Explain-away exercise: mention of antisuit injunction case in negotiations may lead to Munich anti-antisuit injunction (IP Bridge v. Huawei)

It's antisuit time again. The related case law is evolving in ever shorter intervals, and I'll give a talk about that topic on May 19 in a European Commission (specifically, DG GROW) webinar, entitled Enforcement of Standard-Essential Patents -- current bottlenecks and possible solutions. I'll be one of the three panelists on antisuit injunctions, and I'm looking forward to providing an overview of extraterritorial issues in standard-essential patent (SEP) litigation and their interdependencies. I'll talk about developments in multiple jurisdictions on three continents and make a specific proposal for a way out without having to agree on a new international treaty. Access will be free, but typically those webinars have only a limited window for sign-up. Subsequently to my little contribution to the event, I'll upload my slide deck to Scribd and post something to this blog.

Both the European Commission and the Munich I Regional Court are aware of my occasional criticism of their COVID and/or patent policies, yet I know they completely accept that I exercise (within reason, of course) my freedom of speech, and I don't feel unwelcome in those institutions.

Yesterday I was the only member of the general public with a sufficient interest in antisuit injunctions (especially so close to my upcoming presentation) to follow the IP Bridge v. Huawei anti-antisuit injunction hearing held by the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judges Dr. Benz and Kuttenkeuler) of the Landgericht München I (Munich I Regional Court)--my first visit to that court in about nine months. Counsel and parties participated via videoconferencing, so there were only a total of four people in the 700 sq. ft. courtroom, a super low density that facilitated social distancing. Nevertheless we were all wearing N95 masks (all the time); all of us had taken a rapid test across the courthouse before the session; and there were multiple ventilation breaks during the two-hour hearing. This sense of responsibility was exemplary, and I hope the United States District Court for the Northern District of California--sort of my other "home court"--will protect judges, court staff, counsel, parties, and a press pool member at a comparably high level when the Epic Games v. Apple antitrust trial kicks off on Monday.

IP Bridge is a Japanese state-owned licensing firm (link to IAM article), or non-practicing entity (NPE), or if you'd rather have it the disparaging way, a "sovereign patent troll."

It monetizes patents for contributors such as (in this case) Panasonic. In the course of licensing negotiations with Huawei, it undisputedly so occurred in a mid-December video conference that the Chinese mobile equipment and smartphone maker dropped the caption of an already-settled dispute: Huawei v. Conversant. In that one, Huawei had obtained a Chinese antisuit injunction against the other party (an NPE just like IP Bridge).

A couple weeks later, IP Bridge electronically ran to the Munich courthouse and moved for an anti-antisuit injunction, arguing that Huawei had threatened with an antisuit injunction by way of its reference to the Conversant case. This was a clever forum choice by EIP's German lawyer, who are representing IP Bridge--and almost prescient, as the Munich court shortly thereafter handed down its InterDigital v. Xiaomi A2SI/A4SI, not without listing a litany of potential circumstances under which an A2SI/A4SI may be granted in the world's #1 venue for patent and anti-antisuit injunctions. The icing on the cake, according to an obiter dictum in InterDigital v. Xiaomi, is that when you as an implementer of a standard are hit with a Munich A2SI/A4SI, you may also be deemed an unwilling licensee.

Huawei disagreed sharply because of the specifics of its dispute with IP Bridge, and requested yesterday's hearing to discuss the ex parte preliminary injunction. While it appears more likely than not that the Munich court will uphold the PI, the fact pattern is distinguishable from a definitive threat to obtain an antisuit injunction. The question is whether it is distinguishable to the extent of a game changer. The court will have time until June 10 to reflect on the question of whether Huawei's counsel managed to explain away the alleged connection between the mentioning of Huawei v. Conversant and a thinly-veiled threat to throw a wrench in IP Bridge's German SEP enforcement works from China.

Judge Dr. Zigann clarified that his InterDigital v. Xiaomi criteria are neither exhaustive nor per se prohibitions: other circumstances may also give rise to A2SI/A4SI grants, and even if a criterion is met, there may be countervailing facts that might dissuade the court from an A2SI/A4SI.

Whatever the outcome will be here, there is a lesson to be learned, and it resembles an integral part of the Miranda warning: anything you say may be used against you in a court of law.

The Munich court explained at the start of the hearing that it would apply the same standard to alleged antisuit injunction threats as it would to threats in other fields of law: it's not about what was actually the recipient's interpretation, but the objective standard of what a reasonable person placed in the same situation would have thought. Here, between SEP licensing execs working for organizations that know this stuff, the court's inclination is to conclude that a reference to an antisuit injunction case will be understood as such even without the word "antisuit" having been uttered--unless the defendant can explain away the alleged overtone.

There are some relevant facts in this case that Huawei's counsel, Hoyng Rokh Monegier's Dr. Tobias Hessel, pointed to. The Chinese rate-setting action brought by Huawei is only about Chinese SEPs, and is meant to inform the England & Wales High Court's global rate-setting decision in a case brought by IP Bridge. As I announced further above, antisuit injunctions really must be seen as part of a wider extraterritorial-overreach issue, and this is a good example: it makes a lot of sense that Huawei did what the UK judiciary explicitly suggested, which is to seek a rate-setting decision in another jurisdiction such as China (the key jurisdiction in the Unwired Planet v. Huawei/Conversant v. ZTE pair of UK cases) and provide the results to the UK court, which may consider it as part of its global portfolio rate determination. Here, China makes even more sense considering where Huawei sells most of its smartphones.

Judge Dr. Zigann appears inclined (and rightly so, as far as I can see) to give Huawei the benefit of the doubt for the inclusive language of its Chinese motion ("including, but not limited to, royalty rate for Chinese SEPs"). Instead of interpreting this as meaning that the Chinese court may end up setting a rate including German patents, the court will take Huawei's word for it. But that's not enough for Huawei to avoid the A2SI/A4SI.

In my opinion, an implementer deserves the benefit of the doubt to an even greater extent. If it were up to me (as it obviously isn't), I would accept every plausible and reasonably convincing explanation as to why the relevant case (here, Huawei v. Conversant) was mentioned. There are multiple policy reasons for which I think so:

1. Patent licensing negotiations involve, to some extent, also a simulation of what might happen in threatened or pending litigation. In that context, negotiators shouldn't have to be Mirandized by someone else in their own company each and every time they're about to reference another case. The alternative would be cumbersome, and might dissuade parties from oral communication, which would result in slower negotiations and a lower rate of success of those efforts.

   In this case, a plausible showing of a connection between IP Bridge's UK lawsuit (which was of its own making and not Huawei's idea) and the Chinese rate-setting action on the one hand and the Huawei-Conversant history on the other hand might be exculpatory.

2. Under Germany's "loser pays" principle, the defendant would have to pay a significant amount of money after losing an A2SI/A4SI case (court and legal fees). There is also a possibility for German courts to hold that the plaintiff was entitled to the decision, but that the defendant's pre-litigation behavior didn't reasonably necessitate the action, in which case the plaintiff may prevail on the merits, but end up paying. However, in order to avoid the fee award, the defendant would have to accept the decision immediately and focus exclusively on costs, arguing that their conduct didn't warrant litigation.

3. When a "threat" of an antisuit injunction is identified on a basis that--to use U.S. evidentiary standards--is at best a substantial evidence or maybe preponderance finding but far from clear and convincing and definitely nowhere near beyond reasonable doubt, I don't think it's a sufficient basis for declaring the defendant an unwilling licensee.

Part of Huawei's problem in this case is that a sworn declaration by its IP chief Jason Ding (whom this blog mentioned last month as he announced Huawei's 5G SEP license fee) contained a passage according to which Huawei didn't rule out filing for an antisuit injunction at a later stage. The Munich court appears inclined to consider this another indicium of Huawei having meant "antisuit" when they said "Huawei v. Conversant." Were this a U.S. case, I could download at least a public redacted version of the affidavit from PACER and see the context. In Germany, I only know what I hear in the courtroom, and in this case that is just not enough to form an opinion, other than that this is another tale of caution for SEP implementers. "Anything you say..."

The IP Bridge v. Huawei case may or may not be a vehicle for a further evolution of Munich's anti-antisuit case law, depending on what the appeals court will make of it. My concern is that SEP litigations anywhere in the world (provided that the implementer might be susceptible to enforcement action in Munich) may become a very slippery slope. It's not unheard of in the technology sector for licensing negotiators to have more a business and/or technical background. One of them (working for one of the largest U.S. companies at the time) used to quip that his company didn't let him go anywhere without being accompanied by lawyers. And even those with formal legal training may increasingly prefer to just write letters rather than talk via Zoom or Microsoft Teams...

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Three fateful decisions will drive up Tesla's patent licensing costs: Avanci license, Austin factory, and German Gigafactory

I've criticized those old-fashioned German car makers on numerous occasions, and chances are there'll be more reasons further down the road. Now I can't help but offer the prediction that Tesla is going to far outspend, on a per-car basis, everyone else in the automotive industry, and that's because of three decisions its management took without fully considering the ramifications it has for future patent licensing negotiations and infringement disputes.

As the saying goes, you can't argue with success. But Tesla's market capitalization doesn't mean that the company doesn't make mistakes in its operational business that a company like Apple, with its far greater experience in--and more sophisticated and strategic approach to--patent licensing and litigation, would avoid. Tesla is going to pay hefty tuition fees before it will learn how to play this game like the pros in Cupertino.

Avanci license

As IAM (Intellectual Asset Management) reported, industry observers believe that the new Avanci licensee (whose name the patent pool firm behind Avanci, Marconi, hasn't disclosed yet) is none other than Elon Musk's electric vehicle maker.

What gives rise to this speculation is that several lawsuits by Avanci members against Tesla have recently been dismissed in different U.S. federal districts.

Last year, Tesla settled with Conversant (as IAM reported), which was suing Tesla in the Western District of Texas. Actually, Conversant appears willing to license automotive suppliers, as its settlement with Huawei shows. So Tesla should have insisted on Conversant extending a license to its component makers. Then, Conversant's patent portfolio is pretty old and weak, so it might just have appeared cost-efficient to take a direct license, just like Daimler thought when it settled with Sharp. Both settlements--Tesla/Conversant and Daimler/Sharp--unnecessarily endorsed the concept of licensing cellular SEPs at the level of a car. Just like I criticized Daimler's decision in no uncertain terms, I didn't like Tesla's deal with Conversant because of what it means for other automotive SEP disputes. But Daimler has, at least so far, declined to take an Avanci license. Tesla apparently has done just that, and that means it has opened a can of worms and will have to pay off countless patent trolls, but also major operating companies holding patents it infringes.

I've looked up a few U.S. dockets and been able to verify that apparently there are no more cases pending between Avanci members and Tesla. Here's an Optis Wireless v. Tesla stipulation of dismissal from the Eastern District of Texas (this post continues below the document):

21-02-26 Optis v. Tesla Sti... by Florian Mueller

The following screenshot shows a Sisvel v. Tesla dismissal, dated March 2, in the District of Delaware (click on the image to enlarge):

After taking an Avanci license, Tesla is not going to be able to credibly defend itself against other SEP holders by arguing that those patent holders should insteasd talk to Tesla's suppliers.

Austin factory and relocation to Texas

Earlier today I mentioned that the Western District of Texas is the world's #1 hotspot for patent damages, and that is so because companies with a presence there (as opposed to merely having resellers offer its products) can't just move patent cases out of that district under TC Heartland.

Texas is building an Austin factory and even plans to move its HQ to Texas. It's understandable in political terms, because even though I predict Texas will become a blue state in the not too distant future, Texas Democrats may be as centrist as California Republicans, at least in fiscal policy. However, the Western District of Texas effectively imposes a huge patent tax on business.

Gigafactory Berlin-Brandenburg

From a marketing point of view, it made a lot of sense for Tesla to build a "Gigafactory" in Germany. "Made in Germany" has always been, in no small part, about cars. It's a major market. And maybe Tesla hoped to generate political goodwill in the largest EU member state.

However, Germany is exactly the jurisdiction to which patent holders flock in pursuit of injunctions. The judicial district in which you're based there doesn't matter: there's no forcible venue transfer, thus no TC Heartland equivalent either. The problem is that a patent injunction in Germany will not only disrupt Tesla's sales in that particular market, but will force it to halt production in its Gigafactory. Also, Tesla wouldn't be able to circumvent an injunction by exporting the products it makes in Germany to other markets.

Tesla could have built a factory somewhere else in Europe. Just a little bit to the east of its Berlin-Brandenburg site there's Poland. In that jurisdiction it's likely that politicians would immediately take action and protect a major foreign investor against patent injunctions, should the Polish judiciary follow the German example. But in Germany there's no chance: even local players like Volkswagen, Daimler and BMW have failed (partly because their IP lobbying expertise is lacking and wanting) to persuade lawmakers to address the issue. As I explained in my most recent post on the subject, the proposed reform will not affect patent holders who make a licensing offer by the trial date. There won't be a proportionality analysis in such cases. And those are the cases Tesla will be dealing with.

The best cross-jurisdictional patent litigation strategy against Tesla will be to sue them for damages in the Western District of Texas and to seek an injunction in Germany. Maximum leverage.

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Munich appeals court overrules lower court's shameless approach to security amounts: Conversant v. Daimler

As I already noted earlier this month, the Oberlandesgericht München (Munich Higher Regional Court) fundamentally disagrees with the Munich I Regional Court's approach to setting the amounts of collateral to be posted in the form of a bond or a security deposit when patent injunctions are enforced while an appeal is pending.

Meanwhile I've obtained a copy of an order by the appeals court in Conversant v. Daimler, raising the security amount from 5.5 million euros to 146 million euros. That's an increase by more than a factor of 26--and a complete (with respect to this part of the dispute) victory for Daimler at this stage. It also means that Nokia-fed Conversant won't ever enforce a German injunction against Daimler over the patent-in-suit, as the troll probably can't afford this amount anytime soon and the patent is going to expire in about a month's time.

What the lower court had done in that case--and not only that one, as the appeals court will make a similar decision in a Nokia v. Daimler case on Thursday--was not just an error. It was an utter disgrace. It was what happens when judges prioritize "forum-selling" over their own professional honor. And the way in which they explained the "reasons" for their approach was so bad that even the term "nonsensical" would represent a euphemism.

Here's the fundamental problem, in a nutshell:

• A plaintiff who prevailed in trial court often seeks to enforce an injunction even during the appellate proceedings.

• But if the defendant prevailed on appeal, wrongful-enforcement damages would be owed.

• Some kind of security (a bond or a deposit) is to be provided by a plaintiff for enforcement at this stage is to make sure that the defendant can be made whole in case it is later entitled to wrongful-enforcement damages, but the plaintiff can't pay at that point. The actual damages can only be determined later, but the security amount is set based on a reasonable estimate.

• The purpose of such collateral is to enable a defendant to pursue an appeal--as opposed to being coerced into a settlement by the risk of early enforcement damages exceeding what the plaintiff would later be able to pay.

The lower Munich court hit a new low--which says something--when its "logic" simply defeated the purpose of such collateral:

• They said that a defendant had an obligation to mitigate damages by taking a license, but

• in that case it's over and there won't be an appellate decision.

It's not that the lower court wasn't aware of this contradiction. They even suggested that a defendant could make a licensing offer that would be tied to the outcome of the appellate proceedings (by which they probably meant a condition subsequent or similar structure). But as the appeals court noted in its December 3, 2020 partial final ruling (partial because it only corrected the security-related part of the decision, without looking at the underlying merits yet),

• a patentee could simply reject a licensing offer on that basis (and insist on a license deal that would not be contingent upon any future decision),

• Conversant was evasive at best when Daimler suggested such a contractual structure, and

• making such an offer puts a defendant out of compliance with German SEP case law (this point is the least important aspect in my view, as it merely shows that such a deal structure would be unusual).

Simply put, the lower Munich court wanted to deprive defendants of their right to appeal its (sometimes totally wrong) decisions.

Fortunately, the appeals court restored sanity.

The amount of approximately $175 million for shutting down Daimler's German sales for a month (Conversant even won a recall and could have forced Daimler to destroy any "infringing" products) is actually low, but that's because, as the appellate decision notes, Huawei obtained an exhaustive component-level license from Conversant, which indirectly covers approximately 86% of Daimler's German sales. It's mostly the Mercedes truck business that doesn't benefit from that indirect license.

No similar arrangement exists with respect to Nokia's SEPs--and the patent-in-suit in that case isn't about to expire. In the Nokia case, Daimler cars that come with a telematics control unit (TCU) from Samsung subsidiary Harman Becker are excluded from the scope of the injunction, but the effect of that carve-out doesn't come close to the 86% coverage Daimler enjoys in the Conversant context because of Huawei's license. All things considered, a security amount in the billions of euros will likely be set on Thursday. The lower court had set it at only 18 million euros. The numbers don't tell the whole story, but they'll make it clear that the appeals court doesn't merely reverse the lower court in this context. It effectively rebukes it. And rightly so.

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Desperate-defiant Nokia withdraws two Dusseldorf patent cases against Daimler, trollishly refiles in Munich--where it's losing ground as well

The Nokia v. Daimler standard-essential patent dispute that began in early 2019 with ten standard-essential patent (SEP) infringement cases filed in three German venues. In eight of these cases, some kind of decision was made this year: some got stayed (in one Munich case, the stay was of an informal nature as the court simply pushed back the trial date), some complaints were rejected (non-essential patents-in-suit), and Nokia won two injunctions (one each in Mannheim and Munich). But even those two injunctions have so far turned out to be of zero value:

• The Mannheim injunction can't be enforced for a combination of two reasons: Nokia presumably couldn't afford providing security to the tune of $8.5 billion (which is its own fault--the collateral would be so much less if Nokia sued component makers, which it should actually license), and the Karlsruhe Higher Regional Court got Nokia to commit to refrain from enforcement while the appeals court is weighing Daimler's motion for an enforcement stay.

• In Munich, the determination of the amount of the security by the lower court is a total insanity--approximately $20 million--but the appeals court--in that case, the Munich Higher Regional Court--has recently made it clear that it's not inclined in the slightest to uphold the lower court's methodology.

  In a parallel Conversant v. Daimler case, the appeals court's patent-specialized division under Presiding Judge Konrad Retzer had already stayed enforcement until it has made a new determination of the prerequisite collateral. And more recently it has done the same with respect to Nokia v. Daimler. The new amount is slated to be set before the Holiday Season.

Nokia's litigation counsel can't be blamed--their "hit rate" is higher than the industry average in SEP enforcement, though an independent analysis showed this year that the quality of Nokia's aging SEP portfolio is average at best. But the purpose of litigation typically isn't to stick copies of symbolical courtroom victories to a wall. It's about leverage, and that's precisely what Nokia is still lacking.

Nokia's lobbying prowess (with Daimler and some of its suppliers failing miserably in that regard) has so far dissuaded the European Commission from letting its Directorate-General for Competition (DG COMP) do its job and investigate Nokia's SEP abuse. I'm sorry I temporarily blamed DG COMP for not taking action. Over time it became clearer and clearer that the problem has nothing to do with DG COMP. The main culprit is Thierry Breton (the EU's internal market commissioner). It's just not conducive to DG COMP's credibility (even with a non-competition commissioner being the one to blame). Whenever the Commission does or does not decide to investigate a high-profile complaint, a displeased party may insinuate protectionism. Just last month I expressed my fundamental skepticism concerning claims that certain antitrust complaints over SAP's software licensing terms (and as an app developer I am sympathetic to software makers who want to maintain a reasonable degree of flexibility, especially in the business-to-business segment, as to the scope of what users may do with the licensed products) don't get traction just because of SAP's importance to Europe's digital economy. It actually appears those complaints are contrived and unpersuasive. Still, some try to leverage an allegation of protectionism in a context like that, and by not taking action against Nokia, the Commission harms its own reputation as a competition enforcer at a time when that function is more important than ever (not only--but also--in the SEP context).

The issue of component-level SEP licensing is, however, basically in the process of bypassing Brussels and heading straight to Luxembourg. Late last month, the Dusseldorf Regional Court decided to refer to the top EU court two sets of legal questions--the first one being all about component-level access to SEP licenses and the second one, which may not even be reached, relating to the interpretation of the CJEU's Huawei v. ZTE framework. Whatever that court decides is binding on the Commission, not the other way round (though the Commission's input bears considerable weight with the Advocate General, whose recommendations the court adopts in about two thirds of its cases).

Nokia's lobbying machinery will try to influence the court process. They'll try to influence each and every EU member state government, and with the automotive industry being so bad and weak at this, it's possible that even some countries that have a strong automotive industry and virtually no SEP holders are going to make submissions that favor Nokia. But Nokia would rather gain decisive leverage over Daimler before a Luxembourg ruling.

Next week, the Dusseldorf Regional Court was scheduled to hold trials in two more Nokia v. Daimler cases. While the referral to the CJEU was decided by the division headed by Presiding Judge Sabine Klepsch, next week's trials would have been conducted by a panel under Presiding Judge Dr. Tim Crummenerl.

Within less than a week of the trial date, however, Nokia withdrew both cases--and simultaneously notified counsel for Daimler and its suppliers that it simultaneously refiled the same complaints in Munich.

The Dusseldorf withdrawal will result in an award of court fees, which Nokia is apparently happy to pay just to escape from a court it used to love and has apparently learned to hate. Refiling in troll-friendly Munich is a logical choice, but with what I wrote further above as well as in connection with Nokia v. Lenovo, it remains to be seen just for how much longer that venue is going to be a SEP abuser's preferred battleground.

The practice of bringing patent infringement complaints only to withdraw them at a procedural stage where that's a highly unusual thing to do is reminisicent of the most disreputable patent trolls. In fact, Apple and Intel are suing Softbank-owned Fortress Investment in the Northern District of California, and one Fortress front named Uniloc has made such procedural moves in the United States. Such behavior is obviously abusive and vexatious. Nokia has no class, at least not anymore. This Dusseldorf-Munich maneuvering is almost childish. It's an act of defiance after the CJEU referral, and a transparent effort to show to other courts that Munich gets Nokia's business because of its patentee-friendliness.

The Munich court will likely set a somewhat accelerated schedule for those two refiled Nokia v. Daimler cases as the parties are already very familiar with the issues. But a Dusseldorf decision would probably have come down in January, at which point there won't even have been an early first hearing in the refiled cases.

By the way, Nokia can't run from that Dusseldorf judge forever. Dr. Tim Crummenerl will serve on the Federal Court of Justice starting next year.

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Lenovo wins, Nokia loses in Munich appeals court: patent-in-suit most likely invalid, FRAND issues *may* exist on top

On Friday (October 30), the Munich I Regional Court (Landgericht München I) ordered its third standard-essential patent (SEP) injunction in the same calendar month, and the second against car maker Daimler over the course of eight days. Each of these decisions was based on the same clearly erroneous application of the Court of Justice of the EU's Huawei v. ZTE guidance, and each came with a determination of a negligible security amount that is an insult to human intelligence and calls into question whether the rest of the world should take any Munich patent decision seriously anymore or just attribute it to some judges' burning desire to attract patent infringement complaints to their venue, no matter the damage to device makers and to innovation itself.

But the tide may turn. At least there is hope based on certain dicta of an order by the Munich appeals court.

Today Lenovo's public relations agency sent out a press release (which others have already quoted) according to which the Munich Higher Regional Court (Oberlandesgericht München) has granted the computer maker's motion to stay the enforcement of the H.264 video codec SEP injunction Nokia had obtained on October 1 and which the Finnish company (whose products were way too bad to stay competitive in the consumer electronics market) had recklessly started to enforce a couple of weeks ago.

What is known about the Munich appeals court's decision is that the panel (Presiding Judge: Konrad Retzer) concluded unusually quickly that the lower court's ruling most likely cannot stand. Unlike in the United States, where the enforcement of an injunction may be stayed if the defendant establishes irreparable harm and generates significant doubt about whether the court below got it right, the standard in Germany is pretty one-dimensional: short of the possibility of a company going bankrupt, only the likelihood of success on the merits determines whether a motion for an enforcement stay is granted.

The lower Munich court even states in a document outlining its Patent Local Rules that it strives to satisfy patentees' demand for swift injunctions without previously staying case pending a parallel validity determination in another forum. But in this Nokia v. Lenovo case, the patent-in-suit appears to extremely likely to be invalidated that the Munich appeals court based its decision to stay the enforcement of the injunction just on the lower court's abuse of discretion with respect to its ignorance of the high likelihood of invalidation.

The appeals court no longer had to reach any other questions (infringement and FRAND) in order to resolve the motion for an enforcement stay. But as the same court has done in some other contexts, it did elect to comment on infringement and, which has ramifications for various automotive SEP cases, write a few more pages about FRAND.

I haven't been able to obtain a copy of the decision yet (will keep on trying, of course). What I have found out is that the Munich appeals court is full well aware of that its counterparts further up north--the Karlsruhe Higher Regional Court (which hears all patent appeals originating from Mannheim) and the Dusseldorf Higher Regional Court--have applied Huawei v. ZTE to the effect that a SEP holder who fails to make a FRAND-compliant licensing offer is not entitled to injunctive relief regardless of the implementer's counteroffer. By contrast, the Munich I Regional Court's recent SEP injunctions were all based on a holding that the respective implementer was an unwilling licensee, without a full-blown assessment of the SEP holder's original offer.

The Munich appeals court has not indicated whether it intends to overrule or affirm the lower court in that particular regard. But it does realize that affirmance would result in what is called a circuit split in U.S. appellate law.

Even if the Munich Higher Regional Court opted for a circuit split, it might still reverse the lower court's FRAND stance in one or more other respects, which could open the door to successful FRAND defenses.

The question now when and in what case the Munich appeals court will ultimately have to address the questions it outlined in Friday's order:

• Lenovo can avert the continued enforcement of Nokia's injunction by posting security to the amount of approximately $5 million, affording the computer maker the opportunity to further litigate this case. But there is a potential risk of any of the four other Nokia v. Lenovo cases forcing the latter into a settlement. Nokia lost its first case (of six) in Mannheim, now won in Munich, and has four more cases pending, with decisions expected in the coming months.

• Daimler is seeking an enforcement stay of both Conversant's and Nokia's Munich injunctions. Presumably, the two patent trolls (Nokia is one with respect to Daimler as it never made cars and isn't even in the user equipment business anymore) will soon enforce their injunctions against Daimler. The car maker will then depend on the Munich court acting about as swiftly as it did in the Lenovo case. If those cases can be stayed on other grounds (such as validity), FRAND won't be reached, but at some point it probably will be--unless Daimler settles again, like it did with Sharp.

Nokia is now sitting on two injunctions it can't currently enforce: one against Daimler that it won in Mannheim in August but with respect to which the Karlsruhe Higher Regional Court is weighing a motion for an enforcement stay, and the Munich injunction against Lenovo.

Nvidia intervened in support of Lenovo, and one of Lenovo's defenses is that Nokia owes Nvidia an exhaustive component-level SEP license, which would cover Nvidia's customer Lenovo by extension. Component-level licensing wasn't relevant at this procedural juncture, but may become key further down the road in the Nokia-Lenovo dispute. It certainly does play a major role in the Daimler SEP cases, and on next week's Thursday the Dusseldorf Regional Court will most likely (based on what Presiding Judge Sabine Klepsch indicated at the trial in early September) refer to the Court of Justice of the EU certain questions concerning component-level access to SEP licenses. That may make it much harder for Nokia and Conversant to enforce their SEP injunctions against Daimler, depending on how the various regional appeals courts will rule on motions for enforcement stays once such fundamental questions have been submitted to the Luxembourg-based top court of the EU.

Apart from the FRAND defense, another problem badly needs to be addressed in Munich: the lower court has recently determined security amounts based on the patentee's royalty demands as opposed to the actual harm to a defendant's business. In this particular Nokia v. Lenovo case, the appeals court no longer needs to deal with that part as the injunction has been stayed for the duration of the appellate proceedings.

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Huawei and patent troll Conversant settle patent dispute, automotive downstream stands to benefit from component-level agreement

On Friday, the Landgericht München I (Munich I Regional Court) entered a final (though appealable) judgment in a Conversant v. Daimler standard-essential patent (SEP) infringement case in which Conversant was asserting a former Nokia patent (or, to be precise, a derivative of a former Nokia patent). I've meanwhile obtained a copy of the ruling, and its final part (Section H) reveals that a settlement between Huawei--an indirect Daimler supplier--and the Nokia-fed patent troll has been reached.

The written decision says that on October 21, 2020 (just two days prior to the ruling date), defendant Daimler and intervenor Huawei (referred to as "intervenor no. 8") brought parallel motions asking the court to postpone the decision by two weeks in light of an agreement between Huawei and Conversant. The court denied these motions because Daimler's and Huawei's representations didn't go into sufficient legal detail, and because the settlement agreement comes with conditions precedent that weren't specified (Daimler, in fact, requested the court to ensure that the agreement would enter the record). Furthermore, the court notes that just one day prior to that motion, Huawei had filed a pleading according to which it denied having received a licensing offer from Conversant.

In most if not all German SEP cases against Daimler, Huawei intervened in its capacity as a tier 2 (indirect) supplier. Huawei makes network access devices (NADs), or connectivity modules, which some of Daimler's tier 1 (= direct) suppliers such as Continental and Samsung subsidiary Harman incorporate into the telematics control units (TCUs) they sell to the Mercedes maker. Effectively, cellular SEPs are implemented by the baseband chip (tier 3), so if a tier 3 or tier 2 supplier is licensed, so are the tier 1 supplier (TCU maker) and, by ultimate extension, Daimler.

In July, court filings in several Sharp v. Daimler cases pending before the Mannheim and Munich courts revealed a component-level SEP license deal between Huawei and Sharp. At a trial later that month it turned out that this agreement, through patent exhaustion, resolved approximatly 86% of what was at stake between Sharp and Daimler, thereby greatly reducing the impact of the injunction the Munich court handed down last month. To my dismay, Daimler didn't pursue its appeal, a decision that will cost far more in the long run than it would have cost to at least let the appeals court adjudicate Daimler's motion for an enforcement stay. We'll see in the weeks ahead whether Daimler will settle with Conversant as well--or do the right thing and fight on.

It appears that Huawei's deal with Conversant is structurally similar to the agreement with Sharp. Otherwise there wouldn't have been any basis for requesting a postponement of the decision. Therefore, this agreement is further validation of the concept of exhaustive component-level SEP licensing, and undermines the Avanci pool's end-product-only licensing policy. Conversant is another Avanci member that has now entered into a direct SEP license agreement, bypassing the pool.

Qualcomm is lobbying the European Commission--the #1 enemy of Europe's automotive industry in the SEP licensing context--and the German federal government (which could accidentally become an enemy of its automotive industry in this context as a result of some decision makers' cluelessness) with a proposal to grant licenses, on terms that would not allow those suppliers to be economically viable anyway, at the TCU (tier 1) level. But with every deal like Sharp-Huawei and Conversant-Huawei, it becomes clearer that higher levels of the supply chain must be considered as well, and may even represent the point of maximum licensing efficiency.

I'd like to share more information from the Conversant v. Daimler judgment. For only a relatively small and old portfolio, Conversant wanted 75 cents (US) per car. In my trial report I had written €0.75, but the ruling says US$0.75. Daimler's counteroffer amounted to $0.01 per connected vehicle implementing 4G/LTE, and fractions therefore for vehicles implementing only 3G, only 2G, or only emergency calls.

In Section G (right before the part that addresses the requests to postpone the ruling date), the court discusses how it arrived at the insanely low security amount of 5 million euros. Conversant can enforce the injunction during the appellate proceedings by making a deposit or posting a bond. The amount is meant to guarantee that Daimler can be made whole should Conversant ultimately lose the case, in which event Daimler would be entitled to recovery of wrongful-enforcement damages. One doesn't have to be an automotive industry expert to see that the damage of blocking Daimler's German sales (which could even impact many exports from Germany to other countries) would exceed that amount by a factor of not 10 or 100, but roughly 1,000. The ruling notes that Daimler built well over a million cars in Germany in 2018, and a similar volume would be impacted now. That's why the Mannheim court required collateral to the tune of €7 billion in a Nokia v. Daimler case.

The Munich court bases its collateral determination--as it has recently done on various occasions, apparently also including a Nokia v. Lenovo case--on Daimler's duty to mitigate damages. In a nutshell, the court's "theory" (in quotes because it makes mockery of the word) is that Daimler doesn't have to halt production and sales--it could take a license. That, however, would moot the case, thereby depriving Daimler of its right to appeal and defeating the very purpose of collateral for enforcement during an appeal. It's utterly nonsensical.

That approach to security amounts should be reviewed by the appeals court as soon as possible. It already might have been corrected if Daimler hadn't settled with Sharp.

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Conversant wins Germany-wide standard-essential patent injunction against Daimler in Munich: third court loss for Daimler in as many months

Today the 21st Civil Chamber of the Landgericht München I (Munich I Regional Court) granted Conversant Wireless, a notorious standard-essential patent (SEP) troll, a Germany-wide injunction against Daimler over EP2934050 on an "apparatus and method for providing a connection" (a divisional of a patent Nokia once gave to Conversant).

While Daimler will presumably appeal, the injunction is immediately enforceable--absent an enforcement stay that the appeals court might order--if Conversant posts a bond or makes a deposit of a negligible amount. The Munich court bases the amount of the prequisite collateral not on the economic damage resulting from enforcement, but on the SEP holder's royalty demand. In a parallel case, Nokia is now enforcing a SEP injunction on that basis against computer maker Lenovo.

In the EP'050 case, Daimler had conceded essentiality, but disputed the validity of the patent-in-suit. Let me refer you to my report on the September 23 trial. Daimler's FRAND defense was futile because the Munich court turns the CJEU's Huawei v. ZTE on its head by focusing on the implementer's counteroffer and typically never reaching the SEP holder's licensing offer, apart from a less than cursory look. And the court believes that this follows from the Federal Court of Justice's recent Sisvel v. Haier decision, which dealt (among other things) with the question of whether an implementer was a willing licensee.

This is already the third German SEP injunction against the Mercedes maker in as many months:

• On August 18, the Mannheim Regional Court granted Nokia a Germany-wide injunction against Daimler. However, Nokia would have had to provide security to the tune of €7 billion, which it couldn't afford, and at any rate, the injunction isn't being enforced because the appeals court (the Karlsruhe Higher Regional Court) wasn't going to let that happen while weighing Daimler's motion for an enforcement stay.

  By the way, Nokia might also win a Munich injunction--then practically without a requirement to provide security--against Daimler in a week from today.

• On September 10, the Munich I Regional Court's Seventh Civil Chamber granted Sharp an injunction against Daimler, and determined only a negligible security amount. Daimler appealed and requested an enforcement stay, but caved and took a license from Sharp. That decision will cost Daimler dearly. And it already has a negative effect on the Conversant dispute: had Daimler actually pursued its appeal and its motion for an enforcement stay, the Munich appeals court would already have had an opportunity to correct the lower court's Huawei v. ZTE misapplication and its approach to setting the amount of the collateral required for immediate enforcement. Those legal questions are now the same in the Conversant case, so the appeals court could have addressed those questions roughly six weeks earlier (October 23 vs. September 10)...

One of the key legal issues here is the right of component makers to a SEP license on FRAND terms. With the Dusseldorf Regional Court still being very likely (irrespectively of a Qualcomm initiative) to refer a set of component-level licensing questions to the Court of Justice of the EU on November 12, the Munich appeals court might be reluctant to let Conversant enforce its injunction against Daimler on a basis that the top EU court might later find to contravene EU competition law.

The fact that Conversant has now joined Nokia and Sharp in obtaining a Germany-wide Mercedes sales ban may have policy makers in Berlin concerned. The Federal Cabinet has patent reform on its agenda for next week. I haven't seen the draft injunction statute of the proposal they're probably going to adopt. So far, SEP injunctions weren't really the focus, but the pro-reform camp should raise the rapidly deteriorating situation on the SEP front with the Federal Parliament and try to have the bill amended so that proportionality considerations would apply to SEP cases on top of the antitrust-based FRAND defense.

In closing I'd just like to note that today's decision is yet another disgrace for the European Commission, which is totally responsible for what is going wrong in the automotive patent wars because of its regional protectionism favoring Nokia and Ericsson over Europe's automotive industry.

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The day that international comity died was when the UK Supreme Court handed down its injudicious Unwired Planet ruling

There's a lot of talk now about a couple of Chinese antisuit injunctions (Huawei v. Conversant and Xiaomi v. InterDigitroll) preventing the enforcement of standard-essential patent (SEP) injunctions in Germany and India. I don't know the details of those cases, thus can't take a position on them. I did, however, predict and comment favorably on the antisuit injunctions Microsoft obtained against Motorola in the Western District of Washington (Judge Robart, affirmed by the Ninth Circuit) and Samsung against Huawei in the Northern District of California (Judge Orrick). But I was rather skeptical of automotive supplier Continental's case against Nokia in the Northern District of California (and Judge Koh denied a motion for a temporary restraining order). Anyway, antisuit injunctions are not a Chinese invention for sure.

This is a rather short post because it's simply meant to be food for thought.

We all miss the point if we focus just on those two specific cases involving Chinese smartphone makers. The grand picture is that territorial overreach has become a characteristic of the international patent litigation system that just manifests itself differently depending on the jurisdiction we're talking about:

• U.S. courts have granted antisuit injunctions for a long time, but they do so very judiciously and based on a comprehensive analysis way more sophisticated than a German appeals court's overly simplistic, black-or-white approach to an anti-antisuit injunction last year.

  Say what you will about the U.S. patent litigation system, but as Judge Robart explained at a Munich conference last year, U.S. judges generally decline to rule on foreign patents, sometimes even when both parties ask them to.

• The German patent litigation system is in dire need of reform, which may or may not be coming.

  I remember listening to Judge Dr. Peter Tochtermann (now presiding over the 7th Civil Chamber of the Mannheim Regional Court) at an Amsterdam SEP conference in 2012. While Mannheim was many SEP holders' preferred venue at the time, Judge Tochtermann's position at the said conference was that an implementer of a standard could have an availing antitrust defense even if only willing to license a particular patent-in-suit, and only in Germany. But over the years, German courts have become ever less reasonable about SEP enforcement, and nowadays they require a defendant to take a global portfolio license in order to avoid an injunction. That's territorial overreach, plain and simple. And it's part of the "forum selling" German patent judges notoriously engage in, even to the point where they do massive damage to their own country's largest industry (automotive). They're self-serving, irresponsible, and while one might defend some German case law as being "dogmatic," there's actually nothing principled about it. The only principle is to attract patent litigation to certain courts. Judge Albright of the United States District Court for the Western District of Texas is an outlier in the U.S., and German judges would be slightly more subtle at public events, but their extremist rulings speak louder than any roadshow possibly could.

• I've saved the most important point for last: what opened the floodgates against all warnings was this year's Unwired Planet v. Huawei/Conversant v. ZTE ruling by the UK Supreme Court, upholding the lower courts' decisions according to which UK courts can set global portfolio rates and obligate defendants to take a license on such terms under the threat of a UK patent injunction.

  During the four-day hearing, there actually were moments when I thought those UK judges would see the light, but ultimately they did not, as their unanimous decision shows. They just didn't want to overturn their new colleague Lord Kitchin, who had been the "mastermind" of the appellate decision. So they ignored all warnings that such territorial overreach by the UK would draw a response from other jurisdictions--such as China, where the defendants in those UK cases are based.

What's going on now is a global race to the bottom. The patent system is broken. And international comity in patent litigation is history. We can complain about the chaos resulting from this. My position is that neither the U.S. (where the first major SEP antisuit injunctions came down, but as I wrote above, subject to a complex test) nor whatever jurisdiction issues the latest antisuit injunction (now some focus on China, but who knows who will be next) are the source of the problem--instead, the territorial overreach that German courts have engaged in for years and, even more so, the crazy UK Unwired decision are to blame.

And, by the way, has the European Commission ever done anything to combat territorial overreach in patent litigation? It hasn't because it's always been lobbied heavily by Nokia and Ericsson, whose own patent trolls like Conversant and Unwired persuaded a UK court with little experience in patent matters to hand down a decision that may have thrown the cross-jurisdictional patent litigation world into chaos.

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More unhinged standard-essential patent injunctions to come down in Germany in wake of Sisvel v. Haier: Munich trial in Conversant v. Daimler

Before talking about yesterday's Munich trial in Conversant v. Daimler, let's look at the strategic landscape:

In general, Daimler's efforts to fend off Nokia, its patent trolls like Conversant, and the abusive Avanci gang at large, are on the right track. The Dusseldorf Regional Court's foreseeable referral of questions relating to the entitlement of suppliers to an exhaustive component-level license is likely to result in exactly the kind of clarification that the automotive industry and the wider IoT sector need, provided that the top EU court won't be indirectly affected by lobbying: Nokia, Ericsson, and their traditional allies are going to get a number of EU member state governments, and possibly the EU Commission, to make submissions to the court that will advocate the cause of abusive SEP holders, given that the European automotive industry's lobbyists know less about IP policy than their counterparts in the telecommunications industry have already forgotten. Therefore, even some countries with a significant number of automotive jobs may end up siding with Nokia.

I hope the Fair Standards Alliance will manage to counterbalance the SEP abusers' lobbying efforts. Otherwise a number of key FSA members will have no one but themselves to blame. They don't even need to win the lobbying battle; all it takes is to neutralize the Nokia camp's efforts.

There have been cases in which the CJEU didn't care about all those submissions and just interpreted the law the way it saw fit; but there have also been cases in which the positions taken by various member states influenced the Commission, which in turn shaped the Advocate General's thinking, and the AG's recommendations are adopted by the court in a solid majority of cases.

In the short term, it's reasonably encouraging that Presiding Judge Andreas Voss ("Voß" in German) of the Karlsruhe Higher Regional Court got Nokia to commit not to enforce, while the appeals court is weighing Daimler's motion for an enforcement stay pending its appeal (i.e., for approximately a year), a Mannheim injunction that misapplies Huawei v. ZTE and may also simply be wrong on the purely technical question of essentiality. Nokia had no other choice as the appeals court made it clear that it would otherwise have ordered a micro-stay for the month or two it takes to resolve the motion for a stay. Those micro-stays are rarely seen in Germany, where the irreparable-harm standard is not just exacting but next to impossible to meet, making decisions on stays in almost all cases entirely dependent on the likelihood to prevail.

In Munich there's even more of a need for the regional appeals court to restore sanity. It will be interesting to see how the Munich Higher Regional Court's 6th Civil Senate under Presiding Judge Konrad Retzer will adjudge Daimler's motion for an enforcement stay concerning an injunction that Sharp won and could enforce by posting collateral of a negligible amount.

The Munich I Regional Court's 21st Civil Chamber, before which yesterday's trial took place, will announce a Nokia v. Daimler ruling tomorrow. While the court didn't indicate a clear inclination in July, the way yesterday's Conversant v. Daimler trial went definitely increases the likelihood of an injunction--and makes it extremely hard to imagine that Daimler could prevail on its FRAND defense. If anything can help Daimler tomorrow, it will be one of the technical defenses (non-essentiality or invalidity).

I have to update my top three list of the most outrageous German SEP trials I ever watched:

1. Conversant v. Daimler, Munich I Regional Court, 21st Civil Chamber -- September 23, 2020

2. Motorola v. Microsoft, Mannheim Regional Court, 2nd Civil Chamber -- February 7, 2012 (Presiding Judge Dr. Holger Kircher obligated Microsoft to withdraw its challenge to the validity of the patents-in-suit as a precondition for even evaluating an Orange-Book-Standard FRAND defense; only a U.S. antisuit injunction against Motorola prevented a disaster, and by now it's clear the Mannheim court's position was totally irreconcilable with EU antitrust law)

3. Nokia v. Daimler, Munich I Regional Court, 7th Civil Chamber -- February 6, 2020 (one tidbit tells it all: the court's official minutes, which were extremely one-sided, even note that "Counsel for Plaintiff declared herself in agreement with the Court" on FRAND)

As you can see above, yesterday's trial had to beat some formidable competition to claim the top spot, and it did so handily with respect to FRAND/SEP issues. Note that this ranking does not take into consideration the way those trials went with respect to the purely technical merits. In that regard, Presiding Judge Tobias Pichlmaier yesterday set an extremely high standard: after going into the courtroom with a skeptical perspective on Daimler's invaldity defense, he was super-receptive.

The invaldity part (and there was no discussion of essentiality, which was apparently conceded given the breadth of the patent-in-suit) can be summed up as follows: Quinn Emanuel's Dr. Marcus Grosch initially argued that the prior art fell in the scope of the asserted claim(s) of EP2934050 on an "apparatus and method for providing a connection" (a divisional of a patent Nokia once gave to Conversant), suggesting that the basis of the invalidity analysis should be the plain and ordinary meaning of the "core network element identifier" claim limitation. On this one, I actually agreed with the court, which insisted that each claim term would have to be interpreted in light of the patent description--though one of the side judges embarrassed himself when he vaguely described a certain approach as the line of the Federal Court of Justice but, when asked by Daimler's counsel, was unable to name a single decision to that effect.

Conversant sought to narrow the term (so as to avoid an overlap with the prior art), but in that effort had to take a position that was inconsistent with the prosecution history of the patent-in-suit. As a result, the court was no longer fully convinced of the patent being valid. My feeling is that Daimler now has at least a 30% chance of winning a stay pending the opposition proceeding before the European Patent Office.

Then came the FRAND part, and it was outrageous beyond belief. It proved that there's no such thing as hitting rock bottom in FRAND matters in Germany. Every time you think this has to be the end, some court will find a path to a new low, especially since utter intellectual dishonesty has been a trait of many German FRAND decisions for years.

Not long ago, both patent infringement panels of the Munich I Regional Court and the 2nd Civil Chamber of the Mannheim Regional Court departed from the previous application of Huawei v. ZTE in the sense of evaluating the implementer's counteroffer first and ordering an injunction even if the SEP holder's original demand didn't appear to be FRAND-compliant in the first place. That doesn't make sense under any reasonable reading of Huawei v. ZTE, but some judges will get away with this until an appeals court sets the record straight.

The 21st Civil Chamber of the Munich I Regional Court is now trying to take this one step further by means of a shortcut--which is actually more of a short circuit: Emboldened by the Federal Court of Justice's recent Sisvel v. Haier decision, they seek to import a murky soup of considerations into the question of whether the implementer was willing to take a license. In Sisvel v. Haier, there were some unusual circumstances, such as that the implementer's first counteroffer was made only after the relevant patents had already expired. Here, the patent-in-suit is still going to be a valid for a few more months, and Daimler made a counteroffer well ahead of the trial, which used to be deemed more than timely in Germany.

What the CJEU meant in Huawei v. ZTE was for the SEP holder to provide a notice of infringement and, along with that one or in response to an indication that the implementer was willing to take a license on terms to be determined later, an offer that the SEP holder would not just have to make but also explain. Daimler argues that Conversant's unspecified reference to the FRAND metholodogy of an England & Wales High Court ruling (Unwired Planet v. Huawei) involving different parties and patents fell short of the kind of derivation of the royalty demand that Huawei v. ZTE requires, and the first time that Conversant went into details on its numbers was just a few months ago, with the portfolio size actually having changed dramatically since the original demand.

It's not even the most problematic part of the Munich court's position that Sisvel v. Haier, where the counteroffer came four years after the infringement notice and at a much later procedural stage (four weeks prior to the appelate hearing, and after patent expiration, would be viewed as a basis for considering Daimler an unwilling licensee. And I've discussed before that the proper application of the Huawei v. ZTE would have to begin with looking at the SEP holder's royalty demand in the first step.

The real issue is that the "willingness" analysis, as explained by the court, involves the above considerations as well as the court's assumption that Daimler's counteroffer must be unreasonably low simply because it's far below the SEP holder's demand, even though the court said it had not performed, and does not wish to perform, a quantitative analysis of Conversant's offer.

Presiding Judge Pichlmaier drew an analogy that rendered pretty much everyone on the defending side speechless: he said that if a road accident made a person lose an arm and the injured person demanded 1 million euros while the one responsible for the accident offered only 2 euros, it would be obvious, just based on the discrepancy, that something is wrong with the 2-euro counterproposal.

The fallacy here is clear. First, the court's "logic" would mean that even if in the same situation the defendant offered 10 million euros (ten times as much as what the plaintiff in the court's example demanded), it would also appear "unreasonably low" if the plaintiff simply demanded 5 billion euros. Second, the reason why everyone would intuitively say that 2 euros is not a reasonable proposal for damages in a case of severe personal injury is not that the plaintiff asked for a lot more, but that everyone intuitively realizes a loss of a limb is a massive injury, and that a 2-euro amount is chicken shit.

Well, I said something further above about the intellectual honesty of some German FRAND decisions. Instead of formally analyzing the parties' positions on FRAND licensing terms, as the CJEU outlined in Huawei v. ZTE, the court doesn't even want to seriously analyze a single one of them. Instead, the court wants to base a decision--to enter a Germany-wide Mercedes sales ban over a patent covering a tiny part of the telecommunications functionality of a car--on a hazy mix of considering Daimler should have made more efforts to advance the licensing talks and the discrepancy between the parties' offers suggesting unreasonableness on the defendant's side.

Presiding Judge Pichlmaier lamented the difficulties in determining a FRAND rate, considering it's a "range." I agree it's a range. In most SEP cases where an infringement is identified, courts would unfortunately have to go through that exercise (they can appoint expert witnesses for that purpose, but in Germany they just want to hand down as many patent rulings as possible, at the expense of fairness and proper jurisprudence)--unless they cut corners in highly questionable ways. Now, I can imagine some extreme cases in which a given party's offer can be deemed non-FRAND even without stating a precise range of FRAND royalty rates, but even then the court would at least have to conduct parts of the FRAND analysis. For instance, if a SEP holder demands something that is grossly inconsistent with all comparable licensed agreements, the failure of such a royalty demand to comply with the "ND" part of "FRAND" may obviate the need for specifying a precise range. Also, there could be a situation where some questions (such as the percentage of actually-essential patents in a portfolio) would be disputed, but the court would have formed an opinion on all other factors. If the offer to be evaluated then falls clearly outside the possible range of results, even if seen in the light most favorable to the party that made such an offer, it may not be necessary to determine the FRAND range (just a range of conceivable ranges, so to speak).

But rewarding a SEP holder for making an out-of-this-world demand is... well, I'll let you complete the sentence.

By the way, Conversant appears to be seeking €.75 per car, which is roughly a third of what Nokia demands, and Conversant's portfolio is small compared to Nokia's, and even older.

The Munich court was as unreceptive to component-licensing arguments as always. As for the intervenors, they were largely the same group as in the German Nokia v. Daimler cases, with only three differences:

• Unlike Nokia, Conversant's prayers for relief don't have a carve-out for cars that come with telematics control units (TCUs) supplied by Samsung subsidiary Harman Becker. Therefore, Harman is an intervenor in the Conversant cases, and is represented by DLA Piper's Dr. Markus Gampp. He also appeared on Harman's behalf in a recent Sharp v. Daimler trial.

• Judge Pichlmaier noted that Huawei wasn't present. That surprised me, actually, given that Huawei is known to be adverse to Conversant.

• Equally surprisingly, counsel for Valeo subsidiary Peiker was in the audience, but Peiker wasn't mentioned as an intervenor.

Finally, an update on how this panel of the Munich court conducts trials in the midst of the COVID-19 pandemic. I definitely noticed major improvements over the July Nokia v. Daimler trial. There was an obligation to wear masks, and in the spectators' area there was clearly enough of a distance between any two persons. The room wasn't as crowded as in the Nokia cases. However, Munich is a SARS-CoV-2 hotspot (so bad at the moment that hotels in some other parts of Germany aren't allowed to accept guests from Munich and that the city administration now requires people to wear masks in various downtown streets within walking distance from the courthouse). With a view to the risk of aerosolized infections, ventilation is key, and originally the court opened both the door to the courtroom (which was not an option because of too much noise somewhere else in the building) and at least one window, but with ambulance and policar car sirens, that wasn't an option either except for a few breaks. Next time I'll bring a CO2 meter so I can prove that the ventilation they have there is insufficient, which I'm quite certain it was yesterday. But then, the patent-in-suit will expire in a few months' time, and from a "patent trolls über alles" perspective, it made a lot of sense to hold the trial regardless of ventilation problems...

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Dusseldorf Regional Court reinforces position on access to standard-essential patent injunctions: analysis starts with SEP holder's licensing offer

On Monday, the press office of the Landgericht Düsseldorf (Dusseldorf Regional Court) issued a press release on six Conversant v. Huawei and ZTE cases scheduled to go to trial tomorrow (Thursday, June 18, 2020). Of note, the court that adjudicates more patent infringement cases than any other European court (though most smartphone cases, including cases over cellular connectivity in cars, go to the rocket dockets in Mannheim and Munich) reiterates its position on the availability ofcinjunctions over standard-essential patents:

"Nach der Rechtsprechung des EuGH darf ein Unterlassungsanspruch aus einem standardessentiellen Patent, für das eine FRAND-Erklärung abgegeben wurde, nur geltend gemacht[] werden, wenn der Patentinhaber dem lizenzwilligen Benutzer zuvor eine Lizenz zu fairen, angemessenen und nicht diskriminierenden Bedingungen (FRAND) angeboten hatte."

My unofficial translation:

"According to CJEU case law [i.e., Huawei v. ZTE], injunctive relief over a FRAND-pledged standard-essential patent may only be sought if the patentee previously offered to the willing licensee a license on fair, reasonable, and non-discriminatory (FRAND) terms."

The above sentence reaffirms that the starting point of the FRAND analysis will be what the SEP holder demanded. Should the SEP holder have failed to discharge its FRAND duties, no injunction will issue.

The three leading German patent litigation venues continue to approach and adjudge this legal question inconsistently:

• The Dusseldorf court is internally consistent, and in my opinion properly interprets what the CJEU said.

• The Munich I Regional Court takes the contrary position.

• Mannheim is internally divided--but a court divided can stand, at least in a non-Common Law jurisdiction like Germany. The Mannheim Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Peter Tochtermann) is still aligned with Dusseldorf, while the same court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher), which used to be in the mainstream, has recently decided to turn south in this regard, though there is still a glimmer of hope for Daimler in a pending Nokia case (scheduled to be decided next week) based on an adjustment made by that judiciary panel.

The legal test is extremely important, but let's not forget that a lot depends on how a test is applied. If the analysis begins with the SEP holder's offer, but even the most egregious of royalty demands are deemed to be FRAND-compliant, it won't really help. Conversely, if a court approaches a case like the Mannheim Regional Court's Second Civil Chamber in Nokia v. Daimler, but doesn't set the bar unreasonably high for the implementer of the standard, then the outcome may still be pro-competitive. That's why next week's Mannheim ruling will be a particularly interesting one to analyze.

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Nokia-fed Avanci-aligned patent troll Conversant asserting two patents against Tesla in Mannheim: same patents in use against Daimler in Munich

It already became known in late April that Conversant Wireless, a patent troll that obtained patents from Nokia a while ago and contributes to the abusive Avanci patent pool, is suing Tesla in the Western District of Texas as well as in Mannheim, Germany. Meanwhile the Mannheim Regional Court's press office has thankfully been able to provide me with details on the two German Conversant v. Tesla cases:

• The patent-in-suit in case no. 2 O 27/20 is EP2934050 on an "apparatus and method for providing a connection."

• The patent-in-suit in case no. 2 O 57/20 is EP3300421 on a "slow mac-e for autonomous transmission in high speed uplink packet access (hsupa) along with service specific transmission time control."

Those two patents are among the ones Conversant is asserting agaist Daimler in Munich.

The two German Conversant v. Tesla cases are going to be adjudicated by the Mannheim Regional Court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher). From a FRAND perspective, the assignment of those cases to that particular division of the court is unfavorable to Tesla, given that the Second Civil Chamber--though it made a key adjustment--interprets the Court of Justice of the EU's Huawei v. ZTE ruling to the effect that an implementer's FRAND counteroffer is analyzed first, irrespectively of the fact that it (chrono)logically comes second and is merely meant to ensure a defendant won't employ unreasonable delaying tactics.

Another Avanci-aligned patent troll, Sisvel, recently stepped up its patent assertion campaign against Tesla.

The steady stream of new standard-essential patent (SEP) assertions against car makers is the result of regulatory authorites such as the European Commission having been indecisive regarding SEP abuse in an automotive context for too long. It's high time something happened in Brussels and/or elsewhere. And it still might.

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Nokia-fed Avanci-aligned patent troll Conversant stepped up litigation campaign against Daimler: now four cases pending in Munich

Nokia used to be the pride of Europe in its field, but it failed (as the saying goes, the higher you climb, the harder you fall), and a result, its patents have become not the, but certainly a scourge of Europe.

In October I discovered a German Conversant v. Daimler lawsuit because it was mentioned in a U.S. court filing. Nokia gave Conversant a package of cellular standard-essential patents (SEPs)--a practice commonly referred to as "privateering" that anybody in Brussels trying to dissuade the European Commission from enforcing EU antitrust law against Nokia should be ashamed of.

By now, Conversant has brought at least three more cases in Munich (and maybe others in different fora):

• The first one I became aware of is over EP2934050 on an "apparatus and method for providing a connection" and was filed on August 13, 2019. The original complaint (case no. 21 O 11384/19) merely sought an accounting of Daimler's sales of infringing products, but Conversant could add--and by now might have added--a request for injunctive relief anytime (the patent is set to expire in early 2021).

  The case will go to trial on September 23, 2020 before the 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier).

These are the three new cases and the hearing dates I'm aware of (I have yet to find out whether those are first hearings--as I believe--or already trials):

• Case no. 21 (<= that's the number of the chamber, i.e., court division) O 17752/19 over EP3300421 on a "slow mac-e for autonomous transmission in high speed uplink packet access (hsupa) along with service specific transmission time control" (hearing date: November 25, 2020)

• Case No. 21 O 17753/19 over EP3267722 on a "fixed hs-dsch or e-dch allocation for voip (hs-dsch without hs-scch/e-dch)" (hearing date: December 2, 2020)

• Case no. 7 (= Presiding Judge Dr. Matthias Zigann's division) O 17751/19 over EP1797659 on a "slow mac-e for autonomous transmission in high speed uplink packet access (hsupa) along with service specific transmission time control" (hearing date: December 2, 2020)

This further escalation of the Avanci-Daimler dispute shows that the problem wouldn't go away even if Daimler felt forced to settle after a decision such as the one that may come down in Mannheim next month. The issues needs to be addressed. The European Commission has been waiting and waiting and waiting--but its hesitance has not helped in the slightest.

As I just mentioned Mannheim, I have meanwhile learned that Presiding Judge Dr. Peter Tochtermann of the Mannheim Regional Court's 7th Civil Chamber (Presiding Judge Dr. Holger Kircher's division is the 2nd Civil Chamber) held a trial on Friday in a non-automotive case, and from what I hear, that division still has the same perspective on FRAND as before, thereby declining to perform the same about-face as Judge Dr. Kircher's panel. Case law works has merely persuasive weight in Germany, so--unlike in Common Law jurisdictions--inconsistent decisions by the same court on the very same legal question would not be unheard of (no stare decisis doctrine). While I'm unaware of a high-profile question of patent law that would have been decided differently by judges of the same German court, I have read about cases in other fields of law. In one such case, the owners of different condominiums in the very same building in the Northern Bavarian city of Nuremberg brought lawsuits over the very same issue (no difference in facts or law), and one judge found for a plaintiff while another judge did the opposite.

It will be interesting to watch how this SEP injunction issue settles out before the Karlsruhe Higher Regional Court, provided that an appeal is brought and adjudicated prior to a poor mistreated defendant feeling forced to cave.

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