Showing posts with label MobileStar Technologies. Show all posts
Showing posts with label MobileStar Technologies. Show all posts

Monday, August 18, 2014

Google asks appeals court to move Rockstar patent cases against Android device makers out of Texas

Google really doesn't want its Android device makers to mess with the Rockstar Consortium (which is owned by Apple, BlackBerry, Ericsson, Microsoft, and Sony) in Texas. Last December it brought a declaratory judgment action against the Rockstar Android cases in the Northern District of California, and the chief district judge held that California was a proper venue because Rockstar's patent lawsuits advance Apple's interests (Apple is headquartered in that district). As I said at the time, the Rockstar Consortium is so opaque that Apple isn't necessarily responsible for those lawsuits -- but responsible or not, Apple is a potential beneficiary.

But the California decision didn't persuade Judge Gilstrap in the Eastern District of Texas (who has previously been overruled by the Federal Circuit because he denied transfers of venue) to put his case on hold or to transfer it to California. When two district courts practically disagree on the proper venue, clarity can only be provided by an appeals court. That's why Google filed a petition for writ of mandamus (i.e., a request for the appeals court to interfere with an ongoing case, as opposed to an appeal in the narrow sense of the word, which relates to a final ruling) with the Federal Circuit last week. The objective is to have the Texas cases transferred to California (where Google developed Android) or at least to stay the Texas litigations until the California case has been resolved (which would have the same effect as a transfer).

This is what I expected to happen. In fact, I expected it a while ago. In February I wrote that "[w]e m[ight] very well see one or more mandamus petitions in this context" because "these defendants won't leave a stone unturned in their attempts to move the matter out of Texas." In March, I predicted that Judge Gilstrap wouldn't grant the Android device makers' motion to transfer venue, but that his decision wouldn't "dissuade Google and its OEMs from filing a somewhat likely mandamus petition with the Federal Circuit." I noted that Google could lose in Texas or win in California, but "especially with a view to pretrial decisions (summary judgment etc.), the Northern District of California would clearly be a better venue for the defendants in these cases." There we go.

While Apple and Samsung recently dropped all of their ex-US patent infringement actions against each other and Google (jointly with Motorola) reached a similar ceasefire agreement (even of worldwide scope) with Apple, the Rockstar lawsuits are continuing. In addition to still dealing with Apple in the U.S. (directly and through Rockstar) Samsung now basically has a two-front war with Microsoft: a contract action in New York plus that Rockstar lawsuit in Texas.

Some of the same players (as in the direct disputes between certain key organizations) are involved. Quinn Emanuel, the firm that had the lead in fending off Apple and Microsoft's lawsuits against Android (except for Samsung's defensive efforts in Germany, where credit for preventing Apple from ever enforcing any software patent against Samsung goes to the firms of Rospatt, a litigation firm, and Zimmermann & Partner, a patent prosecution firm with considerable litigation expertise) to the point that neither of those players ever achieved significant leverage, brought the mandamus petition against Judge Gilstrap's "what is filed in Texas stays in Texas" approach. I think it's very likely that Quinn Emanuel will defuse the Rockstar lawsuits just the way it defused the lawsuits brought by two of Rockstar's largest owners. But that is going to be more feasible in the Northern District of California than in the Eastern District of Texas.

[Update] I have a small correction to make. While the official caption of the Federal Circuit cases is In re Google, Google is (which comes as no surprise) not alone in this effort. For example, Samsung also filed a petition, and that's the one I downloaded first from the docket and published here. There are several related case numbers. [/Update]

If you're interested in further detail, here's Samsung's petition:

14-08-14 Google Petition for Writ of Mandamus (Rockstar Cases) by Florian Mueller

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Friday, April 18, 2014

Judge Koh's boss finds Rockstar's scare tactics advance Apple's interests against Android

In the ongoing Apple v. Samsung II trial in the Northern District of California, Apple's lawyers try hard to downplay Google's role, though it's blindingly obvious that Google is the true target of Apple's second California lawsuit against Samsung. Usually a twelve-mile drive (from Cupertino to Mountain View) is more convenient than a twelve-hour flight (from San Francisco to Seoul), but in this case, Apple seeks to benefit from the statistically-established bias of U.S. jurors against foreign companies. Also, the fact that Samsung sells actual devices is an opportunity for Apple to disingenuously make damages claims that run counter to its own, repeatedly-stated position on the proper royalty base for patent licenses and damages. The proper royalty base for Apple's asserted patents in the ongoing trial is Google's Android.

Maybe Apple's counsel can fool a jury, but Apple for sure can't fool Judge Koh's boss ("boss" in a nominal more so than managerial sense). The Chief District Judge of the Northern District of California, Claudia Wilken, wrote in an order (handed down yesterday) that the Rockstar Consortium's "'scare the customer and run' tactic advances Apple's interest in interfering with Google's Android business" and made various other findings relating to Apple's anti-Google/anti-Android agenda.

Before I quote the entire Apple-related passage from Chief District Judge Wilken's order denying a Rockstar motion to dismiss or move out of California a declaratory judgment action brought by Google to protect Android and the Android OEMs Rockstar sued on Halloween 2013, I'd like to defend Apple to some extent here, or to at least give it the benefit of the doubt. I agree with Judge Wilken's conclusion that Apple, since it contributed 58% of Rockstar's funding and has strategic interests relating to Android, has created a situation in which Rockstar has continuing obligations to Apple -- obligations to monetize those patents. However, the fact that Apple is (likely) a majority shareholder does not necessarily mean that Apple has a majority of the voting rights. It's actually unlikely that Apple holds a majority of the votes: its partners are large players like Microsoft and Ericsson, who would hardly have accepted to be (collectively!) Apple's junior partner in terms of control. And if my assumption is right and Apple does not have a majority, then it is possible that Apple participated in the Nortel patent-buying effort only to clear the market of those patents (so as to avoid that Google would use them against it) but perhaps never wanted Rockstar to go out and sue the world including non-smartphone companies like cable operators using Cisco equipment. Maybe Apple even voted consistently against litigation, but wasn't able to singlehandedly prevent it from happening.

Further discovery in the now-continuing California declaratory judgment action could shed some light on Apple's role. Until there is more evidence of Apple being the driving force, I will give it the benefit of the doubt, though Chief District Judge Wilken obviously had to make a decision based on the facts in the record and Apple's majority contribution to Rockstar's funding is indeed a good reason to find that there are continuing obligations that Rockstar has vis-à-vis Apple. The existence of continuing obligations with a company domiciled in the Northern District of California is separate from the question of whether Rockstar is an Apple front to sue Google and its Android partners. Apple tops the list of answers to the "cui bono?" question -- but again, there's a need for more transparency about the decision-making process at Rockstar. It would be utterly unjust if Apple was perceived as the primary culprit if it just got outvoted when trying to prevent this mess (and maybe couldn't sell its shares in this company without its partners' approval), so there's a need for more clarity on Apple's influence and the positions it took whenever the shareholder voted on litigation-related issues.

Here's the full text of the Apple-related passage of the order:

"Google contends that Defendants have accepted substantial obligations to Apple, a forum resident, which require Defendants 'to defend and pursue any infringement against' their patents. [...] Google alleges that Apple is a majority shareholder of Defendants and exerts substantial control over them, and as a result Defendants are obliged to act on Apple's behalf in a campaign to attack Google’s Android platform.

In support of this allegation, Google submits strong evidence that Apple is indeed the majority shareholder of Defendants based on Apple’s majority investment in Rockstar’s predecessor entity, Rockstar Bidco.7 Currently, Rockstar is a Delaware limited partnership which lists'“Rockstar Consortium LLC' located in New York as general partner. [...] But Apple contributed $2.6 billion, or fifty-eight percent of the $4.5 billion total investment in Rockstar Bidco. [...] Although Rockstar Bidco reorganized itself to become Rockstar, it does not appear that any ownership interests changed, nor do Defendants assert otherwise.

Even if Apple is a majority shareholder of Rockstar, if Defendants were able to demonstrate that Apple is a mere passive shareholder and takes no part in patent assertion strategy, then the relationship between Apple and Defendants might not be sufficient to uphold specific jurisdiction. [...] Google alleges that Apple's role extends beyond the mere receipt of profits. Rockstar’s CEO Veschi stated that he does not talk to its shareholders about potential licensing partners or infringement suits, but admitted that he has to show them 'progress and that real work is being done.' [...] Veschi holds periodic calls and meetings with the owners, primarily with their intellectual property departments, and Veschi acknowledges that they 'work well together.' [...] Although Veschi states they avoid talking about details, it does appear at least telling that Veschi speaks directly and periodically with the owners' intellectual property departments to demonstrate that 'work is being done.' [...]

Google demonstrates a direct link between Apple's unique business interests, separate and apart from mere profitmaking, and Defendants' actions against Google and its customers. Google and Apple's rivalry in the smartphone industry is well-documented. Apple's founder stated that he viewed Android as a 'rip off' of iPhone features and intended to 'destroy' Android by launching a 'thermonuclear war.' [...] Defendants' litigation strategy of suing Google's customers in the Halloween actions is consistent with Apple’s particular business interests. In suing the Halloween action defendants, Defendants here limited their infringement claims to Android-operating devices only, even where they asserted a hardware-based patent. [...] This 'scare the customer and run' tactic advances Apple's interest in interfering with Google's Android business. [...]"

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Monday, February 24, 2014

Nortel told Google in 2010 it infringed the search patents Rockstar is now asserting against it

Almost four months have passed since the Rockstar Consortium's "Halloween lawsuits" against Google and seven Android device makers (six at this point, because Huawei has already settled) over former Nortel patents, and at this stage the focus is still on venue transfer motion practice. Google wants Rockstar's Android OEM cases as well as the search engine case (in which Google is the only defendant) moved out of Texas and over to California. It filed a declaratory judgment action in California shortly before Christmas over the patents asserted against Android OEMs (and against Google itself, actually, which was added as a defendant to the Samsung case) and a motion to transfer venue in the search engine case.

About two weeks ago Samsung brought a motion to dismiss Rockstar's lawsuit, claiming that one of the asserted patents is invalid and, which would have broader implications, that Rockstar subsidiary MobileStar Technologies lacked standing when the suit was filed (because a certain registration with the Texas Secretary of State occurred only a month later). HTC, LG, ASUSTeK and Pantech filed similar motions last week. Meanwhile, ZTE has done so, too, but in addition to the two issues raised by Samsung and the others, it also wants Rockstar's willfulness allegation with respect to the '551 patent tossed. And Google filed a motion consistent with Samsung's in the Rockstar v. Samsung and Google case.

In the search engine case, Rockstar responded last week to Google's motion to transfer that one to Northern California. What's far more interesting than all sorts of detail about factors weighing for or against one venue or the other is that Rockstar, in the context of where the relevant witnesses are based and how Texas-centric its patent licensing business has historically been, names two of its employees -- CEO John Veschi and Mark Hearn -- who met, while they were still employed by Nortel, with Google in 2010 to discuss licensing the patents-in-suit in the search engine case. In the same paragraph, the subjects of willfulness and Google's knowledge of the patents-in-suit come up.

Rockstar had alleged willful infringement in its original complaint against Google, but the complaint itself discussed only Google's failed bid for the Nortel patent portfolio in the willfulness context. The auction was held in 2011. Prior licensing talks weren't mentioned in the complaint.

A declaration attached to Rockstar's opposition to Google's transfer motion by the aforementioned Mark Hearn says the following about the 2010 meeting between Nortel and Google, which is very significant with respect to the allegation of willfulness:

"6. As part of my employment with Nortel, I personally attended a meeting with Google about the patents-in-suit in 2010. That meeting was also attended by Raj Krishnan and John Veschi, among others, who were all part of the intellectual property team at Nortel.

7. At the 2010 discussions with Google, Nortel employees presented claim charts to Google regarding the manner in which Google infringes the patents-in-suit directly and through third parties.

8. The patents-in-suit that had then issued were the only patents where Nortel presented claim charts to Google.

9. Many documents concerning patent monetization regarding the patents-in-suit, including communications with Google about the patents-in-suit and notifications of infringement, have resided in or near the Eastern District of Texas since the time of their creation in the Nortel era."

Google emphasizes an inequitable-conduct defense against those patents. If it proves those patents invalid or unenforceable, or if it at least convinces the court that there was no objective willfulness (because it would have had a reasonable basis for assuming invalidity or unenforceability or non-infringement), then there won't be any willfulness enhancements (up to triple damages) of a damages award. But if those types of defenses fail, Google will have to try to explain away the significance of the 2010 licensing discussions and the infringement claim charts presented to it at the time.

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Wednesday, February 19, 2014

HTC, LG, ASUSTeK, Pantech join Samsung in moving for dismissal of Rockstar Android lawsuits

A week ago I reported and commented on Samsung's motion to dismiss the patent infringement lawsuit brought against it by the Rockstar Consortium and its MobileStar Technologies subsidiary in the Eastern District of Texas. The next day ASUSTeK brought a motion raising the same issues (alleged invalidity of one patent and, which has potentially broader implications, lack of standing at the time the lawsuit was filed). Yesterday HTC, LG and Pantech followed suit. Technically, due to the AIA's joinder rule, each defendant faces a different Rockstar lawsuit, though the issues are near-identical, except that the case Rockstar brought against Google itself (apart from the fact that Google was later added as a co-defendant to the Samsung case) is about search engine patents.

Of the seven Android device makers sued on Halloween, one (Huawei) has settled, five (firstly Samsung, then ASUSTeK, HTC, LG, Pantech) have brought motions to dismiss, and one (ZTE) has yet to respond. Presumably ZTE will also move for dismissal, unless it settles before.

What we're seeing here is just the overture in the form of a venue fight. Google filed a declaratory judgment action in the Northern District of California shortly before Christmas. Google's partners are meanwhile trying to get the Texas cases dismissed, which would make the California action the first-filed case. At the same time, Rockstar is trying to win the dismissal of the California lawsuit, arguing that there's no point in litigation in two districts "when a single suit in Texas, combined with six existing suits in Texas, can fully safeguard Google's interest".

In each case in which a motion to dismiss should fail, we're going to see a motion to transfer venue. In its reply brief in California, Rockstar has already described a transfer motion as "the predictable next step should this [California] case survive a motion to dismiss", and Rockstar and MobileStar "of course, reserve the right to file such a motion, if necessary, at an appropriate time".

From what I heard (from a major industry player who is neither a client of mine nor a party to Rockstar's Google/Android-related cases), Judge Rodney Gilstrap, who is presiding over the Rockstar-Android cases in Texas, is notoriously unwilling to transfer cases out of his court to other districts, but some defendants have apparently won such transfers through petitions for writ of mandamus filed with the Federal Circuit. We may very well see one or more mandamus petitions in this context as well. I believe these defendants won't leave a stone unturned in their attempts to move the matter out of Texas.

While all of this delays resolution of the actual infringement issues, even the procedural maneuvering that is going on at this stage does involve some arguments touching on the substance of these cases. In last week's reply brief by Rockstar in California I found the following passage particularly interesting:

"C. Google Is Incorrect That Rockstar's Claims Concern Only Android

Throughout its opposition, Google argues that the asserted patents in this action and the Texas litigation concern solely the Android operating system. [...] This is misleading and mistaken. Rockstar and MobileStar are accusing various mobile devices that, while including the Android operating system, also include hardware and software components that infringe Rockstar and MobileStar patents, not the Android operating system alone. [...] For example, at least one patent (U.S. Patent No. 5,838,551) asserted against these mobile devices in the Texas actions has nothing to do with their operating system, but is directed solely to a type of component contained in those devices.

For this reason, Google is mistaken in invoking the customer-suit exception to the first-to-file rule. That exception applies only 'where the first suit is filed against a customer who is simply a reseller of the accused goods, while the second suit is a declaratory action brought by the manufacturer of the accused goods.' [...] Here, the Texas defendants are not resellers of devices or Android operating systems obtained from Google, but rather design, manufacture, and sell the devices themselves (which use the Android operating system). [...] This is hardly the situation of a patentee taking advantage of a customer who unknowingly purchased an infringing product from a manufacturer.

In any event, Google cannot have it both ways. If Google wishes to paint the Texas litigation as a direct assault on Google itself, then Google cannot plausibly hold out this suit as the 'first-filed' case. It is undoubtedly the second-filed case under any logical view of the substance of each suit."

The '551 patent covers an "electronic package carrying an electronic component and assembly of mother board and electronic package", which is obviously Android-unrelated. I'm still going to refer, for the sake of brevity, to these cases as the "Rockstar Android lawsuits" because all defendants have in common that they make Android-based devices and because most of the asserted patents are allegedly infringed by Android itself. When I say "Rockstar Android lawsuits", I mean "Rockstar's lawsuits against six (originally seven) Android OEMs". But for the legal question of whether a dismissal or transfer is warranted, the distinction must be made, and I do agree with Rockstar that Android device makers -- rather large and sophisticated companies, by the way -- can't be compared to the targets of typical customer suits such as hotels or restaurants offering WiFi access.

The potential scope and usefulness of a customer suit exception is also a hotly contested issue in the ongoing U.S. patent reform debate.

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Wednesday, February 12, 2014

Samsung wants Rockstar patent lawsuit over Android dismissed for jurisdictional reason

On Monday, Samsung brought a motion to dismiss the Rockstar Consortium's Android-related patent infringement lawsuit filed on Halloween 2013 in the Eastern District of Texas (to which Google was added as a co-defendant on New Year's Eve). None of the other Android OEMs sued has responded to the complaint yet (one of them, Huawei, settled before responding in any way). It's possible that similar motions to dismiss will also be filed in one or more of the other pending Rockstar Android cases.

Samsung's motion to dismiss has two distinct parts. In the narrower part, Samsung's lawyers (from the Quinn Emanuel firm) argue that claim 5 of U.S. Patent No. 6,463,131 on a "system and method for notifying a user of an incoming communication event" covers an abstract idea and should be thrown out because the claimed invention does not constitute patent-eligible subject matter. The broader part of the motion requests dismissal of the entire case for lack of subject-matter jurisdiction. In the following, I'll focus on that part because it would have further-reaching implications should it be granted.

The Android OEM cases in Texas were filed by the Rockstar Consortium as well as a subsidiary it created on the eve of these lawsuits (on October 30, 2013), named MobileStar Technologies. Samsung's motion quotes a Rockstar/MobileStar filing in the Northern District of California (where Google filed a declaratory judgment complaint right before Christmas in an effort to move the Rockstar-Android matters out of Texas over to California) according to which "MobileStar is an indispensable party to this litigation—it is the owner of five of the seven patents-in-suit and the exclusive licensee of the other two patents."

Samsung argues that Rockstar, therefore, "does not have standing to pursue its claims itself, without MobileStar also appearing". But MobileStar allegedly lacked standing at the time the complaint was filed because it was founded in Delaware, not Texas, making it a "foreign entity" in Texas that, under § 9.001 of the Business Organizations Code of Texas, needs to register with the Secretary of State in order to "transact business in this state".

According to Samsung's motion, that registration was made only on December 2, 2013, "more than a month after filing this action". Here's the header of that registration (click on the image to enlarge):

But further down I found something on that page that Samsung's motion does not address. The form does explicitly allow for registration after the first business transaction in Texas occurred, and MobileStar stated that this was the case on October 30, 2013, i.e., the day it was founded, and the day before the patent infringement complaints were filed (click on the image to enlarge or read the text below the image):

The date on which the foreign entity intends to transact business in Texas, or the date on which the foreign entity first transacted business in Texas is: 10/30/2013

Samsung's motion is interesting because of the effect it could have. If the action was dismissed, Rockstar would have to refile to pursue those claims. In that case, however, Google's declaratory judgment action in California would be the first-filed action, which it is not as long as the Texas lawsuits can go ahead. Google would then probably win the venue war.

But the motion faces significant hurdles. It would fail in any of the following scenarios (or any other scenario not listed here):

  • The court may find that MobileStar's subsequent registration conferred standing retroactively because the registration form explicitly allows after-the-fact registrations and MobileStar declared that it first transacted business in Texas on the day before Halloween.

  • The court may disagree with Samsung that a deficiency at the time of filing the complaint can't be cured.

  • Limitations of a company's ability to sue in Texas state court may not apply in federal court (which is where this case was filed), despite Samsung's claim that they do.

Even if this motion failed, it would likely cause some delay nonetheless. If you're interested in all the details, here's the motion along with all of the exhibits (more than 800 pages):

14-02-10 Samsung Motion to Dismiss Rockstar Patent Lawsuit by Florian Mueller

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Wednesday, January 8, 2014

Rockstar's addition of Google as defendant to Samsung case could keep patent suit in Texas

On Sunday I mentioned Google's procedural gamesmanship in patent cases (and the fact that it isn't working out too well against Microsoft). But, in all fairness, others play the same kind of game against Google, and the Rockstar patent holding firm is an example.

Rockstar appears to have a predilection for filing complaints on symbolic calendar dates. It fired a salvo of patent infringement lawsuits at Google and seven of its Android OEMs on Halloween. And on New Year's Eve, it amended the lawsuit against one of those -- Samsung -- to add Google as a co-defendant (this post continues below the document) because of the Galaxy Nexus:

13-12-31 1st Amended Rockstar Complaint Against Samsung (Adds Google) by Florian Mueller

Samsung has until Friday to answer the complaint. I doubt that it would be granted another extension just on the basis of Rockstar's amendment: nothing changes for Samsung itself. And Samsung and Google use the same lawyers anyway, which turns coordination into child's play.

On December 23, Google filed a declaratory judgment lawsuit in the Northern District of California. The only plausible reason: Google wants to get the Rockstar cases against Android OEMs moved out of the Eastern District of Texas, which has a reputation of being patentee-friendlier than the Northern District of California.

Rockstar's amendment of the Samsung complaint could further complicate Google's venue transfer efforts. While the amendment was made after Google's declaratory judgment complaint, the Rockstar-Samsung case is still the earlier-filed action. I guess Rockstar will somehow try to leverage the addition of Google to the Samsung lawsuit in the massive venue fight that we're going to see in those Rockstar-Android cases before the real thing -- the process relating to the substance of the patent infringement allegations -- begins. As of the time of publication of this post, none of the defendants in any of the Rockstar Halloween cases has responsed to the complaint or (which will likely happen first) brought motions to transfer.

Gene Quinn, a U.S. patent attorney and author of the IPWatchdog blog, commented today on a recent deal between Rockstar and patent monetizer Spherix relating to 100 patents. Mr. Quinn notes that "Rockstar will also share usage information with Spherix for the transferred patents, and will assist Spherix in working with the patents' inventors, to assist Spherix's commercialization efforts" and believes that "this is likely a signal of more patent infringement lawsuits yet to come". This is a reasonable assumption, though it could also be that at least some of the defendants in the Rockstar Halloween cases do opt to strike a license deal with Spherix. It might be out of character for someone like Google to do so, but it could happen. If not, then there will indeed be even more lawsuits involving former Nortel patents.

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Wednesday, December 25, 2013

Google tries to get Rockstar's Android lawsuits transferred out of the Eastern District of Texas

On Halloween 2013, the Rockstar Consortium -- the winner of the 2011 Nortel patent auction -- brought patent infringement actions against Google and seven of its Android hardware partners (Samsung, Huawei, ZTE, LG, HTC, Pantech, and ASUSTeK) in the Eastern District of Texas. The lawsuit against Google itself involves seven "associative search engine" patents, while the seven patents-in-suit in the actions against Android OEMs cover a diversity of hardware and software features.

So far, no defendant has answered to the complaint. They were all granted extensions.

On Monday (December 23), Google filed a declaratory judgment lawsuit in the Northern District of California against Rockstar and its MobileStar Technologies subsidiary over the seven patents-in-suit in the Android OEM cases (this post continues below the document):

13-12-23 Google N.D. Cal. DJ Action Against Rockstar Consortium by Florian Mueller

The complaint contains a lot of rhetoric, accusing Rockstar of having "placed a cloud on Google's Android platform" and threatening "Google's business and relationships with its customers and partners, as well as its sales of Nexus-branded Android devices". One tidbit previously unknown to me is that "MobileStar [the subsidiary that is a co-plaintiff in the Rockstar suits against Android device makers) was formed for litigation one day before Rockstar filed its lawsuits against Google's customers". Other than that, it's the usual anti-troll rhetoric, blaming Rockstar's shareholders, with a particular focus on Apple, for the fact that Google's aggressive pursuit of the Nortel patent portfolio (as a matter of fact, Google won the "stalking-horse bid" in 2011) forced other industry players to join forces in order to clear the market of these patents. If not for Google's aggressive pursuit, these patents would have sold at a fraction of the price.

Google alleges that "Rockstar intends the Android OEM Actions to harm Google's Android platform and disrupt Google's relationships with the Android OEM Defendants". Google does not adduce any particular evidence at this stage; it just refers to an Ars Technica article.

I've previously commented on Google's hypocrisy in connection with patents, such as in an op-ed published last month on The Hill's Congress Blog, entitled "Sue when you're winning".

Presuambly none of the defendants wants the liability issues and remedies to be decided in the Eastern District of Texas. But in order to move the Rockstar Lawsuits out of Texas, they need to present a superior alternative. We'll see soon whether they all advocate that their lawsuits be moved to Northern California, where they could and would be consolidated with Google's declaratory judgment action, or whether some or all OEMs additionally bring declaratory judgment actions in districts where their U.S. subsidiary are based.

Rockstar will presuambly request that Google's DJ action be transferred to the Eastern District of Texas and consolidated with the earlier-filed infringement cases.

Quinn Emanuel filed the Northern California action on Google's behalf. Quinn Emanuel has already done, and continues to do, a lot of work for Android device makers (especially Samsung, HTC and Motorola). It remains to be seen whether all defendants agreed that QE should lead their collective defense, or whether some of them have other preferences.

The case was filed with the San Jose division (that's the one closest to Google's Mountan View HQ) and automatically assigned to Magistrate Judge Paul S. Grewal, known for his work on discovery disputes (including the "Patentgate" affair, which also involves QE) on the Apple v. Samsung cases Judge Lucy Koh is presiding over. If any of the parties declines to proceed before a Magistrate Judge, the case will have to be assigned to a United States District Judge. I'm sure Judge Grewal could handle a case like this just as well as any district judge, but chances are someone will want the case reassigned.

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Friday, November 1, 2013

Failed $4.4 billion bid for Nortel patents comes back to haunt Google and friends on Halloween

Almost two and a half years ago, Google lost the Nortel patents auction to a consortium of six industry leaders (Apple, BlackBerry, EMC, Ericsson, Microsoft, Sony) who just wanted to clear the market before anyone would abuse Nortel's patents, particularly its 4G/LTE patents, the way Google's Motorola Mobility still tries to abuse its standard-essential patents. The price for preventing abuse was $4.5 billion, several times what analysts expected before the auction. Google had won a "stalking-horse" bid, which was not the real game, with a $900 million bid. It famously bid pi billion dollars and other multiples of mathematical constants, showing a strange sense of humor with shareholders' money. Its highest bid, as is now documented in a publicly-accessible court filing, was $4.4 billion -- then it dropped out, Rockstar won, and Google later, in panic mode, wasted $12.5 billion on the acquisition of Motorola Mobility, over whose patents Google currently has precisely zero (you know, the number that looks like the letter O) enforceable injunctions in place against its rivals on a worldwide basis and whose video codec and WiFi patents entitle it to less than $2 million a year in royalties from Microsoft.

Fast forward to Halloween 2013. Apparently the Rockstar Consortium's efforts to subsequently negotiate patent license deals with Google and the wider Android ecosystem have been unsuccessful because at least eight Rockstar lawsuits were filed in the Eastern District of Texas: separate actions against Google, Samsung, Huawei, ZTE, LG, HTC, Pantech, and ASUSTeK. I don't know what happened in those negotiations, but maybe Google was a sore loser and tried to defy logic. The simple logic here is, in my view, that if you bid $4.4 billion for a patent portfolio (just not enough to win the auction), you can hardly dispute later that the patent portfolio in question is a treasure trove. And if you want to license a treasure trove, it costs you more than licensing something of little value such as some Motorola patents covering pre-World-War-II-style interlaced video and minor WiFi features. You can't just bid $4.4 billion -- thereby validating the portfolio in the commercially most meaningful way -- and later refuse to pay a significant amount for a license. This is, figuratively speaking, a case of venire contra factum proprium. No jury, whether in East Texas or elsewhere, is going to buy that.

No one can assert thousands of patents at the same time. Rockstar has now made its initial picks, and it presumably thought very carefully about which patents would likely give it leverage in litigation. It has apparently taken its time and tried hard to resolve the issue through licensing rather than litigation. But litigation turned out inevitable, and it surely prepared for that scenario, too. That's the nature of patent licensing.

There are two categories of lawsuits. A lawsuit against Google's core business -- its search engine -- involves different patents (all from the same family of associative search engine patents, which goes back to the time before Google was even founded!) than the seven lawsuits against certain Google hardware partners. Google has been proud of its own search engine patents, including the patent without which Google might not even exist today (the PageRank patent) or at least not be a monopolist. It now has to respect the work Nortel did in this area and which Google built on. It will have to pay up because Congress is not going to bail it out. The Rockstar Consortium is a co-plaintiff in all eight cases (Google and the OEM cases). Against Google, it is joined by its subsidiary NetStar Technologies, and by another subsidiary, MobileStar Technologies, against the device makers.

Defendants will presumably try to move these cases out of the Eastern District of Texas to other districts. It would be more efficient to keep at least the device maker cases in Texas since it's all about the same patents, but I can understand that defendants have different preferences. In Rockstar's case, resources are not going to be an issue. If necessary, it can pursue these cases in eight different districts in parallel, or bring even more lawsuits if others don't get the message from the Halloween lawsuits and continue to refuse to pay up.

I'll now publish the complaint against Google, followed by a list of the patents asserted against Google, and then the Samsung lawsuit (the lawsuits against the other device makers appear to be consistent), also followed by a list of the patents-in-suit.

13-10-31 Rockstar Patent Complaint Against Google by Florian Mueller

Patents-in-suit against Google

13-10-31 Rockstar Patent Complaint Against Samsung by Florian Mueller

Patents-in-suit against Google's hardware partners (Samsung, Huawei, ZTE, LG, HTC, Pantech, ASUSTeK)

Rockstar and MobileStar are seeking a permanent injunction ove the above patents.

Some of these device makers also build Windows Phone products, but the infringement allegations are limited to "mobile communication devices having a version (or an adaption thereof) of Android operating system", showing once again that Google's intellectual property stategy for Android is a failure that exposes its ecosystem to liability issues. Some of the infringement allegations appear to be Android-specific, possibly resulting in interventions by Google in the device maker lawsuits and suggesting that no one will be able to build Android devices without a license from Rockstar/MobileStar.

22 royalty-bearing Android patent license deals have already been announced. It also appears that Nokia has reached, or is very close to reaching, a tipping point in its dispute with HTC, which will result in another such deal pretty soon -- and not just a Nokia-HTC deal but deals between Nokia and the rest of the Android ecosystem (it's also negotiating with Samsung). And RockStar will strike patent license deals with each and every Android device maker. One Android device maker, Sony, is a member of the consortium -- and patent licensing could increase Sony's competitiveness within the market for Android devices.

By the way, as Intellectual Asset Management (IAM) magazine points out on Twitter, "[a]ccording to the FTC definition, Rockstar should not be regarded as a patent assertion entity (PAE)". Google got more help from U.S. antitrust regulators than any other company in this industry, but there's a limit even to that, and it will now be left to its own devices to sort out this situation. It can sort it out with money. A rather substantial amount of money, I guess.

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