noted that there might be a strong German influence (which means that you'll want to bring your PI motion within a month of becoming aware of an infringement), but that it's too early to tell.

Some of the lawyers in the audience expected a denial on non-urgency grounds. Plaintiff arguably couldn't make a particularly strong showing in that regard, and defendant didn't really specify how the design of the accused products evolved over the years. I wasn't persuaded by either side's urgency-related representations, but that's obviously a bigger problem for the moving party.

It appears wise to me that the Vienna Local Division does not intend to take a position on the question of urgency, which it simply doesn't have to reach in this case. However, future cases may present questions of first impression (first for the UPC) that must be resolved, and I'd have expected that panel to do so in a well-reasoned fashion.

Long before the decision came down, I was already thoroughly impressed with Torggler Hofmann patent attorneys Dr. Markus Gangl and Florian Robl (PhD)--who are formally qualified as European Patent Litigators--who represented the defendant. By just listening to them, one would have thought they were attorneys-at-law: a large part of their argument was legal, not technical. The way they mocked the plaintiff's arguments was typically Austrian (and appeared very effective). That would be done a bit differently in Germany, but that's just a cultural aspect. For the right of patent attorneys to represent clients in UPC infringement litigation without having to team up with attorneys-at-law, yesterday's hearing was a great start, not only because of the result but also because of those two patent attorneys' superb lawyering.

I want to be fair: plaintiff's lead counsel--Taylor Wessing's Dr. Thomas Adocker--has presumably built his very good reputation on stronger cases than this PI motion. He'll probably win some other UPC cases, just not this one.

Toward the end of the hearing, Judge Dr. Schober asked both sides to specify the costs they wanted to be reimbursed if they were to prevail. The amounts seemed rather low compared to the cost of German patent litigation (EUR 50K for plaintiff, only about half of that for defendant), even for a case that was technically relatively simple. Maybe the actual costs were higher, but they didn't believe they could obtain a fee award offsetting their total expenses.

Based on what I saw yesterday, I would encourage UPC litigants to give Vienna a try, provided that they bring stronger cases than the one that failed yesterday.

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OPPO wins in Swedish court as two of Nokia's standard-essential patents (on which it prevailed in Mannheim) are declared invalid; also, Nokia's UK SEP injunction can't be enforced pending appeal

More than two years have passed since Nokia sued OPPO, and more than one year since OPPO was forced out of the German market by the enforcement of various patent injunctions, at least some of which were dubious from the beginning. Nokia still doesn't have leverage over OPPO. In the foreseeable future, there will be only one FRAND determination in place between these parties, and that one will be made by a court in Chongqing, China.

In the first part of this post I have an update on the Swedish part of the earth-spanning set of disputes. Subsequently I'll also discuss the UK situation, which is pretty good for OPPO in practical terms.

In June 2022, it became known that Nokia filed complaints in Finland and Sweden over two patents from the same patent family: EP2981103 and EP3220562, both on an "allocation of preamble sequences." For the avoidance of doubt, Nokia asserted both patents in both jurisdictions.

Over those patents, Nokia won its first standard-essential patent (SEP) injunction against OPPO in Mannheim last year. The Mannheim Regional Court interestingly agreed with Nokia that it was un-FRAND-ly for OPPO to offer a lump-sum royalty, but the same Nokia took the very opposite position later in a UK litigation where it argued that only a lump-sum was acceptable.

In retrospect the Mannheim rulings against OPPO appear more questionable than ever. In July, a French court invalidated two Nokia patents, one of which is a non-SEP that I considered very clearly invalid, but over which the Mannheim court nevertheless granted an injunction (which its appeals court, the Karlsruhe Higher Regional Court, inexplicably allowed to be enforced).

Today the Swedish Patent and Market Court declared the two SEPs underlying the June 2022 injunction--EP'103 and EP'562--invalid with respect to its juridiction (Sweden). And it even did so on three independent grounds relating to partly different claims:

  1. The original patent applications lacked support for the combination of cyclic interpretation and the second embodiment described iin the specification. Therefore, claim 1 of EP'103 and claim 4 of EP'562 were deemed to contain impermissibly added subject matter.

  2. Either patent's claim 1 is a device claim with method features, but those method features do not affect the properties or the configuration of the device, which is why the court found they must be disregarded in the novelty analysis. As a result, the patents are invalid based on anticipation.

  3. Claim 8 of EP'103 and claim 9 of EP'562 are independent method claims, but the Swedish court found them to cover a purely intellectual aact (as opposed to performing a specific technical function).

To be fair, the Mannheim court was not alone in siding with Nokia over those two SEPs. A Dutch court and a UK court did so, too. But now there is a very well-reasoned pair of rulings from the Swedish Patent and Market Court that states three reasons for invalidation when any single one of them would have been sufficient. It remains to be seen whether those patents will at some point be invalidated elsewhere.

EP'103 and EP'562 are now going to be harder for Nokia to enforce, as there is a possibility of courts in other jurisdictions being persuaded by the Swedish court's reasoning. This shows that Nokia is paying a significant price for its protracted dispute with OPPO.

Not only is this becoming ever more costly (including hard-to-quantify costs such as the invalidation of key patents) but the question of the "end game" must be asked as well. At this point it appears that the key jurisdiction is going to be China. That's because the Chongqing court's FRAND determination will be made soon, and while the Chongqing decision cannot be enforced during an appeal, it will most likely become enforceable prior to any other FRAND determination anywhere in the world that Nokia could point to.

I have now obtained copies of Mr Justice Richard Meade's latest Nokia v. OPPO decisions relating to remedies. He's given the topic a lot of thought and arrived at a position somewhere in the middle between the two parties' views:

  • While Nokia technically has a UK SEP injunction against OPPO now (based on Mr Justice Meade's application of existing appellate case law in the UK), that one has been stayed pending OPPO's appeal. The balance of hardships weighed against forcing OPPO out of the UK market the way it was forced out of the German market last year.

  • A very interesting question in that appeal is whether OPPO's willingness to take a license on whatever terms are in fact FRAND, but based on the upcoming Chongqing rate-setting decision, is a sufficient basis for not enjoining OPPO in the UK. A second point is that OPPO argues it actually already has a license under French law (based on Nokia's ETSI FRAND pledge), just that the exact financial terms have not been set. That argument had also been made by Xiaomi in the dispute with Philips. The question about whether OPPO is a willing licensee based on its commitment to take a license on the terms to be decided in Chongqing appears more likely to succeed as far as I can tell. And Mr Justice Meade takes that question seriously enough that he even authorized "leapfrogging" over the Court of Appeal and going straight to the UK Supreme Court (a decision that also has to do with the Optis v. Apple dispute, where the UKSC accepted to hear an appeal by Apple).

  • It's interesting how the parties' perspectives have changed in both Nokia v. OPPO and Optis v. Apple. The plaintiffs brought their UK actions because they hoped to be able to force the defendant into a global portfolio license on terms that would be reasonably attractive to the respective right holder. But after the actual FRAND determination was made in Optis v. Apple, and also in light of the prior InterDigital v. Lenovo decision by Mr Justice James Mellor, it's now actually the defendants who are more interested in taking a global license on UK-determined terms than the plaintiffs are in granting one. As a result, OPPO would actually be quite happy now to get a UK FRAND decision, but Nokia would rather wait.

  • Mr Justice Meade already had everything set to hold the UK FRAND trial in a few weeks' time. The parties have obviously already made quite an effort preparing for that trial. But all things considered, including that the FRAND terms to be decided there would presumably not result in a near-term license agreement and would become known close to the end of the relevant license period (which is mid-2021 to mid-2024), he decided to stay that trial.

  • Time will tell whether it was the right decision on Nokia's part to request a stay of the UK FRAND trial. While perfectly understandable in light of the recent outcomes in InterDigital v. Lenovo and Optis v. Apple, that tactical decision now enables OPPO to argue that it was quite willing to obtain useful guidance from the UK court.

  • Nokia can enforce a UK non-SEP injunction, but OPPO will apparently just work around it, rendering that Nokia win inconsequential in practical terms.

Again, I have great respect for Mr Justice Meade's thoughtful approach and balanced decisions. The question is not whether any of the parties or I would agree 100%. On this set of issues, you may get as many opinions as the number of people you ask. But this judge tried to be fair, and the outcome is a nuanced one.

If Nokia doesn't have a strategy that is likely to give it decisive leverage over OPPO (interim payments etc. are just symbolic), it should try to settle this dispute. OPPO has surprised a lot of people, including me, with its determined and sophisticated defense. At some point the U.S. also pulled out of Vietnam.

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