IP Bridge wins 4G patent injunction against Ford's German subsidiary: Munich I Regional Court announced bench ruling at end of yesterday's trial

In the second half of 2020, Daimler was slapped with four German standard-essential patent (SEP) injunctions with only 11 weeks between the first and the fourth. Three of them came down in Munich, and one in Mannheim. Quinn Emanuel--a firm that boasts a sky-high ratio of trial wins on its website--unsuccessfully represented Daimler in each of those cases.

Yesterday (Thursday, May 19), the Landgericht München I (Munich I Regional Court) entered the latest SEP injunction against a maker of connected cars. A few hours after the OPPO v. Nokia 5G trial I've already reported on, the same division of the court--the Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann (and again with Judge Dr. Hubertus Schacht as the rapporteur and Judge Kuttenkeuler as the second side judge)--resumed the proceedings in case no. 7 O 9572/21, Godo Kaisha IP Bridge 1 v. Ford-Werke GmbH. Japan's national patent licensing firm IP Bridge won a Germany-wide permanent (though appealable) injunction against the German subsidiary of Ford Motor Company over a patent found essential to the 4G (LTE) standard, EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator." The patent-in-suit was originally obtained by Japanese electronics maker Panasonic, which declared it essential to 4G. The same patent has previously been asserted against smartphone makers OPPO and HTC, and various other defendants.

As I'll mention again further below, the decision has ramifications beyond these two parties: the fact that Ford didn't make the Avanci patent pool a counteroffer was fatal to Ford's FRAND defense.

I saw the IP Bridge v. Ford case on a list of hearings and trials right outside Judge Zigann's courtroom (501, for those who've been to the Munich court and/or like the iconic Levi's jeans). I later asked the court what happened, and received a highly informative answer today.

The injunction came down as a bench ruling, with the full-length written decision expected to issue in the near term. Even if Ford appeals, IP Bridge can enforce by providing collateral (in the form of a bond or by depositing the amount on the bank account of the Local Court of Munich) to the amount of 226.935 million euros (approximately US$240 million). Ford could try to persuade the Oberlandesgericht München (Munich Higher Regional Court) to stay the injunction, but the hurdle for that is high: a defendant needs to persuade the appeals court of its likelihood of success on the merits. Failing that, Ford could ask the appeals court to increase the security amount, but $240 million is already a significant number.

Not only is Ford enjoined from making or selling infringing cars in Germany but it also has to recall infringing products from retailers and destroy infringing products (if IP Bridge elects to enforce those parts), and it owes IP Bridge an accounting of the infringing sales so as to enable IP Bridge to calculate a damages claim (liability is has been established, but the amount is yet to be determined).

While it may take a while before the full-length written judgment becomes available, Presiding Judge Dr. Zigann explained the underlying reasons at yesterday's announcement. I'm now going to summarize the court's explanations.

The Bundesgerichtshof (Federal Court of Justice) upheld this patent on January 18, 2022 (decision in German) on appeal from the Bundespatentgericht (Federal Patent Court). The appellees were two of the three nullity complainants (presumably, Daimler is the third one that dropped out, and the other two may very well have been Continental and TomTom). The Munich court relied on the claim construction adopted by the Federal Court of Justice in that case, which was consistent with the way the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court) interpreted the patent in a different case (case no. 6 U 104/18).

Not only did Ford and its intervenors raise new non-infringement arguments in Munich but they also claimed that the patent was exhausted under some agreement between Panasonic and an unnamed third party. However, like the Karlsruhe appeals court, the Munich I Regional Court concluded that the patent-in-suit does not fall within the scope of that agreement.

Ford's FRAND defense failed because the court deemed it an unwilling licensee (and denied that a "patent ambush" defense could be raised against a post-standardization owner of the patent). The court's decision to throw out Ford's FRAND defense appears to be based on more than one reason, but the one that was mentioned is that Ford failed to make Avanci a counteroffer. It is unclear whether IP Bridge also offered a bilateral license, but with this holding by the Munich court it apparently didn't even have to.

There isn't even the slightest sign of last year's German patent injunction "reform" having played any role. German car makers and some other organizations lobbied heavily for an amendment to Germany's patent law, but simply failed to achieve anything that would have moved the needle.

IP Bridge is represented in this action (and some--but not all-- of its other German patent cases) by Wildanger, arguably the German law firm with the strongest track record in enforcing SEPs (and a go-to firm for non-SEP assertions as well. The lawyers on yesterday's winning Wildanger team were Peter-Michael Weisse, Jasper Meyer zu Riemsloh, and Ole Dirks. Ford relied on Hogan Lovells. There are some intervenors, but I don't know exactly which suppliers made an attempt to support Ford. I do, however, recall a speaker from Continental discuss this case at a recent Frankfurt "Auto IP" conference.

Munich is arguably he world's #1 SEP enforcement hotspot, also when automakers are the defendants. Just this month, Dutch telecoms carrier KPN joined other Avanci licensors suing Ford in Munich. Ford is also defending in Delaware and the Eastern District of Texas. But in those other venues, it will take some time before we see any decision.

Let me first show you the order in a narrow sense (i.e., the remedies without the reasons) in the original version (in German), which the court thankfully provided to me upon request, followed by my own (obviously unofficial) translation of the injunction (except for the claim language, which I didn't translate because the German nullity actions resulted in a narrowed version that is now unique to that jurisdiction). You can also skip the original and go straight to my translation.

Original IP Bridge v. Ford injunction

I. Die Beklagte wird verurteilt,

1. es bei Meidung eines für jeden Fall der Zuwiderhandlung fälligen Ordnungsgeldes bis zu 250.000 Euro, ersatzweise Ordnungshaft bis zu 6 Monaten oder Ordnungshaft bis zu 6 Monaten, im Wiederholungsfalle Ordnungshaft bis zu 2 Jahren, wobei die Ordnungshaft am jeweiligen Geschäftsführer der Beklagten zu vollstrecken ist,

z u   u n t e r l a s s e n,

LTE-fähige Kraftfahrzeuge mit mobilen Endgeräten, insbesondere solche mit dem Ausstattungsmerkmal „FordPass-Connect“,

die ausgebildet sind, das folgende Verfahren auszuführen:

Verfahren, umfassend die nachfolgenden Schritte, die von einem mobilen Endgerät durchgeführt werden: Empfangen eines Steuerkanalsignals von einer Basisstation, wobei das Steuerkanalsignal einen (im LTE-Standard so bezeichneten) „MCS“-Index (Modulation and Coding Scheme MCS, Modulations- und Codierschema), Information über Ressourcenblöcke in Form eines „resource indication value (RIV)“-Wertes, die zur Übertragung von dem mobilen Endgerät an die Basisstation verwendet werden, und einen Kanalgüteinformationsauslöser zum Auslösen einer Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation umfasst, dadurch gekennzeichnet, dass das Verfahren des Weiteren umfasst: Bestimmen ob der Kanalgüteinformationsauslöser gesetzt ist und ob das Steuerkanalsignal einen vorbestimmten Wert des MCS-Indexes anzeigt und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich einer vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, wobei

das Steuerkanalsignal nur für den Fall als Befehl zur Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne Multiplexieren des aperiodischen Kanalgüteinformationsberichtes mit Uplink-Shared-Channel-Daten interpretiert wird, dass der Bestimmungsschritt ein positives Ergebnis bringt, demzufolge der Kanalgüteinformationsauslöser gesetzt und das Steuerkanalsignal den vorbestimmte Wert des MCS-Indexes und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich der vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, und Übertragen des aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne Multiplexieren des aperiodischen Kanalgüteinformationsberichtes mit Uplink-Shared-Channel-Daten für den Fall, dass der Bestimmungsschritt das positive Ergebnis bringt

umfassend einen Empfänger, der ausgelegt ist zum Empfangen eines Steuerkanalsignals von einer Basisstation, wobei das Steuerkanalsignal einen (im LTE-Standard so bezeichneten) „MCS“-Index (Modulation and Coding Scheme MCS, Modulations- und Codierschema), Information über Ressourcenblöcke in Form eines „resource indication value (RIV)“ - Wertes, die zur Übertragung von dem mobilen Endgerät an die Basisstation verwendet werden, und einen Kanalgüteinformationsauslöser zum Auslösen einer Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation umfasst, wobei das Endgerät des Weiteren umfasst einen Prozessor, der ausgelegt ist zum Bestimmen, ob der Kanalgüteinformationsauslöser gesetzt ist und ob das Steuerkanalsignal einen vorbestimmten Wert des MCS-Indexes anzeigt und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich einer vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, wobei das Steuerkanalsignal nur für den Fall als Befehl zur Übertragung eines aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne Multiplexieren des aperiodischen Kanalgüteinformationsberichtes mit Uplink-Shared-Channel-Daten interpretiert wird, dass der Bestimmungsschritt ein positives Ergebnis bringt, demzufolge der Kanalgüteinformationsauslöser gesetzt und das Steuerkanalsignal den vorbe-stimmten Wert des MCS-Indexes und eine Anzahl von Ressourcenblöcken, die kleiner oder gleich der vorbestimmten Ressourcenblockanzahl ist, mittels Bestimmung unter Verwendung des RIV-Wertes anzeigt, und einen Sender, der ausgelegt ist zum Senden des aperiodischen Kanalgüteinformationsberichtes an die Basisstation ohne den aperiodischen Kanalgüteinformationsbericht mit Uplink-Shared- Channel-Daten zu multiplexen, falls die Bestimmung das positive Ergebnis bringt,

(Anspruch 9; eingeschränkte Fassung)

in der Bundesrepublik Deutschland herzustellen, anzubieten, in Verkehr zu bringen, zu gebrauchen oder zu den genannten Zwecken einzuführen oder zu besitzen;

2. der Klägerin darüber Auskunft zu erteilen, in welchem Umfang die Beklagte die vorstehend zu Ziff. I.1. bezeichneten Handlungen seit dem 7. November 2012 begangen hat, und zwar unter Angabe

a) der Namen und Anschriften der Hersteller, Lieferanten und anderer Vorbesitzer,

b) der Namen und Anschriften der gewerblichen Abnehmer so- wie der Verkaufsstellen, für die die Erzeugnisse bestimmt waren,

c) der Menge der ausgelieferten, erhaltenen oder bestellten Erzeugnisse sowie der Preise, die für die betreffenden Erzeugnisse bezahlt wurden,

wobei zum Nachweis der Angaben die entsprechenden Kaufbelege (nämlich Rechnungen, hilfsweise Lieferscheine) in Kopie vorzulegen sind, wobei geheimhaltungsbedürftige Details außerhalb der auskunftspflichtigen Daten geschwärzt werden dürfen;

3. der Klägerin in einem chronologisch geordneten Verzeichnis darüber Rechnung zu legen, in welchem Umfang die Beklagte die vorstehend zu Ziff. I.1. bezeichneten Handlungen seit dem 7. Dezember 2012 begangen hat, und zwar unter Angabe

a) der einzelnen Lieferungen, aufgeschlüsselt nach Liefermengen, -zeiten, -preisen und Typenbezeichnungen sowie den Namen und Anschriften der Abnehmer,

b) der einzelnen Angebote, aufgeschlüsselt nach Angebotsmengen, -zeiten, -preisen und Typenbezeichnungen sowie den Namen und Anschriften der Angebotsempfänger,

c) der betriebenen Werbung, aufgeschlüsselt nach Werbeträgern, deren Auflagenhöhe, Verbreitungszeitraum und Verbreitungsgebiet sowie bei Internetwerbung der Schaltungszeiträume, der Internetadressen sowie der Zugriffszahlen,

d) der nach den einzelnen Kostenfaktoren aufgeschlüsselten Gestehungskosten und des erzielten Gewinns,

wobei zu lit. a) bis d) Belege (wie beispielsweise Ausgangsrechnungen, hilfsweise Lieferscheine, Angebotsschreiben, Eingangsrechnungen, hilfsweise Lieferscheine) vorzulegen sind, wobei geheimhaltungsbedürftige Details außerhalb der rechnungspflichtigen Daten geschwärzt werden dürfen; und wobei der Beklagten nach ihrer Wahl vorbehalten bleibt, die Namen und Anschriften der nichtgewerblichen Abnehmer und der Angebotsempfänger statt der Klägerin einem von der Klägerin zu bezeichnenden, ihr gegenüber zur Verschwiegenheit verpflichteten, in der Bundesrepublik Deutschland ansässigen, vereidigten Wirtschaftsprüfer mitzuteilen, sofern die Beklagte dessen Kosten trägt und ihn ermächtigt und verpflichtet, der Klägerin auf konkrete Nachfrage mitzuteilen, ob eine bestimmte Lieferung oder ein bestimmter Abnehmer oder Angebotsempfänger in der Aufstellung enthalten ist;

4. die vorstehend zu Ziffer I. 1. bezeichneten, seit dem 7. November 2012 in Verkehr gebrachten Erzeugnisse von den gewerblichen Abnehmern zurückzurufen;

5. die in der Bundesrepublik Deutschland im unmittelbaren oder mittelbaren Besitz bzw. Eigentum der Beklagten befindlichen Erzeugnisse gemäß Ziffer I.1. zu vernichten, oder an einen von der Klägerin zu beauftragenden Gerichtsvollzieher zum Zwecke der Vernichtung auf Kosten der Beklagten herauszugeben.

II. Es wird festgestellt, dass die Beklagte verpflichtet ist, der Klägerin allen Schaden zu ersetzen, der der früheren Patentinhaberin Panasonic durch in der Zeit vom 7. Dezember 2012 bis zum 25. April 2017 sowie der Klägerin durch seit dem 26. April 2017 begangene, in Ziff. I.1. bezeichnete Handlungen entstanden ist und noch entstehen wird.

III. Die Beklagte trägt die Kosten des Rechtsstreits, die Nebenintervenientinnen tragen ihre außergerichtlichen Kosten selbst.

IV. Das Urteil ist in der Ziffer I. gegen einheitliche Sicherheitsleistung in Höhe von 226.935.000,00 EUR (Zweihundertsechsundzwanzigmillionen, Neunhundertfünfunddreißigtausend) und in Ziffer III. gegen Sicherheitsleistung in Höhe von 110 Prozent des jeweils zu vollstreckenden Betrages vorläufig vollstreckbar.“

---   ---   ---

Unofficial and shortened English translation

I. Defendant is ordered

1. at penalty of a contempt fine of up to 250,000 euros, imprisonment of up to 6 months [if the fine cannot be collected] or imprisonment of up to six months [regardless of whether a fine could be collected], in the event of repeated violation of up to 2 years, whereas Defendant's relevant managing director is the person to be imprisoned,

t o   c e a s e   a n d   d e s i s t

from, within the borders of the Federal Republic of Germany, manufacturing, offering, releasing into commerce, using or, for said purposes, importing or possessing

LTE-capable vehicles with mobile user equipment, particularly those that come with the "FordPass-Connect" feature,

that are equipped to execute the following method:

[...]

(Claim 9; narrowed version)

2. to provide an accounting to Plaintiff as to the extent to which Defendant has committed the acts set forth in Section I.1 hereof since November 7, 2021, stating therein

a) the names and addresses of manufacturers, suppliers, and other prior owners,

b) the quantities of the delivered, received, or ordered goods as well as the prices paid for said goods,

whereas Defendant is to produce copies of proofs of purchase (to wit, invoices, alternatively delivery slips), whereas confidential business information beyond the data Defendant is required to provide may be redacted;

3. to provide, in the form of a chronological list, an accounting to Plaintiff as to the extent to which Defendant has committed the acts set forth in Section I.1. since December 7, 2012, stating therein

a) the individual deliveries by quantities, times, prices and product types as well as the names and addresses of the purchasers,

b) the individual offers by offered quantities, times, prices and product types as well as the names and addresses of the recipients of the offers,

c) its advertisements by circulation, period of distribution, and region, as well as in the case of online advertisements the periods of placement, the Internet addresses, and access numbers,

d) manufacturing costs by the cost types and profits made,

whereas [further details regarding the requirements for photocopies of documents and potential redactions]

4. to recall from commercial purchasers the goods set forth in Section I.1 that have been released into commerce since November 7, 2012;

5. to destroy the goods in accordance with Section I.1 it directly or indirectly owns in the Federal Republic of Germany or to surrender them to a bailiff (whom Plaintiff would have to ask) for the purpose of destroying those goods at Defendant's expense.

II. It is adjudged and decreed that Defendant is liable to make Plaintiff whole for all demages that have arisen from the acts set forth in Section I.1 between December 7, 2012 and April 26, 2017, and will arise from such acts in the future.

III. Defendant has to bear the costs of the proceedings. Intervenors are to bear their own costs. [Explanation: since the intervenors are Ford suppliers who intervened to support the losing party, they're not entitled to a fee award.]

IV. Section I of this Judgment is provisionally [i.e., during an appeal] enforceable against a unitary security of 226,9935,000.00 euros (two-hundred twenty-six million nine-hundred and thirty-five thousand), and Section II against a security of 110% of the amount to be collected.

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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 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:

• Optis/Unwired Planet group sues Ford Motor Company over five 4G standard-essential patents in Eastern District of Texas: sixth Avanci licensor to go after Ford

• Sol IP adds 16 more standard-essential patents to infringement lawsuit against Ford Motor Company in Eastern District of Texas: now 21 patents-in-suit (potentially new record)

• Neo Wireless [not an Avanci licensor] expanding patent enforcement campaign to automotive: actions filed against Ford, Honda, VW, Nissan, GM, Tesla, Toyota with five U.S. district courts

• Another patent lawsuit against Ford discovered [MiiCS v. Ford] -- and a great automotive IP conference taking place in Frankfurt next week

• Sisvel becomes third Avanci licensor to sue Ford Motor Company over cellular standard-essential patents (and a post on Sisvel's Munich cases

• Japan's IP Bridge appears close to license agreement with OPPO, but Ford still holding out: 4G standard-essential patent disputes in Munich (the trial will continue the day after tomorrow--Thursday, May 19, 2022)

• L2 Mobile Technologies [a Longhorn IP subsidiary] claims Qualcomm chips in Ford, Lincoln cars infringe 3G standard-essential patents originally obtained by ASUSTeK

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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Optis/Unwired Planet group sues Ford Motor Company over five 4G standard-essential patents in Eastern District of Texas: sixth Avanci licensor to go after Ford

This is now the third post in a row on standard-essential patent (SEP) litigation in the Eastern District of Texas. The two previous ones were about Ericsson v. Apple. As I was checking on the E.D. Tex. docket, I also discovered a new automotive SEP lawsuit: a group of patent licensing firms named Optis Wireless Technology, Optis Cellular technology, Unwired Planet, and PanOptis Patent Management has brought an infringement complaint over five 4G SEPs against Ford Motor Company.

That group of patent holders has a strong track record in litigation. most famously involving the UK Supreme Court's Unwired Planet v. Huawei decision. An Optis v. Apple FRAND trial (setting the terms of a conditional injunction) will soon be held in London. And now the Optis-Unwired group has become the sixth Avanci licensor to go after Ford--and the second one in the Eastern District of Texas, where Korea's Sol IP is already asserting a whopping 21 patents against the car maker. Other Avanci licensors to be enforcing their intellectual property against Ford include MiiCS (Munich), Sisvel (Delaware and Munich), IP Bridge (Munich), and Longhorn IP subsidiary L2 (Delaware). The Delaware cases will go to trial only sometime in 2024, but holdout won't work for Ford because the patent injunction hammer will likely come down in Germany long before, and I also expect Sol IP's and Optis-Unwired's cases in the Eastern District of Texas (which are about damages, for now) to go to trial much sooner.

According to the latest complaint, both Optis-Unwired and Avanci have been trying for about five years to strike a license deal with Ford:

"For several years dating back to 2017, Plaintiffs themselves and also as part of a licensing pool through Avanci LCC ('Avanci') have attempted to negotiate with Ford to reach an agreement for a FRAND license to Plaintiffs’ cellular patent portfolios. However, Ford has declined to date to take a license. In contrast to Ford, several other automobile manufacturers have taken a license.

"Plaintiffs have also sought to have Ford take a license to its patents on FRAND terms as part of a broader pool of essential cellular patents through Avanci. On information and belief, starting in August 2017, Avanci has made extensive efforts to have Ford take a license on FRAND terms."

The complaint notes that "[i]n contrast to Ford, several other automobile manufacturers have taken a license." That fact ups the ante for Ford, which really comes across as an unwilling licensee by now. Just two days ago, Avanci announced a license agreement with General Motors, the largest U.S. car maker. When IAM reported on that deal, it also stated what I've been saying for some time (Tesla must be an Avanci licensee given that multiple cases brought by Avanci licensors were withdrawn near-simultaneosuly last year) and said that electric SUV and pickup truck maker Rivian Automotive is an Avanci licensee.

These are the patents asserted by Optis and Unwired against Ford:

• U.S. Patent No. 8,149,727 on a "radio transmission apparatus, and radio transmission method" (originally filed by Panasonic, currently assigned to Optis Wireless Technology)

• U.S. Patent No. 8,199,792 on a "radio communication apparatus and response signal spreading method" (originally filed by Panasonic, currently assigned to Optis Wireless Technology)

• U.S. Patent No. 8,223,863 on a "method and arrangement in a cellular communications system" (originally filed by Ericsson, currently assigned to Optis Wireless Technology)

• U.S. Patent No. 8,254,335 on a "radio communication apparatus and radio communication method" (originally obtained by Panasonic, currently assigned to Optis Wireless Technology)

• U.S. Patent No. 8,320,319 on a "semi-persistent scheduled resource release procedure in a mobile communication network" (originally filed by Panasonic, currently assigned to Optis Wireless Technology)

Optis-Unwired's complaint was filed by McKool Smith, which also (together with Irell & Manella) won a $300 million damages verdict against Apple for the same plaintiff and in the same district.

For as much as I would like to show you the complaint (though there's no major information in it beyond what you can find in this post anyway), I haven't been able to upload it to Scribd. While Scribd did successfully process the court document in my previous post (Ericsson's opposition to Apple's motion to stay a case over three 5G patents), it entered into an endless loop after claiming that the upload of the Optis-Unwired complaint (and previously, an Ericsson-Apple court order) had been completed "100%." I don't know whether this is due to my new computer, but the fact that one of those three court documents from the Eastern District was successfully published on Scribd makes it unlikely that I have a firewall problem (I can also upload files to other websites without problems). I'll try to solve the problem. If all else fails, I'll have to find an alternative to Scribd. Apologies.

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Sol IP adds 16 more standard-essential patents to infringement lawsuit against Ford Motor Company in Eastern District of Texas: now 21 patents-in-suit (potentially new record)

If the Guinness Book of Records had category for the largest number of standard-essential patents (SEPs) asserted in a single infringement action, Korea's Sol IP--one of at least five Avanci licensors currently asserting SEPs against Ford Motor Company--might claim the crown.

Ford hasn't even responded to the recently-filed original complaint (over five SEPs) yet, but Sol IP has already amended it and is now asserting not only the five original SEPs-in-suit but also 16 more in the Eastern District of Texas. I'll list all 21 patents-in-suit and discuss the implications, especially with a view to litigation economics, but let me firstly show you the amended complaint (this post continues below the document):

22-04-22 Sol IP v. Ford Ame... by Florian Mueller

These are the five original SEPs-in-suit, which continue to be asserted:

1. U.S. Patent No. 10,938,534 on "carrier aggregation in wireless communication systems"

2. U.S. Patent No. 10,231,211 on a "method for paging information in cellular system

3. U.S. Patent No. 10,932,298 on a "method for transmitting uplink control signal in mobile communication system"

4. U.S. Patent No. 8,320,571 on a "method for generating downlink frame, and method for searching cell"

5. U.S. Patent No. 10,148,477 on a "method and apparatus for transmitting ACK/NACK" (ACK = acknowledgement; NACK = negative acknowledgment)

Here are the new ones:

6. U.S. Patent No. 10,206,207 on an "error control method, medium access control (MAC) frame designing method, and terminal registration method in wireless communication system, and recording medium"

7. U.S. Patent No. 10,244,559 on a "method for transmitting up link control signal in mobile communication system"

8. U.S. Patent No. 8,311,031 on a "cell search method, forward link frame transmission method, apparatus using the same and forward link frame structure"

9. U.S. Patent No. 9,496,976 on a "cell search method, forward link frame transmission method, apparatus using the same and forward link frame structure" (same title as previous patent)

10. U.S. Patent No. 10,080,204 (same title as previous two patents)

11. U.S. Patent No. 8,320,565 on a "method for generating downlink frame, and method for searching cell"

12. U.S. Patent No. 10,749,722 on a "method and apparatus for transmitting ACK/NACK" (ACK = acknowledgement; NACK = negative acknowledgment) (same title as '477 patent (#5 on the list))

13. U.S. Patent No. 10,271,349 on a "scheduling apparatus and method for multicast broadcast service"

14. U.S. Patent No. 10,687,351 on a "scheduling apparatus and method for multicast broadcast service" (same title as previous patent)

15. U.S. Patent No. 8,593,936 on "carrier aggregation in wireless communications systems" (same title as '534 patent (#1 on the list))

16. U.S. Patent No. RE48,101 on a "method of transmitting downlink channel rank information through physical uplink shared channel"

17. U.S. Patent No. 10,405,277 on a "method for reducing power consumption of terminal in mobile communication system using multi-carrier structure"

18. U.S. Patent No. 10,863,439 on a "method for reducing power consumption of terminal in mobile communication system using multi-carrier structure" (same title as previous patent)

19. U.S. Patent No. 10,462,776 on a "method for transmitting and receiving control information of a mobile communication system"

20. U.S. Patent No. 10,009,896 on "methods for transmitting and receiving of control channel in wireless communication systems"

21. U.S. Patent No. 10,893,525 on a "method for transmitting and receiving control channel in wireless communication systems" (almost identical title as previous patent)

Judge Gilstrap presumably won't let Sol IP put that many patents before the jury, as the trial would take very long and then disrupt jurors' lives for months. Even though those 21 patents are not from 21 different families (patents from the same family relate to largely the same technique, yet each must have a unique scope of protection), it would still take a whole lot of technical explanation.

But to the extent that those patents cover distinct inventions, the court can't force Sol IP to drop them. A frequently cited precedent in that regard is the Federal Circuit's 2011 opinion In re Katz Interactive Call Processing Patent Litig.. Sol IP may not even have to narrow its complaint at all (by dropping patents, which it could also do without prejudice in order to be able to reassert them subsequently) until we get a lot closer to a jury trial.

If Ford wants to properly defend itself, it will have to spend tens of millions of dollars. Based on Avanci's published 4G rate, that would cover a whole lot of cars with respect to 49 patent portfolios, of which Sol IP's is just one. I'm sure that some people at Ford have already done the math.

There is an asymmetry because Sol IP can assert all those patents without having to--for example--search prior art. Also, Sol IP likely has access to the inventors and the patent attorneys who prosecuted the original application, and those individuals are already quite familiar with the inventions in question.

Ford is in the business of making cars (as it has been for well over a century), not in the business of defending against cellular SEP infringement complaints. Sol IP's 16 additional SEPs-in-suit have probably simplified Ford's calculus.

Ford was not directly involved in the amicus brief campaign surrounding the en banc petition in Continental v. Avanci. It is, however, a member of the Alliance for Automotive Innovation, which filed an amicus brief together with the VDA (German Association of the Automotive Industry). Car makers Tesla (a presumptive Avanci licensee), Toyota, and Honda finally managed to file their own brief (as opposed to the wrong one), as I discussed in my previous post.

Continental is so far from making even the slightest headway against Avanci--they're not even going to be able to start discovery anytime soon--that Ford may already have given up on the prospects of that case. It now has to make the right decision for itself, realistically coming from the assumption that Continental's complaint is beyond salvation, and that Ford itself will sooner or later be enjoined in Germany and face at least substantial damages claims (if not also injunctions) in the United States, where the Biden Administration's new SEP policy statement that is currently in the works won't make much impact (if any) in the near term either.

Henry Ford famously said: "Half the money I spend on advertising is waste, and the problem is I do not know which half." When it comes to SEP litigation, defendants often find that more or less 100% of the money they spent defending themselves against patents was wasted.

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Fourth Avanci licensor sues Ford Motor Company: Sol IP asserting five LTE standard-essential patents from Korean research institute ETRI in Eastern District of Texas

Pressure is mounting on the Ford Motor Company to do its standard-essential patent (SEP) licensing homework. The legendary U.S. car maker is now defending against patent infringement actions brought by (at least) four Avanci licensors:

• In Munich, Japan's IP Bridge is likely to prevail on the merits of at least one SEP. In three weeks from today, the trial will continue and it appears to be all about FRAND.

• L2 Mobile Technologies, a Longhorn IP subsidiary, is suing Ford in the District of Delaware.

• Sisvel--whose president I quoted yesterday on Xiaomi's approach to patent licensing--is enforcing 4G patents against Ford in the District of Delaware as well as in the Munich I Regional Court.

A few days ago, Ford also got sued in the Western District of Missouri by a company named Neo Wireless, which unlike the aforementioned three companies is not an Avanci licensor (thus likely to demand far higher royalties on a per-patent basis).

The latest enforcement action by an Avanci licensor--the fourth to date to assert patents against Ford--was filed yesterday in the Eastern District of Texas. Sol IP, which has an exclusive license to various patents belonging to Korean research institute ETRI, is suing Ford over five 4G SEPs (this post continues below the document):

22-03-31 Sol IP v. Ford Mot... by Florian Mueller

With a view to TC Heartland (case law on patent venue transfers), Sol IP argues that Ford as a Central Market Area Office in Plano, TX, which is in the Eastern District. In a case before a Texas state court in 2015, Ford said the Plano office was "the principal office of Ford in the State of Texas." The General Manager of that office resides in Frisco, TX, which is equally in the Eastern District. He is responsible for "750 Ford and Lincoln Dealers".

Sol IP's complaint points to the fact that Ford could take an Avanci pool license anytime (though the complaint also notes that any licensing through Avanci is "nonexclusive" and mentions a bilateral licensing offer that came with the infringement notice):

"Other automakers have taken licenses from Avanci on the same terms per connected vehicle that has been offered to Ford, including but not limited to Volkswagen, Seat, Skoda, BMW, Audi, Porsche, Volvo, Jaguar Land Rover, Mercedes Benz, Daimler Truck, Aston Martin, Scania, MAN, and Volvo Group. In all, more than thirty automotive brands are Avanci licensees."

Sol IP is not pursuing an injunction, but it is seeking damages including willfulness enhancements.

Sol has previously sued Qualcomm over 28 ETRI patents as well as carriers AT&T Mobility, Verizon, and Sprint.

These are the asserted patents, each of which was declared essential to the 4G/LTE standard and belongs to South Korea's Electronics and Telecommunications Research Institute (ETRI):

• U.S. Patent No. 10,938,534 on "carrier aggregation in wireless communication systems"

• U.S. Patent No. 10,231,211 on a "method for paging information in cellular system

• U.S. Patent No. 10,932,298 on a "method for transmitting uplink control siginal in mobile communication system"

• U.S. Patent No. 8,320,571 on a "method for generating downlink frame, and method for searching cell"

• U.S. Patent No. 10,148,477 on a "method and apparatus for transmitting ACK/NACK" (ACK = acknowledgement; NACK = negative acknowledgment)

With all that is going on, the question is now whether Ford is the next Daimler (which defended itself against SEP infringement cases by Avanci licensors for more than two years, only to take a pool license anyway) or the next Volkswagen (which settled its dispute over an upgrade of its Avanci license to 4G rather quickly). I can't give the answer to that question. Only Ford itself can.

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Sisvel becomes third Avanci licensor to sue Ford Motor Company over cellular standard-essential patents

The ink isn't dry yet on the Biden Administration's draft policy statement on standard-essential patent (SEP) enforcement, and an American industrial icon is already facing yet another SEP infringement lawsuit as Ford Motor Company got slapped yesterday with a complaint by Italian (but globally present) licensing firm Sisvel in the District of Delaware (this post continues below the document):

21-12-13 Sisvel v. Ford Com... by Florian Mueller

This makes Sisvel the third contributor to the Avanci pool to tell Ford that enough is enough, and hold-out must come to an end. Previously, L2 Mobile Technologies (a Longhorn IP subsidiary) also sued Ford in the same federal district, and Japan's IP Bridge is going after Ford in Munich.

Last year it became known that Ford had entered into a short-term patent license agreement with Nokia--sort of a covenant not to sue during a standstill period. A few months ago, Nokia announced a deal with an unnamed car maker, and one possibility is that Ford might have acceded to Nokia's royalty demands and taken a "real" license. The Avanci pool does not preclude its members from entering into bilateral license agreements with car makers or automotive suppliers. But when a car maker needs licenses from dozens of Avanci members, it may indeed find it more cost-efficient to take a pool license rather than engage in piecemeal resolution.

The complaint says Sisvel first made Ford a licensing offer in January 2017, and properly identified its 3G SEPs. There was some further correspondence, and in 2018 Sisvel made Ford another offer, which included 4G SEPs. While Ford continued its unlicensed use, Sisvel acquired further patents, which it specified in a 2019 letter. Four of the patents-in-suit were finally identified t Ford in a June 2021 letter. But "Ford refused to take a license to Sisvel's patents," the complaint states. And that's why Sisvel felt forced to bring the complaint shown further above.

The patents-in-suit were originally obtained by Nokia, BlackBerry (formerly known as Research In Motion), and LG Electronics:

• U.S. Patent No. 7,751,803 on a "method and arrangement for optimizing the re-establishment of connections in a cellular radio system supporting real time and non-real time communications"

• U.S. Patent No. 7,894,443 on a "radio link control unacknowledged mode header optimization"

• U.S. Patent No. 7,979,070 on a "mobile equipment for sending an attach request to a network"

• U.S. Patent No. 8,600,383 on an "apparatus and method for making measurements in mobile telecommunications system user equipment"

• U.S. Patent No. 8,971,279 on a "method and apparatus for indicating deactivation of semi-persistent scheduling"

Sisvel is represented in this case by the Delaware-based Devlin Law Firm.

I'll try to find out about any European cases. Sisvel has a history of enforcing patents in Germany, a major market in which Ford might be enjoined next year as the U.S. complaint's account of the history of licensing negotiations between the parties makes it fairly likely that German courts would consider Ford an unwilling licensee...

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L2 Mobile Technologies claims Qualcomm chips in Ford, Lincoln cars infringe 3G standard-essential patents originally obtained by ASUSTeK

Ford Motor Company appears to have a history of standard-essential patent (SEP) hold-out. It was unwilling to take an actual long-term license from Nokia a few years ago, so the parties entered into what was more of a standstill than license agreement. Last week I found out about an IP Bridge v. Ford infringement action in Munich. An injunction looms large, and just today Germany's chief patent judge said that a recent amendment to the patent injunction statute was merely "a clarification and consolidation of the case law". One of his side judges told another audience that any proposals to soften patent enforcement should be directed to the legislature. Therefore, Ford can expect to be enjoined in Germany unless it agrees to take a FRAND license or is cleared of infringement of any valid SEP.

Three weeks ago, L2 Mobile Technologies, a subsidiary of a Texas-based non-practicing entity named Longhorn IP, sued Ford in the District of Delaware over a handful of 3G SEPs (this post continues below the document):

21-10-01 L2 Mobile Technolo... by Florian Mueller

L2 announced the complaint on its website, on which it also recently reported a favorable validity determination on one of its Chinese patents and, about six months earlier, an infringement lawsuit against Google. Against Ford, L2 is not seeking an injunction, at least not at this stage, but treble damages. In order for such willfulness enhancement to be awarded, L2 must prove an objective and a subjective prong. The latter is about whether Ford actually had knowledge of its infringements of these patents. It appears that the underlying theory is based on Ford's decision not to take an Avanci pool license:

ATTEMPTS TO LICENSE FORD

17. L2MT is a member of the Avanci LLC patent pool. On information and belief, Avanci LLC made Ford a FRAND offer to patents that are essential to the 3G wireless communications standard. On information and belief, Ford declined to take a license to the Avanci LLC patent pool.

The Avanci pool contains the cellular SEP portfolios of dozens of companies, a number of which are way bigger than L2. If L2 prevailed on this objective-willfulness theory, all car makers with significant U.S. sales would have to be extra cautious when rejecting an Avanci licensing offer as they might be liable for treble damages when any Avanci licensors sue them in the United States.

A willful infringer and an unwilling licensee are the same type of market actor, just from different angles. In Germany, courts increasingly deem implementers unwilling licensees if they decline to take a pool license. Therefore, I wouldn't be surprised if a U.S. court considered Ford a willful infringer of any patents in the Avanci pool that the iconic car maker hasn't licensed bilaterally either.

L2's infringement allegations involve Qualcomm chips. Qualcomm is an Avanci contributor as well, but apparently does not have a license from L2. The patents-in-suit were originally obtained by ASUSTeK, a subsidiary of Taiwanese device maker ASUS, and later assigned to a non-practicing entity named Innovative Sonic (also based in Taiwan). That one brought some infringement litigation many years ago, such as against BlackBerry, and in 2018 joined Via Licensing's LTE pool. Via welcomed Innovative Sonic as an innovative leader. Somewhere along the way, Innovative Sonic assigned a bunch of former ASUSTeK SEPs to L2. Maybe Qualcomm had a cross-license in place with ASUSTeK, but Innovative Sonic and L2 obviously never needed a license or chipsets (which wouldn't be available without taking a license first) from Qualcomm.

These are the patents-in-suit:

1. U.S. Patent No. 7,266,105 on a "method for determining triggering of a PDCP sequence number synchronization procedure" (PDCP means Packet Data Convergence Protocol)

2. U.S. Patent No. 8,179,913 on a "method and apparatus of handling variable of RLC reset procedure during receiver-side-only re-establishment in wireless communications system" (RLC means Radio Link Control)

3. U.S. Patent No. RE47,200 on "preventing shortened lifetimes of security keys in a wireless communications security system"

4. U.S. Patent No. 8,054,777 on a "method and apparatus for handling control PDUs during re-establishing receiving sides in a wireless communications system" (PDU means Protocol Data Unit)

5. U.S. Patent No. 8,064,460 on a "method and apparatus of delivering protocol data units for a user equipment in a wireless communications system"

The complaint correctly describes these patents as 3G-related. However, its third paragraph confuses 2G (GSM) and 3G--an unusual (but merely clerical) error in a wireless SEP complaint:

"The wireless communications devices in Ford's connected vehicles comply with the GSM wireless communications standard. This standard is also referred to as the '3G' wireless communications standard."

The costs of patent infringement litigation in the U.S. add up, and in the German IP Bridge case, Ford faces the threat of an injunction. It could take an Avanci pool license, but so far appears to have been opposed. It can also enter into bilateral license agreements.

Avanci itself doesn't hold patents and can't assert them, nor does it have the power to direct its licensors to enforce. Patent pools always have an obligation to inform their contributors (licensors) of any license agreements they conclude, and normally also keep them updated as to ongoing negotiations. For example, if Ford had been close to signing a deal with Avanci, L2 and IP Bridge would presumably have known and might then have waited instead of suing. But ultimately those companies are in the licensing business, and they can't let all car makers get away with unlicensed use forever. By suing Ford, they send out a clear message to others.

No coordination is needed for an independent patent holder to decide to sue the same entity after someone else decided to do so. Those companies do not mean to drive Ford out of business; they merely want to get paid. The more patent cases a given company has to defend against, the greater the incentive to settle at least some of them. A company like Apple or Samsung has to deal with numerous NPE cases in parallel, so one more wouldn't make a difference--but Ford is much smaller, and has much less expertise in the field of cellular SEP litigation. To me it just seems a logical choice that companies holding patents in the same field (regardless of whether they're even contributors to the same pool) would be more inclined to sue someone who is already embattled than pick another target.

For that reason alone, I would not attribute to malice (such as conspiracy) what can be adequately explained with natural litigation choices--and which Ford may have had coming because it apparently passed on licensing options of any kind, be it the Avanci pool or bilateral licenses such as with Nokia. Also, Qualcomm is a far bigger contributor to the Avanci pool than L2 (in fact, Qualcomm's portfolio dwarfs L2's), so the mere fact that L2's case against Ford accuses Qualcomm chips of infringement makes it impossible to imagine that Avanci would have orchestrated anything here.

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Ford entered into short-term patent license agreement with Nokia "under duress" in March 2019, terminated it as per 31 January 2020

At some of those Nokia v. Daimler patent trials in Germany, an unnamed American car maker was mentioned as a Nokia patent licensee, as I most recently wrote in April. I thought it was Tesla, but wasn't sure. With all that's going on in that context, such as last month's Mannheim injunction and this week's Dusseldorf trials, I asked around and learned from a U.S. source (which I obviously can't disclose) that the provisional license had actually been granted to, but terminated by, the Ford Motor Company.

This is the chronology of that short-term standard-essential patent (SEP) license agreement, which was merely meant to buy Ford time to negotiate a long-term license:

• the original agreement was executed on 20 March 2019;

• it was amended as of 18 September 2019;

• on 29 December 2019, Ford sent a notice of termination to Nokia; and

• said termination took effect on 31 January 2020.

As far as I know, no new agreement has since been concluded between Nokia and Ford. From what I hear, Ford denounced the terms of that interim agreement as non-FRAND in the strongest terms, and called it a "Tolling Agreement" (not "Trolling," though that may be just what Ford meant).

Ford blames the unsuccessful outcome of the negotiation effort on Nokia's unwillingness to make an offer on fair, reasonable, and non-discriminatory (FRAND) terms, while Ford claims that its counterproposal was FRAND in consideration of applicable law and relevant facts. What Ford particularly took issue with is that Nokia wanted to base the royalty amount on the value of a car, though according to Ford the SEPs in question are practiced by the mobile chipset.

The only reason Ford acceded to Nokia's demands on a provisional basis was to negotiate rather than litigate. According to my source, Nokia's licensing executives had repeatedly and aggressively threatened their counterparts at Ford with the immediate filing of an avalanche of lawsuits in multiple jurisdictions, and stressed that Nokia would pursue injunctions in different key markets (sales and/or import bans). Therefore, Ford told Nokia it only signed the provisional license agreement "under duress."

I don't find it hard to believe what I learned from my undisclosed source, knowing that Nokia's approach to patent licensing borders on racketeering, especially when Nokia doesn't have to fear retaliation. In public statements, Nokia and its lawyers make it sound like this was all just about Nokia getting fair compensation for its contributions to "innovation." But most of its SEP infringement cases fail on the merits as the dispute with Daimler shows (and it even happened to Nokia against ViewSonic years ago, a company that couldn't even afford challenging the validity of Nokia's patents-in-suit).

Nokia's licensing business is all about intimidation and crapshoots. They thought they could prey on automotive companies, but it turns out that neither Ford nor Daimler were the kinds of soft targets the failed Finnish handset maker had hoped.

If the European Commission was committed to competition enforcement on the merits, as opposed to being a protectionist political body, it would already be formally investigating Nokia's refusal to license component makers. But the solution may come from certain courts.

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Dell, Ford, Google and HP file submissions to up the ante for patent trolls at the ITC

Google, HP, Ford and Dell have filed statements (which are not themselves publicly accessible, but which are referenced by a public filing by Nokia, Huawei and ZTE) in connection with an ITC investigation of a complaint by non-practicing entity InterDigital.

In parallel to a political debate and legislative process on U.S. patent reform, some companies are also trying to achieve fundamental change through amicus curiae briefs. As a general rule, you really need to change the law for major change. On key issues, limited progress -- moving the goalposts just a little bit in your preferred direction -- is all you can realistically hope to achieve if you raise a policy argument with a court.

One of the topics in the patent reform debate is the ITC's immense popularity with patent trolls. In the headline of a Wall Street Journal op-ed, a former ITC commissioner even referred to the U.S. trade agency as the "International Trolling Commission". Without a doubt, the ITC is under pressure and may see its jurisdiction over patent infringement cases restricted.

There are three ways in which lawmakers or the ITC itself could make it harder, or even impossible, for patent trolls to obtain ITC exclusion orders (import bans). Some argue that an eBay v. MercExchange type of equitable standard should be imported into the ITC's governing law. I don't consider this a promising approach because the ITC has only one remedy, which is a form of injunctive relief, but eBay is all about deciding whether legal remedies (monetary compensation) are sufficient or an injunction is warranted. Also, I believe that ITC exclusion orders are a special kind of remedy. The second approach would be centered around public interest considerations. I can see how this works for certain issues, such as FRAND-pledged standard-essential patents (SEPs), but doubt that it's an answer to the problem of rampant, increasingly industrialized patent trolling. The third approach is the ITC's domestic industry requirement (DIR): you don't have access to an exclusion order without proving that a domestic industry exists or is in the process of being created in the U.S. with respect to the asserted patent(s). And that's the one I'm going to focus on for the remainder of this post.

Just like Congress liberalized the DIR in 1988 by enabling complainants to satisfy it through the proof of licensing activities (as opposed to the manufacturing of products implementing the patents in question), it could again narrow it. It's like "Congress giveth, Congress taketh away". But at this point there doesn't seem to be momentum behind legislative change in that regard (for as much as I would prefer a stricter DIR over an attempt to make eBay work for the ITC). So some of the companies who are generally critical of the ITC, and particularly of the many ITC investigations instituted at the request of patent trolls, hope that ITC rulings and, especially, appellate opinions can result in a more exacting DIR. Unfortunately for them, this is a steep challenge because Section 337, the statute governing the ITC's unfair import investigations, defines the DIR very inclusively.

In January 2013, Dennis Crouch wrote on his PatentlyO blog that "NPEs [Non-Practicing Entities] Solidify Enforcement Jurisdiction at USITC". That post discussed the Federal Circuit's order denying a petition by Nokia for a rehearing of a decision relating to InterDigital's first ITC complaint against Nokia, holding that InterDigital satisfied the DIR. The following passage from the Federal Circuit's opinion supports PatentlyO's assessment:

"Under the clear intent of Congress and the most natural reading of the 1988 amendment, section 337 makes relief available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing. It is not necessary that the party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article. As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337."

Let's take a quick look at the relevant part of the statute:

(2) Subparagraphs [regarding import bans against infringing products] apply only if an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established.

(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned --

(A) significant investment in plant and equipment;

(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

I'll further enhance legibility now by replacing "patent, copyright, trademark, mask work, or design" with "IPR" (for "intellectual property right"):

(2) Subparagraphs [regarding import bans against infringing products] apply only if an industry in the United States, relating to the articles protected by the [IPR] concerned, exists or is in the process of being established.

(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the [IPR] concerned --

(A) significant investment in plant and equipment;

(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

Item (C) is the one that patent trolls invoke -- in particular, the last item ("licensing"). For example, litigation expenses can constitute a substantial investment in licensing. Without litigation it's probably hard to satisfy the DIR on a licensing basis.

The structure of the statute has a major flaw. It lumps together all the criteria for satisfying the DIR through a product business with those that apply to a licensing business. It would have been better to have a clear set of criteria for product-based DIR arguments, and another set for licensing-based DIR theories. But the statute is what it is, and various companies are now arguing that even a non-practicing entity like InterDigital, which relies on licensing, must show "articles protected by the [asserted IPR(s)]". In the case of an NPE, such articles would be products made by licensees.

For product-based business, the DIR has an economic prong (investment, employment) and a technical prong (a showing that the products the investment and/or employment relate to actually implement an asserted patent). The statutory basis for the technical prong is the term "articles protected by the [IPR] concerned". Does this even make sense for licensing firms? Or should there be no technical prong at all in their case? That's the question the ITC recently asked parties and third-party stakeholders in connection with its ongoing review (which does not, at least not yet, involve FRAND issues) of a preliminary ruling clearing Nokia, Huawei and ZTE of infringement of various InterDigital patents. This is the Commission's request for input in its September 4, 2013 review notice:

"Please discuss, in light of the statutory language, legislative history, the Commission's prior decisions, and relevant court decisions, including InterDigital Commc'ns, LLC v. Int'l Trade Comm'n, 690 F.3d 1318 (Fed. Cir. 2012), and 707 F.3d 1295 (Fed. Cir. 2013), whether establishing a domestic industry based on licensing under 19 U.S.C. § 1337 (a)(3)(C) requires proof of 'articles protected by the patent' (i.e., a technical prong). If so, please identify and describe the evidence in the record that establishes articles protected by the asserted patents."

This question about whether there is any technical prong of the DIR for licensing-based businesses was interesting enough all by itself. But those advocating a strict, NPE-unfriendly DIR saw another invitation to make submissions to the ITC in last month's Federal Circuit opinion on Microsoft's appeal of certain unfavorable parts of the ITC ruling on its complaint against Motorola. On page 11 of that opinion, there's the following passage that stresses the need to show articles protected by an asserted IPR (and that these must be the ones that a domestic industry is established for):

There is no question about the substantiality of Microsoft's investment in its operating system or about the importance of that operating system to mobile phones on which it runs. But that is not enough under the statute. Section 337, though not requiring that an article protected by the patent be produced in the United States, unmistakably requires that the domestic company's substantial investments relate to actual 'articles protected by the patent.' 19 U.S.C. §§ 1337(a)(2), (3). A company seeking section 337 protection must therefore provide evidence that its substantial domestic investment—e.g.,in research and development—relates to an actual article that practices the patent, regardless of whether or not that article is manufactured domestically or abroad. InterDigital Commc'ns v. Int'l Trade Comm'n, 707 F.3d 1295, 1299, 1304 (Fed. Cir. 2013).

So there's the above passage, building on and citing to the earlier decision in the InterDigital case, and it emphasizes the reuqirement to show articles protected by an asserted patent. The respondents in the InterDigital investigation that is at the review stage -- Nokia, Huawei, and ZTE -- have tried to capitalize on this in their reply briefs. But I don't agree with them (not because I don't like what they want to achieve, but because I don't think they provide a compelling logic) that the Microsoft decision clarifies/modifies the InterDigital opinion to the effect that a licensing firm needs to show actual products. In the InterDigital opinion, the Federal Circuit actually declines to go into much detail on decisions relating to product-based DIR cases. I'm sure the reference in Microsoft to InterDigital is only about the part that clarified once again a domestic industry article doesn't have to be manufactured domestically but can also be imported.

Still, some companies now hope to up the ante for patent trolls by requiring them to show DIR products (and, even though InterDigital appears to suggest the opposite, those would obviously have to be other products than the accused devices). Nokia (which is in the future going to be more of a patent licensing firm than a product business), Huawei and ZTE try to defeat InterDigital's ITC complaint, in the event any of the preliminary findings on (non-)liability is reversed, just on the basis of the DIR.

In a reply brief (the public redacted version of which just became available this week) they also point to positions taken by third-party stakeholders that are allegedly consistent with their own opening brief on domestic industry:

"Respondents [Nokia, Huawei and ZTE] were also served with filings from non-parties Hewlett Packard, Dell, Ford and Google that address the domestic industry issue identified in the September 4 Notice. These submissions largely are consistent with the positions taken by Respondents in their initial brief."

Those submissions have actually not appeared on the ITC document system yet.

Now that briefing on the Commission's DIR-related review question is complete, it's clear that there are basically three positions: InterDigital argues that there is no technical prong and it also wants to have an extremely low hurdle as far as the economic prong is concerned. Respondents and third-party stakeholders opposing patent trolls' access to ITC exclusion orders want there to be a technical prong, which would not make it impossible for NPEs to win ITC cases, but it would be too late for InterDigital in this case and it might discourage some other NPEs from bringing ITC complaints. The Office of Unfair Import Investigations (commonly referred to as the "ITC staff"), which is participating in this investigation with respect to only two of the patents-in-suit and overall FRAND issues, has stated a position that is closer to InterDigital's -- no technical prong -- but still comes down to a more exacting standard: the ITC staff would like to see proof that a substantial investment in licensing relates to the asserted patents. The ITC staff says that InterDigital failed to provide such proof. Presumably InterDigital just argued based on licensing activities relating to its overall portfolio. The ITC staff wants a more granular showing of substantial investments relating to particular patents out of a large portfolio. It's not clear to me how this would work in practice.

My guess is that if the Commission, the six-member decision-making body at the top of the ITC, reaches the domestic industry question at all instead of just throwing out InterDigital's complaint for failure to prove infringements of valid patents, it will rule more or less consistently with InterDigital's position. Maybe it will agree with the staff that the economic prong, which would be the only relevant prong for NPEs, must be satisfied on a patent-by-patent basis. But I doubt that it will agree with the likes of Google. Companies like Google will, however, continue to lobby Congress for a reform of overall patent law and also the statute governing the ITC.

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Verizon, advertising agencies and Ford can't participate in Google-Apple appellate hearing

Today the United States Court of Appeals for the Federal Circuit denied a motion by Verizon, the American Association of Advertising Agencies and the Ford Motor Company to participate in the September 11, 2013 hearing on the Apple v. Motorola cross-appeal of Judge Richard Posner's dismissal of a two-way patent infringement lawsuit. These parties had already submitted a joint amicus curiae brief and support both parts of Judge Posner's ruling, the one relating to Apple's offensive claims over non-standard-essential patents as well as the one relating to Motorola's offensive claims over FRAND-pledged standard-essential patents. As usual, the appeals court did not state the reasons for this case management decision. It appears that amici curiae rarely get speaking time at those hearings.

Apple was flexible about these stakeholders' participation (provided that its own speaking time would remain unchanged). Google's Motorola strongly, and ultimately successfully, opposed it.

Despite the denial, Verizon and friends made a valuable contribution by bringing this motion in the first place. Their motion prompted Google to claim that they support Apple all the way. In their reply brief Verizon et al. clarified that this was simply not true. And in its effort to prevent third-party stakeholders from getting to speak at the hearing, Google surprisingly took a position on the scope of the ruling that is consistent with the one outlined by Microsoft's amicus curiae brief, but runs counter to what Google said in its opening brief. Google now agrees with Microsoft that the issues on appeal are very case-specific, while it originally claimed that Judge Posner established a bright-line rule denying injunctions to SEP holders.

Verizon and friends' initiative also demonstrated to the appeals court and everyone else with an interest in this case that certain neutral third-party stakeholders (Verizon is certainly not anti-Google in general) support Judge Posner's ruling all the way.

I will report on the hearing in three weeks as soon as the recording becomes available.

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Google flip-flops on scope of Judge Posner's FRAND ruling, now agrees with Microsoft

The highest-profile appellate hearing scheduled in the ongoing smartphone patent dispute for September is undoubtedly the Federal Circuit hearing on the Apple-Motorola cross-appeal of Judge Posner's June 2012 dismissal of a two-way lawsuit. Two weeks ago I reported on a request by three amici curiae -- Verizon, the American Association of Advertising Agencies, and the Ford Motor Company -- to participate in the September 11, 2013 hearing in an effort to defend both parts of Judge Posner's ruling: the one relating to Motorola's FRAND-pledged standard-essential patents (SEPs) as well as the one relating to Apple's patents-in-suit, all of which are non-SEPs.

As a litigation watcher I'm accustomed to inconsistencies, contradictions, and shifting positions, and to some extent that's obviously legit. But every once in a while I see a degree of self-contradiction that is really difficult to understand. This morning I had such an experience again when I read Google's (Motorola's) opposition brief to the request for participation by Verizon and friends (this post continues below the document):

13-08-15 Google Opposition to Participation in Hearing by Verizon Et Al.

Considering that Verizon et al. said clearly that they support Judge Posner's ruling all the way, there are actually reasons for which both parties might object. Apple takes no position as long as it doesn't affect the allotted time for its own argument. Google now claims that Verizon et al. "styled their brief as in support of 'neither party,' but every argument made in their brief supports Apple". This is Google's summary of the amicus brief submitted by Verizon et al. (reformatted and citations omitted):

1. injunctive relief is inappropriate for [F]RAND-encumbered Standards-Essential Patents;

2. injunctive relief is inappropriate when the patent at issue covers a minor component in a multi-component device; and

3. reasonable royalty damages should not exceed the value of the patented technology over alternatives at the time of design.

While it's true that items 2 and 3 can be understood to relate to SEPs, they aren't exlusively relevant to SEPs. Item 2 is primarily about non-SEPs since item 1 takes care of SEP injunctions all by itself, making item 2 only a secondary argument in the SEP context, but the primary one in the non-SEP context. And item 3, even the way Google summarizes it, is at least no less of a non-SEP-related argument than a SEP-related one. In the context of the FRAND part of Judge Posner's ruling, the emphasis would usually not be on the time of design but on the time of adoption of a standard.

Moreover, Verizon's concerns about the availability of injunctive relief (such as ITC import bans) over patents of all sorts -- particularly non-SEPs, such as the ones at issue in Apple's original ITC complaint against HTC -- are long-standing and well-documented. Verizon may have played a key role in explaining to the Obama Administration the issues raised by the ITC ruling on Samsung's complaint against Apple. But about a year before it took a position on that SEP issue, it spoke out against Apple in a non-SEP context.

Anyway, rather than try to get mileage out of whatever Verizon et al. say, Google is afraid that the effect of letting Verizon et al. participate would be to "give another voice and more time for presentation of Apple's positions than of Motorola's".

And now we're getting to an unbelievable contradiction. Google (Motorola) says the Federal Circuit "need not necessarily reach the policy 'issues of patent remedies' that Amici claim 'will have considerable effect on patent litigation for years to come.'" This is how Google now, all of a sudden, describes the scope of the SEP injunction part of the appeal:

"The parties dispute whether the district court failed to consider pertinent facts and properly apply the eBay standard in dismissing Motorola's claims for equitable relief. The Court can fully address these issues and resolve this appeal without reaching the sort of broad policy pronouncements that Amici seek to support."

This position that the FRAND injunction part of the appeal of Judge Posner's ruling is just about case-specific facts to be considered under eBay is not new. Microsoft said this much in its amicus curiae brief:

"Whether the holder of a standard-essential patent with a [F]RAND licensing commitment should be unable to obtain an injunction under all circumstances is an interesting question—but not a question presented in this appeal. First, the district court's straightforward application of eBay provides an adequate and independent basis for its decision. [...] Second, [...] the district court was not considering and did not apply a blanket prohibition on injunctions[.]"

But Google did not previously agree with Microsoft. Let's take a look at its opening brief in this appeal. Here's issue 4 raised by Google's cross-appeal:

"Did the district court err in applying an automatic rule that injunctions are never available for patents declared essential to SDOs, and thus in declining to consider evidence that Apple was an unwilling licensee?" (emphasis mine)

Here's another interesting passage:

"The district court failed to apply the four-factor eBay test to evaluate Motorola's claim for injunctive relief. Instead, the district court improperly enacted a bright-line rule permitting continued infringement not only of Motorola's '898 patent, but all FRAND-committed patents in Motorola's portfolio irrespective of the terms of those commitments, and even by parties that have consistently refused to take a FRAND license." (emphasis mine)

So Google is now saying in its opposition to the request for participation by Verizon et al. the very opposite of what it said in its opening brief. In March it said Judge Posner "enacted a bright-line rule", or an "automatic rule", prohibiting SEP injunctions, and wanted the appeals court to take a position on that one. That's what Google concedes would be Verizon and friends' preferred outcome. But it doesn't want to let Verizon et al. defend that position because now, five months after Google's opening brief, it's all about the "pertinent facts" and not about "broady policy pronouncements". How could the Federal Circuit opine on Google's issue #4 on cross-appeal (whether Judge Posner "err[ed] in applying an automatic rule that injunctions are never available for patents declared essential [...]"), without addressing the very policy issues Verizon et al. have raised? So either Verizon et al. have a legitimate reason for requesting participation in the hearing, or Google would have to withdraw its issue #4 on cross-appeal because, by its own admission and in accordance with what Microsoft's amicus brief says, the broad question of SEP-based injunctions is not an issue before the Federal Circuit in this case. Google wants to have its cake and eat it. It wants a broad policy pronouncement against Judge Posner's approach, and it doesn't want third-party stakeholders to advocate the policy they support. The circuit judges will easily identify this inconsistency, and it won't enhance Google's credibility in this appeal.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

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