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 settle antitrust dispute over component-level licensing of automotive suppliers: Dusseldorf case 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 that the parties had settled their dispute, resulting in the voluntary dismissal of Huawei's complaint.

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 S. 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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Friday, May 13, 2022

Apple keeps trying to duck infringement claims over three Ericsson 5G patents in Eastern District of Texas: reply brief

Whether in a policy context like the IEEE's standard-essential patent (SEP) policy or in litigation, I often find that Apple will say anything that it believes may advance its agenda--or will even have astroturfers say it. It strikes me as add that one of the most admired companies in history lacks the self-respect to choose its arguments more wisely.

In the multi-jurisdictional 5G SEP dispute with Ericsson, there's now been a pattern of Apple contradicting itself. One might even say that the only thing consistent about Apple's tactics is that they're constantly being inconsistent. Whether one agrees or disagrees with Ericsson's royalty demands (which is for the courts to decide in the end, unless the parties can reach an agreement), Ericsson's actions are straightforward. They have SEPs and non-SEPs that Apple isn't currently licensed to (as the previous contract expired in mid-January), and that's why they're enforcing their intellectual property rights in different venues, all of which have mechanisms in place to protect implementers against so-called patent hold-up. By contrast, Apple will tell one thing to the court in the Eastern District of Texas and another to courts in foreign countries, only to get Ericsson's cases there stayed. Apple even conflated SEPs and non-SEPs (by suggesting that a SEP rate-setting action could dispose of Ericsson's non-SEP assertions, though there is no general entitlement to a non-SEP license) or turned the antitrust concept of tying on its head. That's just not the way to build and maintain credibility with courts and commentators.

The self-contradiction I have to highlight now is that Apple itself challenged three Ericsson 5G SEPs through declaratory-judgment claims back in December, but after Judge Rodney S. Gilstrap perfectly reasonably severed the FRAND claims from that case (and incorporated them into Ericsson's earlier-filed FRAND actions as compulsory counterclaims), Apple was no longer interested in pursuing its own requests for declaratory judgment. Apple's DJ claims forced Ericsson to bring compulsory counterclaims of infringement (in the alternative, Ericsson would have had to "pull a Qualcomm" and just give up on those patents by not bringing compulsory counterclaims, thereby effectively giving Apple a free license). The only surprise here was that Ericsson didn't take Apple up on its offer to stay those DJ claims but is now exuding maximum confidence in those patents--which Apple thought were Ericsson's weakest 5G declared-essential patents--and insisting that the claims be resolved. By not opposing the stay, Ericsson could have avoided a waiver.

Now, Apple has replied in support of its motion for a stay, and I'll share some observations below the document:

22-05-12 Apple Reply ISO Mo... by Florian Mueller

Two of Apple's three reply arguments are about remedies: Ericsson is allegedly neither entitled to monetary relief because Apple will obtain a license anyway (based on a FRAND claim it brought in the very same complaint as the DJ claims, so this is nothing new) nor can it get an injunction (because Ericsson itself, a looong time ago, opposed an ITC import ban over SEPs, which falls far short of setting binding precedent).

The third item is that Apple describes as "incorrect" Ericsson's suggestion that Apple brought the DJ claims just to give the Federal--not Fifth--Circuit appellate jurisdiction. That is something that I already identified as Apple's transparent tactical objective long before Ericsson said so. It's just too obvious. Now Apple says it "filed the -460 Action with both FRAND-based and patent-based claims because it believed that the merits of the patent claims were relevant to determining a FRAND rate," but as the court severed the claims and the two-way FRAND case "is set for trial first," Apple says "it will be far more efficient to stay the -460 Action pending resolution of the -376 Action."

The implausible part here is that, given the size of Ericsson's portfolio, a sample of three patents that Apple itself handpicked could hardly ever have been relevant to the FRAND rate. Whether Apple would have prevailed on all three DJ claims, or Ericsson on all three of those patents, or something in between would have been the outcome, I can't see what productive purpose those determinations would ever have served.

Also, given that either decision can be appealed and no one can predict today how long it will take for a case to be really resolved, it is still quite possible that the licensing situation remains unclarified at the time a patent infringement decision becomes enforceable.

When Judge Gilstrap denied Ericsson's (somewhat unusual) motion to confirm Apple's commitment to be bound by the court's FRAND decision, he clearly said that Apple, by its own representations, would remain free not to take a license from Ericsson. So Apple's reply in support of its motion to stay the three-patent infringement case looks a little bit like a motion for clarification or even reconsideration of Judge Gilstrap's recent order. We'll see whether he takes the bait or is getting tired of this.

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D.C. District Court doesn't sanction Google for abuse of attorney-client privilege through 'Communicate with Care' policy: United States v. Google antitrust case

In March, the United States Department of Justice brought a motion to sanction Google for misuse of the attorney-client privilege, and to compel it to produce documents withheld under such privilege. You can find the motion (PDF) and a 39-page memorandum (PDF) on CourtListener.com. The short version is that Google had for a long time--about a decade--instructed and trained its employees, under a "Communicate with Care" program, to involve counsel in communications related to the types of practices that the DOJ as well as numerous state attorneys-general are challenging in an antitrust case that is, by any objective measure, way bigger than Epic Games v. Apple is or FTC v. Qualcomm ever was.

Google is clearly on the opposite of the spectrum to Epic, which in my opinion did not communicate with the prerequisite degree of care about its 2020 Nineteen-Eighty-Fortnite stunt (provoking the ejection of Fortnite from the major mobile app stores in order to file prepared lawsuits and publish a campaign video). Somewhere in the middle between Google and Epic one would find Apple, some of whose internal emails about the App Store or its iMessage-related lock-in strategy were quite revelatory.

The DOJ had a point when bringing its motion. The attorney-client privilege is important. It even involves fundamental constitutional rights. But the "silent-attorney email" practice of just copying lawyers in order to later claim privilege is simply a means of obstructing (future) discovery.

From a legal-policy perspective, one could have an interesting debate over whether government plaintiffs should have better access to pre-litigation company-internal communications in antitrust cases, given that they--unlike an Apple or a Google--never have a competitive agenda other than protecting the competitive process itself. But that's another topic with wide-ranging ramifications.

Judge Amit P. Mehta of the United States District Court for the District of Columbia resolved the DOJ's motion in two steps. First, on April 12, he summarized the DOJ's attack vectors on Google's Communicate with Care policy as "seek[ing] one form of relief—an order compelling Google to produce in unredacted form all communications between non-attorneys where an in-house attorney was included but did not respond in the chain of communications—through two different mechanisms: a motion for sanctions and a motion to compel."

That April 12 order reiterated a concern Judge Mehta had already stated at an April 8 motion hearing: "whether [the D.C. District Court] has the inherent authority to impose sanctions for pre-litigation conduct of the type at issue here." The parties were given the opportunity to "identify any cases they believe support their respective positions on this issue by April 19, 2022"--but the judge made it clear that this should not be tantamount to "additional briefing." Just a case list.

Google's April 19 filing was short. The search engine monopolist declared itself unaware "of any reported decision where a court (1) used its inherent authority to sanction alleged pre-litigation conduct regarding marking business documents as subject to claims of attorney-client privilege or otherwise involving conduct relating to privilege issues, or (2) imposed the sanction of categorically removing attorney-client privilege and/or work-product protection over documents irrespective of whether they are privileged or work product in the absence of bad-faith litigation misconduct, typically involving violation of a court order."

It's impossible to prove a negative, so the intuitive thing for Google to do would have been to present decisions in which courts denied motions to compel, or motions for sanctions, in such a context. Additionally or alternatively, Google could have shown decisions in which courts granted such motions, but still enaged in some line-drawing consistent with Google's position by distinguishing those other cases from the kind of situation relevant here. I mean, it's not like Google's army of lawyers wouldn't have the resources to conduct a proper case-law research.

By contrast, the DOJ--which compared to Google is at an unbelievable resource disadvantage, listed nine decisions by federal appeals courts and six by district courts. The most recent appellate decision is the Fifth Circuit Snider v. L-3 case:

"(“[A] per se rule against sanctions for prelitigation conduct is inconsistent with the justifications for inherent-authority sanctions. A court’s inherent authority to impose sanctions serves goals beyond the specific litigation at hand. It exists also to protect the integrity of the judicial process writ large. A court should be free to sanction conduct that undermines that process, whether it occurred during litigation or before it."

The other decisions cited by the DOJ are also interesting, and let me just highlight one more because it's from the appeals court this blog has mentioned more frequently than any other--the Federal Circuit (Micron v. Rambus, 2011):

"[I]t was not clear error for the district court to conclude that the raison d’être for Rambus’s document retention policy was to further Rambus’s litigation strategy by frustrating the fact-finding efforts of parties adverse to Rambus." (the district court had held that Rambus engaged in spoliation)

Unfortunately, the DOJ's motion in the Google case has nevertheless been denied. Yesterday, the court entered the following decision:

MINUTE ORDER. For the reasons stated during the status conference held on May 12, 2022, [317] [326] Plaintiffs' Motion to Sanction Google and Compel Disclosure of Documents Unjustifiably Claimed by Google as Attorney-Client Privileged is denied. Google is ordered, however, to ensure that all of the "silent-attorney emails" at issue in the Motion have been re-reviewed to the same extent as the sample of 210 emails provided to the court for its in camera review. Signed by Judge Amit P. Mehta on 5/12/2022. (lcapm2)

A failure by Google to "ensure" a proper re-review of all of the roughly 21,000 "silent-attorney emails" at issue could still lead to sanctions. In his April 12 order, Judge Mehta had ordered Google to produce directly to the court "on a thumb drive" "(1) a random sample of 210 'silent attorney' emails (including the surrounding email chain), of which all or a portion has been withheld on privilege grounds (approximately 1% of the 'roughly 21,000' emails that 'fit [the] silent attorney description that [Google is] maintaining a privilege claim over,' [...]), and (2) a single spreadsheet with privilege log entries as they pertain to that sample of emails."

That was in-camera review by the court, and the re-review that Google has been asked to perform now will simply be done by Google itself. This means the DOJ isn't really going to be able to ascertain that all of the Google-internal emails that should have been disclosed will be produced.

If the court had decided against Google, there would have been different ways for Google to take the matter up with the D.C. Circuit (discretionary appeal, mandamus, or appealing a sanctions order). The DOJ, however, isn't going to suffer the kind of immediate harm that a party ordered to produce allegedly-privileged documents can claim to suffer. It can seek appellate review of that decision in the event of an adverse final judgment.

While the DOJ will be rightly disappointed, I remain optimistic that the government plaintiffs will likely establish some serious antitrust violations by Google even without piercing through Google's abuse of the shield that is the attorney-client privilege.

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