Escalation: Continental seeking anti-anti-antisuit (yes, 3x 'anti') temporary restraining order against Avanci, Nokia, Sharp, others

In July, Nokia surprised everyone by obtaining an anti-antisuit-injunction injunction ("AAII") preventing automotive supplier Continental from pursuing a U.S. antisuit injunction against Nokia in an effort to shield Continental customer Daimler from Nokia's ten (and possibly other) German patent infringement suits. When that news broke, a few people in the industry were already wondering about whether the next level of escalation would be an anti-anti-antisuit motion. In fact, there is historic precedent for that, though it's rare.

Here we go--a couple of hours ago, Continental brought a motion for a temporary restraining order (TRO), asking Judge Lucy H. Koh of the United States District Court for the Northern District of California to bar within a matter of hours--ex parte, i.e., without a hearing--Avanci, Nokia, Sharp, Conversant (which has very recently become the third and latest Avanci member to sue Daimler for patent infringement, as I reported earlier today), and Optis from seeking another AAII against Continental in Germany.

Today's TRO motion renews the original pursuit of a U.S. antisuit injunction against those defendants, but now also includes Sharp. About a month ago, Judge Koh had denied the previous motion without prejudice, explicitly allowing renewal (but didn't want to entertain multiple motions in a row).

I've criticized Continental's lawyers very harshly. I thought the original motion was overbroad. They were seeking to shield Daimler even from lawsuits targeting cars that don't come with an accused Continental component, which I described as behaving like a class-action plaintiff without meeting the requirements for a class action; they failed to clarify at the time that they didn't mean to enjoin Sharp, which wasn't a defendant when the original motion was brought and when defendants had to respond to it (but by now Sharp has been added to the case--and presumably been properly served, too); and they originally wanted to prevent patent assertions against Daimler regardless of remedies sought.

Continental has now brought a narrowly-tailored TRO. That makes a lot more sense, and I feel that their decision to focus on what's more realistically achievable (though a motion for an antisuit injunction or TRO is never a cakewalk) also validates my criticism. They've abandoned their unbelievable attempt to overreach, and I commend them for that. Now it's just about Daimler cars that come with accused Continental components; it's only about parties that were in the case at the relevant time; and it's only about preventing those Avanci members from seeking injunctive relief against Daimler.

The current TRO motion does not include the first ten cases Nokia brought against Daimler in Germany. Continental already had to withdraw that part of the original motion in September due to Nokia's Munich AAII. But the motion notes that--as this blog has also reported--the Munich Higher Regional Court will hear Conti's appeal on Halloween, and should the existing AAIIs be lifted, Conti will inform Judge Koh and will presumably seek an extension to those cases.

The exclusion of those ten pending Nokia v. Daimler cases is a major limitation. Even if today's TRO motion succeeded, the Avanci group would achieve its strategic goal of forcing Daimler to accept their supra-FRAND royalty rates if Nokia just got enough leverage from one of those first ten cases.

Continental has certainly become very reasonable now. Will they succeed? I generally like to offer predictions, but in this case I'll refrain from it, especially since this motion will likely be resolved very swiftly one way or the other.

The anti-anti-antisuit request makes a lot of sense. It could be that Judge Koh flatly declines to play a long-distance game of leverage with her Munich counterparts, but she might also conclude that an anti-anti-antisuit TRO just for the purpose of quickly resolving the actual motion is reasonable.

The more conventional part of the motion, which comes down to a motion for an antisuit (just one "anti" for a change) injunction that would start as a TRO (TROs need to be converted into injunctions after a short while or they automatically expire), is now narrowly-tailored as I said. This is a clear case of standard-essential patent holders--who whine about "hold-out" (implementers' delay tactics) all the time--being unwilling to license a company just because they don't like Conti's position in the supply chain and consider car makers like Daimler the more lucrative type of target. That's a strong policy argument in favor of Conti's U.S. case. The primary issue is still timing. What matters here is not the date of the motion, but the date of the filing of the original complaint. The Northern California complaint was brought in May, but Nokia's and Sharp's patent assertion campaigns against Daimler started before. However, timing is not an issue with respect to any cases that were filed after Continental's U.S. complaint (such as that newly-discovered Conversant lawsuit) or will be filed going forward. The two Munich AAIIs that are in effect (one against the U.S. entity that is the plaintiff in California, and one against the German group parent) require Conti to exclude Nokia's first ten cases from the scope of the requested TRO for the time being. So timing could become a bigger issue should Conti, after a successful appeal in Munich (a Happy Halloween scenario for Conti), seek to broaden the scope of the order they're seeking.

This is an interesting procedural twist, and should I find anything worth highlighting after a closer look (so far I've looked at those documents only cursorily), I may do a follow-up post, though chances are that some sort of a decision--even if just a procedural order--will come down before I even get there.

Let me now, finally, show you both the motion and the underlying memorandum (two documents):

19-10-08 Continental Motion... by Florian Mueller on Scribd

19-10-08 Continental Memo I... by Florian Mueller on Scribd

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Continental accuses Avanci patent pool of "conspiracy" to "boycott[] suppliers so [patentees] can collect hold-up royalties downstream"

Less than two months ago, I described automotive supplier Continental's FRAND/antitrust case against the Avanci patent pool as a conspiracy theory--in a nonjudgmental sense, notwithstanding the term's most common connotation, which is utterly pejorative.

In its opposition brief to the Avanci-Nokia-Sharp motion to dismiss the complaint, "Conti" (as people in the automotive industry commonly refer to it) uses the term "conspiracy" 20 times (plus three occurrences of "conspirator", singular or plural). At this procedural stage, it would be too much to ask for that they'd have to put forward any evidence--the standard right now is whether their pleadings are sufficient. In that regard, Conti appears to be in pretty good shape, and its opposition brief is thoroughly researched and persuasive (this post continues below the document):

19-10-04 Continental Opposi... by Florian Mueller on Scribd

The most interesting allegation is that of an "overarching conspiracy to boycott upstream suppliers like Continental." Continental describes itself as "a user of the standards impacted by Defendants' illegal boycott." Elsewhere, the alleged boycott is labeled "collusive." According to Continental, "the conspiracy consists of multiple means and agreements, all intended to achieve a single cohesive purpose—boycotting suppliers so Defendants can collect hold-up royalties downstream."

Continental argues that neither Avanci's status as a pool that doesn't hold patents of its own nor the fact that its agreement doesn't explicitly preclude its contributors form direct license agreements with upstream suppliers like Conti provide antitrust immunity. There doesn't appear to be a safe harbor like that for Avanci, but there also isn't a wealth of case law in place for holding pools responsible. Conti cites to a February 2015 pretrial decision in Zenith Electronics, LLC v. Sceptre, Inc. in the Central District of California, to a 1999 decision by the FTC (In Re Summit Technology, Inc.), and a DOJ paper according to which certain pool agreements require antitrust scrutiny. So this case before Judge Koh is almost a seminal case; at a minimum, a pivotal one.

I'm fairly optimistic that Conti's accusations are sufficient to survive a motion to dismiss. But they'll need to find a smoking gun, or multiple ones, in discovery. Otherwise Avanci--though not necesarily the conduct of each of its contributors--will be deemed above-board.

The opposition brief highlights certain conduct that is interesting to read at any rate. For an example, Sharp sued Daimler allegedly without even trying to enter into a direct license agreement, and apparently presented an Avanci pool license as the only way Daimler can settle the dispute.

Non-practicing entity Optis Wireless behaved a bit differently. A sworn declaration by PacTech Law's David Djavaherian (firm website), who represents Conti in licensing negotiations with Avanci members, reveals that Optis was only willing to go to arbitration, provided that Conti would dismiss Optis from the California case--but without even making an offer that would enable Conti at this point to evaluate the situation and the prospects of alternative dispute resolution. Should Optis make exorbitant demands, arbitration would almost certainly (though Optis said the parameters could be discussed) create a situation in which Conti could only end up with a highly unfavorable deal since a licensee can't counterbalance an outrageous demand by a licensor by proposing a negative royalty rate.

Mr. Djavaherian used to be in-house litigation counsel at Broadcom (at a time when Broadcom was firmly in the FRANDly camp). So he does know exactly what implications arbitration has as compared to litigation. He's not involved with this FRAND/antitrust litigation, but trying to work out license agreements, which appears very difficult. Recently, he served as vice chair of a CEN-CENELEC workshop that produced the CWA2 set of SEP policy recommendations.

I recently heard both Mr. Djavherian and Conti's lead counsel in this Northern California litigation, Sheppard Mullin's Stephen Korniczky, speak, but due to the Chatham House Rule I can't be more specific. What I can say is that both really understand SEP licensing issues extremely well--the reason that I have criticized Conti's U.S. litigation strategies is simply that I believe they're too slow and that I've never seen a litigant make multiple totally outrageous demands in just one context (here, with respect to the pursuit of an antisuit injunction that would have been absurdly overbroad for more than one reason). Without litigants trying long shots, the law couldn't evolve, at least not as rapidly as the pace of our industry requires it. But what they asked Judge Koh to do for them totally flew in the face of even the most basic legal principles--as did some crazy arguments such as pointing to an antitrust complaint lodged with the EU Commission in connection with the question of whether Nokia's German patent infringement lawsuits against Daimler were or were not the earlied-filed cases than Continental's U.S. lawsuit against Avanci, Nokia, and other parties.

Furthermore, given that their own representation to the court (in paragraph 145 of their first amended complaint against Avanci et al.) is that their client became aware of Sharp's German litigation campaign on or about June 3 (which is consistent with a mid-August Juve Patent article according to which the German legal community had then already been aware of it for some time), I don't understand why they brought their antisuit motion against Avanci, Nokia and two other defendants the following week instead of first adding Sharp to the case (which they finally did about 50 days after becoming aware of Sharp's first complaint against Daimler). There definitely wasn't a sense of urgency with respect to Nokia. While a first hearing in Munich on June 5 was dreadful for Daimler and, by extension, Continental, the court scheduled the actual trial for February 2020. At the earliest, Nokia will be able to obtain an injunction after a December 10 Mannheim trial. Judge Koh was right to dismiss the antisuit motion without prejudice. Conti does have a timing problem with respect to Nokia, but that's because of the dates of the relevant complaints, not of the antisuit motion.

On Halloween, the Munich Higher Regional Court will hear Conti's appeal of Nokia's anti-antisuit-injunction injunction ("AAII"). If the German appeals court finds that AAIIs are categorically impossible, then Conti will win, but should the appeals court make this subject to a case-by-case determination, then Nokia will probably benefit from Conti's slowness, hesitancy, and the unreasonable scope of the original antisuit motion (which wasn't limited to just preventing Nokia from enforcing injunctive relief against Daimler cars that come with Conti telematics control units, but was meant to bar Nokia from any such assertions against Daimler regardless of supplier and remedies sought).

Going back to the conspiracy theory (nonjudgmentally speaking) in the U.S. case, discovery might get interesting, but it's also possible that Avanci and its members structured their collusion so cleverly that no one can dig up evidence of anticompetitive conduct. At the 2021 trial I would expect Avanci to present a number of witnesses who will seek to exonerate it. Also, even a company that is not at all associated with SEP abuse--Deutsche Telekom--has recently joined the Avanci pool.

I'm against Avanci's strategy of licensing only car makers, not the likes of Conti. I do consider Avanci's royalty demands to be supra-FRAND. Whatever Conti can point to at this procedural stage is probably and hopefully enough to keep the case alive, but it's thin. For the time being, it falls far short of what it will take to prevail on the allegation of a conspiracy in two years' time. Conti needs to find or elicit something totally incriminating, lest Avanci will be acquitted.

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Continental tries again to add Sharp to Avanci FRAND/antitrust case in California -- Munich court affirms original anti-antisuit decision

I have three procedural updates relating to the Avanci v. Daimler/Continental v. Avanci automotive patent wars:

1. On Wednesday (October 2), the Munich I Regional Court held a hearing and, hours later, affirmed its original anti-antisuit-injunction injunction (AAII) against Michigan-based Continental Automotive Systems. That is no surprise; in fact, anything else would have been a huge surprise, given that the same court recently granted an additional AAII--after briefing and a hearing, unlike in the first case--against Continental AG, the German group parent. The case against the German entity involved an additional hurdle for Nokia to overcome (complicit or intermediary liability), so given that Nokia prevailed even on that one, it was to be expected that the court wasn't going to lift its original AAII.

2. The second AAII was appealed to the Munich Higher Regional Court, which has scheduled the appellate hearing for Halloween. Considering that the first AAII involves only a subset of the issues in the other case, and knowing the appeals court's efficiency-oriented case management, it appears fairly probable that both AAIIs will be addressed on Halloween.

   I believe reversal is about three times as likely as affirmance. The appeals court will probably be far more receptive than the lower court to certain fundamental concerns. However, Nokia may hope that even the appeals court has a strong desire to prevent U.S. antisuit injunctions from interfering with German cases. In this case, the appeals court might even adopt a test similar to the one used in the U.S. for antisuit injunctions. If the appeals court doesn't rule out AAIIs categorically, then the chronology of events favors Nokia in this particular case (its German infringement cases were filed way earlier than Continental's U.S. FRAND complaint, and the fact that Nokia didn't immediately seek injunctive relief--but did provide a Huawei v. ZTE FRAND analysis that is relevant only when a SEP holder moves for an injunction--doesn't have a bearing on when the case per se was filed; also Continental's U.S. antisuit motion relates to any pursuit of infringement litigation against Continental customer Daimler in Germany, regardless of remedies sought).

3. Continental may refile its U.S. antisuit motion. It had withdrawn it in part further to the Munich AAIIs. What played a role in Judge Lucy H. Koh's decision to deny the motion without prejudice was confusion about whether Continental meant to enjoin Sharp, another contributor to the Avanci patent pool. While Sharp also sued Daimler a while ago (the first complaint was filed in mid-April), Continental brought its amended complaint adding Sharp only in late July--and Sharp argued in the defendants' joint motion to dismiss that Sharp's Japanese group parent hadn't been properly served.

   Yesterday Continental's lawyers filed two declarations of service on Sharp Japan, which constitute another set of attempts to serve Sharp Japan through U.S. entities (as opposed to cross-border service of process under the Hague Convention). In one of those cases, Sharp's lawyers served a Sharp entity in New Jersey, and in the other case, they served on a Sharp Electronic Corporation office in Los Angeles. We'll see whether Sharp is now satisfied or still complaints about improper service. The motion-to-dismiss hearing will be held on November 21 (though Judge Koh might just take the matter under advisement, as she frequently does in such situations).

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Munich court schedules first hearings in two Sharp v. Daimler patent cases for late November, another anti-antisuit hearing for early October

Two key contributors to the Avanci IoT patent pool are suing Daimler in Germany:

• Nokia has already brought (at least) ten cases. Trials have been scheduled in five of them for the period from December to May, and since the Munich I Regional Court will hold first hearings (about claim construction and infringement analysis, though sometimes they go beyond) in two other cases in late October, there's quite a possibility that even two more such trials will be scheduled for the first half of 2020. Three Dusseldorf trials have yet to be scheduled.

• Foxconn-owned Sharp, which announced a new license deal with Samsung last week, has filed (at least) five patent infringement complaints against Daimler: three in Munich and two in Mannheim.

Today the press office of the Munich I Regional Court ("Landgericht München I") thankfully responded to my inquiry regarding the hearing dates in the three Munich Sharp v. Daimler cases:

• On November 20, 2019, the court's 21st civil chamber under Presiding Judge Tobias Pichlmaier will hold hearings in case no. 21 O 8609/19 over EP2854324 on a "communication system and mobile station apparatus" and case no. 21 O 9918/19 over EP2312896 on a "base station device, mobile station device and corresponding communication methods using carrier aggregation."

• On March 5, 2020, the 7th civil chamber under Presiding Judge Dr. Matthias Zigann will hear case no. 7 O 8818/19 over EP2667676 on a "base station device, mobile station device, and uplink synchronization requesting method."

The question is whether Sharp is now going to seek a prophylactic anti-antisuit-injunction injunction ("AAII") from the Munich court, given that Daimler supplier Continental may in the not too distant future file an antisuit-injunction motion with Judge Lucy H. Koh in the Northern District of California targeting at least Sharp, Nokia, a couple of patent assertion entities Nokia had fed with patents, and the Avanci patent pool firm. On Tuesday, after Continental's miserable failure over the course of four days (two weekend days, but well-run litigants wouldn't care) to respond to a letter Sharp had addressed to Judge Koh, the world's #1 technology industry judge dismissed a pending antisuit-injunction motion without prejudice so as to avoid piecemeal resolution with two or more antisuit injunction motions in the same case. While Continental was too slow and/or unprofessional to clarify promptly that Sharp wasn't meant to be included by the original antisuit motion, it could have brought a subsequent antisuit motion targeting Sharp. Also, Continental had withdrawn parts of its motion even with respect to Nokia (most importantly the ten aformentioned pending German cases) to comply with the first Munich AAII, but by doing so without prejudice, the automotive supplier reserved the right to revive those parts in the event of a successful appeal to the Munich Higher Regional Court. And then the Avanci pool has various other members, so if Continental refiles, it should target all Avanci contributors (in case its lawyers are conflicted with regard to any of them, it should simply find new ones, which may be a good idea anyway given how things have gone wrong so far with respect to the antisuit effort).

There are two AAIIs in place, one (the first to come down) against Continental Automotive Systems, Inc. of Auburn Hills, MI, and one against Continental AG, the Germany-based parent company of the entire group (and, as part of that, an indirect parent of the U.S. entity). The first one had been granted ex parte without a hearing and without Continental even having a clue until the decision had come down. But there was a service-of-process dispute as the U.S. entity pointed to the Hague Convention (which according to the Avanci defendants' motion to dismiss Continental's U.S. lawyers may have failed to comply with when attempting to serve Sharp Japan). The second one didn't raise that kind of issue, but the court initially denied an AAII because Nokia had not made it sufficiently clear what complicit or intermediary role Continental AG, which is not a plaintiff in the case before Judge Koh, had played in the U.S. antisuit effort. Nokia didn't take no for an answer, so the court held a hearing, and then decided in Nokia's favor.

On October 2, 2019, the Munich I Regional Court will hear the U.S. Continental entity's motion for reconsideration of the first AAII. The court didn't say why that hearing wouldn't take place sooner, given the urgent nature of a preliminary injunction, but it's easy to figure: the issues will be a subset of the ones already heard in late August, so the outcome will be the same unless the appeals court (Munich Higher Regional Court, "Oberlandesgericht München") will lift the second AAII in the meantime. It may seem counterintuitive that the appeals court will decide on the second AAII before the first, but that's due to the combination of two factors:

• Continental didn't move for reconsideration of the first one until it had been served in what it deemed to be compliant with the Hague Convention. That's why, in a way, the second AAII is now practically ahead of the first one.

• The losing party to a preliminary-injunction motion (be it the movant or the non-movant) must firstly give the lower court the chance to reconsider, which actually just worked out for Nokia and resulted in a second AAII. That's why the October 2 hearing formally had to be scheduled, but since the second AAII is already past that stage, the appeals court can review it soon (provided that Continental already has appealed, or will appeal in the coming days; the deadline is early next week).

The German legal term is "sofortige Beschwerde" (immediate objection), but it comes down to a motion for reconsideration in the lower court, and if that one fails, then it goes up to the appeals court. By scheduling the reconsideration hearing for early October, knowing that the appeals court will likely hold a hearing before (or otherwise the reconsideration hearing could be pushed back), the lower court enables itself to quickly lift the first AAII should the second one be lifted on grounds that apply to the first one as well (most of the issues are overlapping, but the second one involves complicit or intermediary liability on top of everything else).

This takes us back to what Sharp may do. If Nokia's AAII is upheld, we can set our watches by Sharp bringing an immediate AAII motion with the lower court unless Sharp will already have done so by that time. Should Nokia's AAII be lifted on grounds that would apply to any AAII Sharp might bring, then Sharp will likely refrain from bringing one in the first place or will withdraw a hypothetically pending one. The scenario of Continental not appealing the second AAII is almost impossible to imagine (even more so since we now know they objected to the first one); in that highly hypothetical case, Sharp would certainly pursue its own AAII just as if Nokia had won affirmance.

Given that Nokia, which has demonstrated its litigation prowess again and again, filed ten cases against Daimler before Sharp filed its five complaints, the question is whether those Sharp cases are ultimately going to make any difference. It's certainly a chance for Sharp, which increasingly seeks to monetize its patents, to send out a clear message to other implementers of cellular standards that the Foxconn-owned Japanese electronics company is not just a dog that barks but doesn't bite. They do sue from time to time, as those five German cases prove.

But if Nokia got decisive leverage over Daimler in the meantime, Daimler might take an Avanci pool license, in which case it would also be licensed to Sharp's patents-in-suit. I hope Daimler will be able to avoid this, as Avanci's terms are supra-FRAND and SEP licenses should be available at the component level, with royalties calculated as a percentage of the smallest salable patent-practicing unit. However, Nokia is amazingly good at the patent litigation game, and I have yet to see an automotive company that can withstand such an onslaught. Let there be no doubt that Quinn Emanuel's Dr. Marcus Grosch, Daimler's lead counsel in the Nokia and, according to Juve Patent, also the Sharp cases, is going to give Nokia a run for the money. But the first hearing in one of those cases already showed the court leaning Nokia's way, and ten patents is just too much ammo. Without a successful FRAND/antitrust defense, or the infringement cases at least being stayed pending the resolution of Daimler's and some of its suppliers' EU antitrust complaints against Nokia, it will only be a question of when, not if, Daimler will lose. And QE does a whole lot more work for SEP asserters than for implementers, especially in Germany (where they also represented a patent assertion entity against Nokia over the course of many years, until Nokia exited the mobile handset business).

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Automotive supplier Continental gets penalized for its lawyers' low-quality work as Judge Koh denies (without prejudice) motion for antisuit injunction

A little over a year ago, Judge Lucy H. Koh of the United States District Court for the Northern District of California denied without prejudice a motion for an antisuit injunction--by a consumer class against Qualcomm. But a very detailed and thoughtfully-crafted order indicated that the motion had raised some valid points, just prematurely, which is why I viewed the order as an invitation for the consumer class to refile at the right time. Meanwhile, Qualcomm's settlement with Apple has directly and indirectly (because of its effects on Intel's cellular modem aspirations) taken care of that matter.

Today (Tuesday), Judge Koh once again denied an antisuit-injunction motion--automotive supplier Continental's motion that was meant to shield Daimler from (at least) Nokia's German patent enforcement campaign--without prejudice, and accordingly states that "Plaintiff may refile a motion for anti-suit injunction." But this time around it's not an invitation in practical terms as I'll explain below, after showing you the actual order (two pages plus signature):

19-09-10 Order Denying Wo P... by Florian Mueller on Scribd

Continental's work related to this U.S. antisuit motion is a total disaster. I've criticized them before, though I did give them credit for a first-rate opposition brief to Avanci and Nokia's venue transfer motion. Considering that Continental itself is a sizable company, and that an even larger company (Daimler) should have a strong strategic interest in this, it's nothing short of a bankruptcy declaration for the ability of two members of the DAX-30, the "club" of the 30 largest publicly-traded German corporations, to fend off the Avanci patent pool's and particularly Nokia's patent enforcement efforts.

In Germany, Continental is represented by Freshfields Bruckhaus Deringer, and Daimler by Quinn Emanuel. That's as good as it gets, but the environment there is markedly hostile to those defending themselves against patent infringement suits (worse than the infamous Eastern District of Texas because of easy access to injunctions), so the idea of trying to shackle Nokia through a U.S. antisuit motion was a good one. However, the quality of the execution of that idea is far below the standard of anything I've seen this decade from major device makes and operating system developers in the "smartphone patent wars." They've botched almost everything they could botch in this context--however, as I'll explain now, a reversal of fortune (and no, this is not meant to be a subtle word play) is procedurally possible. Without such a reversal, Daimler would likely have to bow to the Avanci pool's supra-FRAND royalty demands at some point during the December-2019-to-May-2020 "trial season."

I'm really shocked at how unprofessionally and unreasonably Continental has acted. The antisuit motion was filed too late; they failed to put a better structure in place to satisfy the functional-identity requirement under Gallo by not making sure that at least one of the U.S. plaintiffs and movants would be one of the Continental entities that potentially owes Daimler damages as a result of those Nokia cases; the motion was overbroad from the beginning, and even to an irrational extent when they insisted--which no reasonable person could do with a straight face--that it should even bar Nokia from enforcing patents against Daimler cars in which no Continental component is accused of infringement; later, they realized that they had made a stupid mistake by not including Sharp (though they must already have known of Sharp's German lawsuits against Daimler by the time of the original complaint), so they added Sharp by way of an amended complaint. It's beyond ridiculous, but they may even have failed to apply a California legal standard to their service of process on Sharp that Continental itself had already benefited from in at least two California litigations (and despite holding the Hague Convention against Nokia in the anti-antisuit context).

It was a letter by Sharp asking Judge Koh for clarification, coupled with Continental's failure to respond (or at least to respond promptly, which is something they generally don't seem to be capable of) to that letter, that resulted in Judge Koh's order. Procedurally it was very clear that Sharp couldn't possibly have been meant to be targeted by the antisuit motion: it was added to the case (if it still has been, which is doubtful given those service-of-process issues) after the deadline for the opposition brief to Continental's antisuit motion. At the time I still thought even Continental's lawyers couldn't possibly have intended a violation of due process. But just like Sharp, even Judge Koh has now concluded that "[i]t is unclear whether the motion for anti-suit injunction, and if granted, the anti-suit injunction, extends to Sharp," and notes that "[Continental] appears to believe that its motion for anti-suit injunction extends to Sharp."

Whether Sharp's apprehension and Judge Koh's feeling or my thinking that Continental had just mentioned Sharp's cases with a view to the Avanci pool firm (which is also a defendant to the motion, though Avanci itself doesn't hold or assert patents) are right, Continental has failed miserably and cluelessly one way or the other:

• If Continental indeed thought Sharp could be enjoined without having had a chance to defend itself against the motion, then that would have been even more insane than the idea of enjoining Nokia from enforcing patents in against Daimler cars that don't come with an accused Continental component. So insane that I still don't believe they meant that.

• If their references to Sharp's cases were just related to some indirect form of liability by Avanci, and/or if they thought that after obtaining an antisuit injunction against Nokia (whose cases are further along) they could easily also get an additional one against Sharp because they believed (possibly even for good reasons) that there was nothing Sharp could point to that would lead to a different outcome, they should at least have told Judge Koh within hours, or maybe a day, of Sharp's Friday letter. They should have told her instantaneously that they certainly didn't mean to be pathologically unreasonable and should have apologized for not having made this clear from the beginning, such as with a footnote explaining the rationale behind their references to Sharp's cases in both their (largely disappointing) antisuit reply brief and their withdrawal-in-part.

The stated reasons for the denial without prejudice are that (i) "the Court's limited resources would be unduly burdened if the Court were required to resolve an additional motion for anti-suit injunction directed solely at Sharp," and (ii) "it would be inequitable to allow Sharp to oppose a potential motion for anti-suit injunction directed solely at Sharp even though every other Defendant was ordered to file a consolidated opposition." The former is more important than the latter, given that there was nothing here that really created the smallest problem for the other defendants--Avanci, Nokia and a couple of patent trolls Nokia once fed with patents--to agree on a consolidated opposition.

Judge Koh's order doesn't even make the slightest reference to the two Munich anti-antisuit-injunction injunctions ("AAIIs"). But obviously she was aware of them, not only because Nokia wrote to her after obtaining the first one of them, but also because of Continental's withdrawal-in-part. And between the lines, Judge Koh's reference to court resources presumably also related to the fact that the Munich AAII situation required Continental to withdraw its motion at least in part, which Continental did "without prejudice," so there would have been a risk--subject to what the Munich appeals court will do now--of Continental reviving some Sharp-unrelated parts of the original motion.

Reading even more between the lines, the combination of (i) the current motion being denied without prejudice because Judge Koh doesn't want to allocate the resources required to adjudicate more than a single motion (facing a single consolidated opposition brief) and (ii) the Munich AAII situation limiting, if not eliminating, Continental's ability for the time being to make a new filing, the order is, at best, a lukewarm invitation to refile at a later stage. It's certainly not an encouragement, under the cirumstances, to do so immediately.

Nokia's German lawyers deserve credit here because, regardless of the fact that Judge Koh's order doesn't mention the AAIIs, their two recent wins presumably did contribute to Judge Koh getting the impression that Continental's motion was a mess at least at this stage.

The ball is now in the Munich Higher Regional Court. If Continental can't get the lower Munich court's AAIIs lifted, Judge Koh won't ever have to devote any time to a ruling (with or without a hearing) on the U.S. antisuit motion because there won't be any (of if Continental brought a new one, Nokia and/or Sharp could easily just obtain whatever other AAII they need in Munich to thwart it). However, I still think the AAIIs are more likely than not to be lifted. In that case, Continental can refile. If that happens, Continental will have the chance to bring a better motion, but prior to that Continental might have to try (if still possible, which may be in Judge Koh's discretion) to bring in at least one other Continental entity as an additional plaintiff to have a clearer functional-identity case. The timing problem, however, can't be solved, and while there's no bright-line rule, Nokia accurately pointed out that any Ninth Circuit antisuit injunctions that have been granted in similar cases involved either different sequences of events (with the U.S. cases being earlier-filed than, or simultaneously-filed with, the foreign counterparts) or very unusual circumstances of other kinds. (By the way, the consumer class action against Qualcomm that I mentioned further above was filed months before Qualcomm brought the relevant USITC complaints against Apple.)

With all that has gone wrong so far for them, I would advise Continental (and, by extension, Daimler) to get help, additionally or alternatively to current counsel, from a U.S. law firm that has previously demonstrated its ability to bring successful U.S. antisuit-injunction motions (though Quinn Emanuel probably couldn't help for a variety of reasons)--but no outside counsel would be able to solve all the problems if internal decision-making processes are part of the problem, which is quite possible here given that inexplicable hesitancy and slowness. And as I just mentioned, that slowness with respect to when they brought the original complaint (plus, the failure to include Sharp from the beginning) is incurable anyway.

At this point Daimler and Continental are more likely to get help in Europe (where the European Commission's Directorate-General for Competition could put pressure on Nokia and Sharp) than in California, though that U.S. case couldn't possibly have been assigned to a better judge.

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Sharp asks Judge Koh to confirm that Continental's motion for U.S. antisuit injunction won't impact its own German Daimler patent suits

Two contributors to the Avanci IoT patent pool are currently suing Daimler in Germany:

• Nokia has filed (at least) ten cases, five of which already have trial dates between December 2019 and May 2020 in Mannheim and Munich. Also, the Munich I Regional Court will hold first hearings in two other cases, and it's fairly likely that the subsequent second hearings, which are trials, will be scheduled during the first half of 2020 as well. In the past, the 21st civil chamber of that court used to be much slower than the other division that hears patent cases (the 7th civil chamber), but it looks like they are catching up.

• After Nokia's first ten Daimler lawsuits, Foxconn-owned Sharp also filed five complaints against Daimler (in Mannheim and Munich).

At the beginning of this week, Daimler supplier Continental Automotive Systems was forced to withdraw a motion for a U.S. antisuit injunction motion with respect to the ten above-mentioned Nokia cases. As I explained in that post, it remains to be seen whether that partial withdrawal of the U.S. antisuit motion, further to a German anti-antisuit-injunction injunction ("AAII") obtained by Nokia in Munich, will be deemed sufficient--but in the meantime, before any hypothetical contemption motion would be adjudged, the Munich appeals court may very well lift the injunction.

Continental's withdrawal-in-part specifically stated that the motion was not withdrawn with respect to "the other defendants in this proceeding," and not in the same sentence, but in the wider context, the withdrawal notice reminded the U.S. court of "Sharp's separate and ongoing proceedings against Continental's customer Daimler."

At the time of the U.S. antisuit motion, the defendants were all from the following corporate groups: Avanci (a patent pool firm that doesn't hold or assert patents); Nokia; and two patent assertion entities Nokia fed with patents (Optis and Conversant). Sharp was added to the case as an additional defendant only the following month by way of Continental's first amended complaint. However, Sharp's lawyers are concerned that Continental's reference to Sharp's German cases might mean that the remaining parts of the pending antisuit motion would take aim at those Sharp v. Daimler cases.

In order to eliminate any doubt about that, Sharp's lawyers (whose appearance is limited in scope as Sharp denies to have been served properly) have now asked Judge Lucy H. Koh of the United States District Court for the Northern District of California to provide guidance (this post continues below the document):

19-09-06 Sharp Letter Re. A... by Florian Mueller on Scribd

When I read Continental's references to Sharp in its reply brief in support of the motion as well as in the partial withdrawal notice, I assumed that Sharp itself wasn't meant to be targeted, but that there could be an issue for Avanci, given that Continental, even after the partial withdrawal, seeks to enjoin Avanci and the other defendants "from acting in concert with anyone to pursue or institute such an action."

While it's understandable that Sharp's lawyers decided to file that letter out of an abundance of caution, it's hard to see why they couldn't clarify this between counsel for the parties ("meet and confer"). The letter doesn't say anything about what Continental's lawyers told counsel for Sharp--other than the fact that "[c]ounsel for Sharp only just received from Continental's counsel the full, unredacted briefing regarding the Motion on September 4, 2019."

Enjoining Sharp as a result of the currently-pending antisuit motion wouldn't make sense given that the motion targeted only the defendants named in the unamended original complaint. Beyond that, Sharp disputes in the defendants' motion to dismiss Continental's first amended complaint that it has been properly served under the Hague Convention. According to Sharp's lawyers, Continental served the complaint on Sharp USA, which is a subsidiary of Sharp Japan, but not a California subsidiary that could be deemed the foreign company's "general manger" under California state law. Also, Sharp's lawyers argue that Sharp USA "does not engage in any patent licensing business at all," so it couldn't be Sharp Japan's "general manager" for purposes of U.S. service with respect to patent licensing activities.

Should footnote 10 of the motion to dismiss correctly liken this situation (in the California Continental v. Avanci et al. case) to a couple of cases in which Continental AG, the German parent company of Michigan-based Continental Automotive Systems, allegedly "prevailed on the argument that it cannot be served through [Continental Automotive Systems, Inc.]," and should the application of that same legal standard result in a finding that Sharp Japan wasn't properly served under the very Hague Convention that Continental Automotive Systems held against Nokia's attempts to serve the first German AAII on a Germany-based board member, then that would be a major embarrassment for Continental's legal department:

"Indeed, Continental knows its attempted service on Sharp USA, rather than Sharp Japan, is improper. Continental's ultimate parent company, Continental AG, a German corporation, has repeatedly prevailed on the argument that it cannot be served through the Plaintiff here, its U.S. subsidiary, but instead must be served under the Hague Convention. See Orion Tire Corp. v. Gen. Tire, Inc., No. 92-cv-2391 AAH, 1992 WL 295224, at *1 (C.D. Cal. Aug. 17, 1992) (granting Continental AG's motion to dismiss for insufficient service and requiring service under Hague Convention); see also Leon v. Continental AG, 176 F. Supp. 3d 1315, 1318 (S.D. Fla. 2016) (requiring service on Continental AG under Hague Convention). The same is true of Sharp Japan."

In case Continental would want to bring a separate antisuit motion against Sharp, Sharp's lawyers ask Judge Koh to firstly hear the motion to dismiss, and in any event they obviously want due process, but I wouldn't expect anything else than due process from an extremely meticulous judge.

Assuming that at some point (and it may take longer than Continental hopes) Sharp Japan is properly added to the U.S. case as an additional defendant, a new antisuit motion by Continental against Sharp would again have a problem with the principle that earlier-filed cases, at least in psychological terms and with respect to the "international comity" part, are more likely to serve as a basis for enjoining parties with respect to actions in later-filed cases than the other way round. Sharp's first German lawsuit against Daimler was filed on April 12, 2019; the other four were filed between June 5 and June 28; those lawsuits in Germany against a German company were probably served within a week or, at most, two, i.e., even prior to Continental's mid-May original complaint, but Continental's first amended complaint, which finally added Sharp, was filed on July 23.

While I believe Continental and Daimler can be reasonably optimistic that the German appeals court may lift the two AAIIs very soon (in my observation, the judges on the patent senate of that appeals court are not only very experienced but also principled and, especially by comparison to some judges on the lower court, unemotional), the fact that they were too hesitant and slow with their own U.S. antisuit initiative may ultimately prove fatal to the pending motion and any subsequent antisuit motion.

Continental should have brought its complaint against Avanci much sooner, simply because the filing date of the complaint is so important for antisuit-injunction purposes, and should have had the courage and the budget to just sue all Avanci contributors immediately--or at least the ones that were already suing Daimler, or where there was a reasonable likelihood of this happening (which would probably apply to all Avanci contributors without exception).

Sharp's letter is attributable to an abundance of caution on its U.S. lawyers' part, but the overall situation is chaotic, and while (figuratively speaking) the jury is still out on the antisuit injunction motion as well as on the service-of-process question raised by Sharp Japan, a point may be reached before the end of the year when--after adverse decisions due to slowness, hesitancy, possibly even sloppiness and lack of coordination between parties and across jurisdictions--some people might begin to wonder whether Daimler and Continental are sleepwalking through the automotive patent wars. They can do better, as Continental's first-rate opposition to Avanci's venue transfer motion shows. If they don't perform consistently at the high level of that late-August opposition brief, they'll be eaten alive, also in light of the exceedingly patentee-friendly environment in Germany. I just voiced genuine apprehension.

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Avanci, Nokia, Sharp move to dismiss Continental's San Jose FRAND/antitrust complaint over component-level licensing

Technically on the same calendar day as Nokia's spectacular win of a second anti-antisuit injunction injunction ("AAII") against automotive industry supplier Continental, its lawyers filed, on behalf of all defendants (the Avanci patent pool, Nokia, Sharp, and a couple of patent trolls Nokia fed with patents) a motion to dismiss Continental's FRAND/antitrust complaint in the Northern District of California (this post continues below the document):

19-08-30 Avanci Et Al. Moti... by Florian Mueller on Scribd

In very general terms, I already commented on some of Avanci's previously announced theories two weeks ago. Also, the fact that Judge Lucy H. Koh denied Avanci's motion to stay discovery suggests to me that Avanci's preview of the motion to dismiss didn't immediately make her feel that this case was a waste of time.

The question here that is most relevant to the information and communications technology industry at large, apart from the overarching objective of Continental's complaint (to obtain a component-level license on FRAND terms), is whether patent pool firms like Avanci, which don't hold patents in a formalistic sense but are key in bringing companies together and getting them to combine their leverage and to coordinate their behavior, can be held liable. Avanci is a SEP pool with a focus on IoT, but there's plenty of similar organizations such as MPEG LA.

I would encourage the decision-makers at major ICT companies and industry bodies (many of whom are known to read this blog) to strongly consider supporting Continental on that "pool-firm liablity" question, be it through amicus curiae briefs or background advice. Such involvement may be particularly important because, quite frankly, Nokia's litigation skills (and let's not forget that Qualcomm is also an Avanci member) are world-class, while there's light and shadow with respect to Continental. The U.S. antisuit motion and the related reply brief left a lot to be desired (while no one can blame Continental's outside counsel in Germany for the anti-antisuit situation, which was a total surprise to everybody and where they face a court that aspires to make the Eastern District of Texas pale by comparison; plus, I think they may very well prevail on appeal). By contrast, Continental's opposition to Avanci's U.S. venue transfer motion was perfect; it could serve as a textbook example for how to deal with this frequent type of situation, and one can see that a lot of thought as well as hard work went into it.

The various questions raised by the motion to dismiss also include the one of whether Sharp was properly served. Continental Automotive Systems, Inc. (the Detroit-area Continental subsidiary that is the plaintiff in NorCal) disputes that the first Munich AAII has been properly served under the Hague Convention--but now that Nokia has an injunction in place against the German parent company of the Continental group (though a few degrees removed from the U.S. entity, which could make it hard to establish contempt of court if they do their part but any single one in the chain of subsidiaries refuses to comply), service may be less of an issue there. Still, it's interesting that an Avanci member now raises a service question, too.

Motions to dismiss can dispose of some claims, though it's unlikely that an entire multi-claim complaint like the one in question would be dismissed. It's also possible that Continental's lawyers have to address some shortcomings through bringing a second amended complaint (the current one is already the first amended one). I actually thought two years ago that the FTC might have to make some limited improvements to its complaint against Qualcomm, but Judge Koh didn't reach that conclusion. However, Continental is a different case, and the need to amend the complaint again could cause some delays, though the October 2021 trial date is so far off that it might still be kept even in that scenario.

The issue of pool-firm liability is really very important, and while my policy position is clear (such firms should be liable for the behavior they cause and coordinate), I'll probably talk about this in greater detail only after Continental and, hopefully, one or more amici curiae have done the prerequisite case-law search and opposed the Avanci-Nokia motion. It appears that apart from some paywalled websites I'm the only one to write about this case at the moment, so I at least wanted to share the motion here quickly, even prior to forming an opinion on the liability issues.

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Judge Koh schedules Continental v. Avanci et al. FRAND trial for October 2021, denies defendants' motion to stay discovery

Yesterday Judge Lucy H. Koh of the United States District Court for the Northern District of California held an initial case management conference in Continental v. Avanci et al.--for details on the issues in the case, please click on the links to earlier posts that you find in this article--and subsequently issued the following case management order (this post continues below the document):

19-08-21 Case Management Or... by Florian Mueller on Scribd

The 10-day bench trial (reminiscent of FTC v. Qualcomm) will kick off on October 15, 2021.

The next case management conference will take place on December 18, 2019, and I'll probably be in the area and may stop by out of curiosity (which wasn't possible yesterday).

Also, the defendants' (i.e., Avanci, Nokia, and privateers that Nokia once fed with patents; and meanwhile, Sharp has also been properly served) motion to stay discovery was denied. While their forthcoming motion to dismiss and already-pending venue transfer motion have yet to be adjudicated, it's possible that Avanci's related arguments at least haven't overwhelmed Judge Koh, which may be the reason she doesn't see a point in staying discovery.

The just-mentioned motion to transfer the case from San Jose to Dallas is already the second attempt to avoid Judge Koh's jurisdiction over the case. In June, Law.com's Scott Graham reported on the denial of a venue-internal transfer motion: the Northern District of California has several divisions; Judge Koh is based in San Jose; and Avanci wanted to at least get the case moved out of that place (with San Francisco being their preferred alternative), even before it was formally assigned to Judge Koh (at the time it was still pending with Magistrate Judge Nathaniel Cousins, which already made it likely that it would be assigned to Judge Koh). As Scott Graham mentioned, Nokia's testimony in FTC v. Qualcomm didn't appear credible to Judge Koh (for undestandable reasons as Nokia itself once complained over Qualcomm's practices, at a time when Nokia was still in the mobile handset business).

The order doesn't say anything about the further process regarding Continental's fully-briefed motion for an antisuit injunction. In my opinion, that motion is neither totally meritless nor a slam dunk.

Juve Patent thankfully credited my blog for publishing the case numbers and patent-in-suits of five German Sharp v. Daimler patent infringement cases (Sharp is another Avanci member). That article also says a first hearing in one of the Nokia v. Daimler patent infringement cases will be held in Munich in October, and the first Nokia v. Daimler trial is scheduled for December in Mannheim. When Continental and Avanci briefed Judge Koh ahead of yesterday's case management hearing, Continental listed those German patent infringement actions against Daimler as related cases, while Avanci and its co-defendants deny that there is a link.

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Foxconn-owned Sharp is suing Daimler over five patents in two German courts: concerted action by contributors to Avanci pool?

Through a filing with Judge Lucy H. Koh's court in the Northern District of California, I've become aware of the following patent infringement complaints (presumably but not necessarily involving one or more requests for injunctive relief) filed by Foxconn subsidiary Sharp Corporation against Daimler in Germany:

• Mannheim Regional Court (Second Civil Chamber under Presiding Judge Dr. Holger Kircher):

  • EP2154903 on a "mobile communication system, base station device, and mobile station device" (case no. 2 O 46/19; complaint filed on 12 April 2019)

  • EP2129181 on a "mobile communication system, base station apparatus and mobile station apparatus" (case no. 2 O 87/19; complainted filed on 5 June 2019)

• Munich I Regional Court (Twenty-First Civil Chamber under Presiding Judge Tobias Pichlmaier):

  • EP2854324 on a "communication system and mobile station apparatus" (case no. 21 O 8609/19; complaint filed on 25 June 2019)

  • EP2312896 on a "base station device, mobile station device and corresponding communication methods using carrier aggregation" (case no. 21 O 9918/19; complaint filed on 27 June 2019)

• Munich I Regional Court (Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann)

  • EP2667676 on a "base station device, mobile station device, and uplink synchronization requesting method" (case no. 7 O 8818/19; complaint filed on 28 June 2019)

The sequence of those filings may be attributable to the following dynamics:

• Sharp filed the first lawsuit in Mannheim in mid April just to demonstrate to Daimler that they were serious about forcing Daimler to license their patents through the Avanci pool.

• When Daimler didn't bow, they brought another one in early June (same venue: Mannheim). It may have been assigned to the same chamber by coincidence, but more likely Sharp just amended the complaint, in which case German courts automatically sever any new patents-in-suit, but keep the case in the same chamber.

• The three Munich filing in late June were presumably made to have a high likelihood of getting at least one case assigned to either of the two Munich panels hearing patent infringement cases. Historically, the 7th Civil Chamber used to be considered faster and more patentee-friendly than the 21st, but that may change now.

I haven't been able to find any other report on those Sharp v. Daimler cases prior to this blog post. Others have, however, reported on complaints brought by Broadcom and Nokia.

Like Nokia's German patent infringement suits against Daimler, those Sharp cases involve, at least in part, cars that come with a telematics control unit (TCU) supplied by Continental, which alleges that "Sharp's lawsuits are evidence of the immediate, substantial threat that Avanci will encourage or direct its members to engage in a concerted litigation campaign in an effort to force Continental’s OEM customers to take a non-FRAND license through Avanci." The allegation I just quoted is made in Continental's reply in support of its motion for a U.S. antisuit injunction against Nokia (this post continues below the document):

19-08-09 Continental Reply ... by Florian Mueller on Scribd

Some high-level observations on the reply brief:

• Just like the original motion, it's strong on policy and economic reasoning, but suffers from some deficiencies. The document looks like a lot of effort has gone into it, as they are under significant pressure. However, at this stage Continental's lawyers can try to explain away some facts but can't change them anymore.

• They keep pursuing the U.S. antisuit injunction, arguing that Nokia hasn't properly served its Munich anti-antisuit-injunction injunction under the Hague Convention. Consistently with that position, they haven't even objected to the Munich injunction yet, but they have announced their intent to do so once they believe the Hague Convention has been complied with.

• Continental's lawyers want Judge Koh to gloss over their suboptimal structure. While it's true that the question of functional identity between the parties in the enjoining U.S. case and the enjoined foreign action shouldn't be looked at it in exceedingly formalistic terms, Continental simply could have made it a whole lot easier for Judge Koh. It's true, but besides the point, that Daimler wasn't in a position to serve a third-party notice under German law on Continental U.S. for lack of direct liability. But then Continental simply should have made sure that an entity with a closer connection with those German infringement cases would have been another plaintiff in the U.S. case (and, consequently, one of two or more movants seeking the antisuit injunction against Nokia).

• With respect to the functionality identity of parties, Continental concedes that the proposed application of the customer suit exception (which usually governs motions to transfer cases within the U.S.) should be applied in the context of a cross-border antisuit injunction "is a case of first impression." I'm sympathetic to Continental's position on the customer suit exception, and as Continental notes, Nokia can't "point to any case wherein application of the customer suit exception doctrine was rejected in the context of a motion for anti-suit injunction." But, again, you make your bed and you lie in it. I still believe it was a major and potentially (though I hope it won't be) fatal for the motion that they didn't make a better choice as to the legal entities behind the U.S. antisuit motion. It would be great if Judge Koh granted the motion anyway, but Continental's lawyers have no one to blame but themselves in case she concludes otherwise.

• As a matter of policy and industry practice, Continental is right that SEP licenses, also including the ones granted by Avanci, typically cover an entire corporate group. Therefore, Continental U.S. and the legal entities implicated in the German infringement proceedings are in the same boat: the whole purpose of the U.S. case (before they even brought an antisuit injunction motion) was to secure a license on FRAND terms that would benefit the entire Continental group.

• Continental's reply brief says "Nokia's contention that 'under no circumstances will Daimler be 'forced' (in the German proceedings) to accept a license proposal on anything other than truly FRAND terms' is highly disingenuous." That is hyperbole. The two SEP antisuit injunctions in the Ninth Circuit that Continental points to are Microsoft v. Motorola and Huawei v. Samsung (where Samsung, the defendant, was the successful movant). The latter case was more recent, but about Chinese patent injunctions. The former case is older, and the case law in Germany regarding SEP injunctions subsequently changed fundamentally when the Court of Justice of the EU's Huawei v. ZTE ruling did away with Germany's misguided application of the Federal Court of Justice of Germany's Orange Book doctrine. In that Microsoft case, which I watched closely (both the U.S. FRAND case and the German infringement proceedings, where I attended the trial as well as the announcement of the decision), there was a far greater discrepancy between U.S. and German SEP injunction case law. It's true that Judge William H. Orrick defined the potentially-frustrated U.S. policy rather broadly in Huawei v. Samsung, but that was a FRAND determination case that Huawei itself had chosen to bring in the U.S.--and it's unclear how the Federal Circuit would have ruled as the parties settled before an appellate opinion came down.

• They downplay--actually, deny--the relevance of timing, but comment on it anyway. In that context it strikes me as odd that Continental would point to the timing of an EU antitrust (DG COMP) complaint: that is simply not a substitute for bringing an action in the U.S. at an earlier point in time.

• In another timing context, they still argue that Nokia sought an extension of time in the U.S. only to seek a German anti-antisuit-injunction injunction (though there are different lawyers working on the cases in those jurisdictions), and that Nokia overstated the urgency of that matter to the Munich court, with Continental saying a decision by Judge Koh ahead of the August 9 reply brief "would be virtually unheard-of in connection with a fully-noticed motion in the U.S.," though "virtually unheard-of" does not mean "procedurally impossible," but more importantly, I already explained in a previous post that Continental could have waived the optional reply brief, just like they now sort of waive the right to a hearing (Judge Koh might have taken this here under advisement anyway, which is one of her strategies for high efficiency), or they could have filed it very shortly after Nokia's opposition brief (the pace at which Continental's lawyers have moved so far suggests they always need a lot of time for anything, but again, procedurally it would have been possible).

• The part of Continental's reply brief that I completely disagree with is where they claim it doesn't matter that Nokia's German lawsuits also involve Daimler cars that don't come with Continental components. Here's a key passage:

  "Although it is true that Continental is not Daimler’s only supplier, the purpose of Continental’s lawsuit is to confirm that suppliers like it are entitled to a license, and set the FRAND terms and conditions for such a license. It would be perverse, to say the least, if Nokia could avoid an anti-suit injunction in a lawsuit brought by a component supplier willing to take a license on FRAND terms, and thereby perpetuate its illegal strategy of only licensing OEMs rather than component suppliers, by relying on the existence of other component suppliers which Nokia also refuses to license!"

  Sorry, guys, but your explanation mark and rhetoric fail to convince me. It's your damn job to either seek an injunction that isn't overbroad (by limiting it to Daimler cars that come with Continental TCUs) or to persuade other suppliers to join you in this case. But just because your case may also have a bearing on--or may even be the next best thing to direct applicability to--the legal interests of some other entities doesn't mean you can behave like a class-action plaintiff... which is why there are special rules for class actions.

  The court can obviously tailor the requested injunction more narrowly, and should Continental prevail, I think that's more likely than not to happen. And if it were up to Avanci and Nokia, the court to decide wouldn't even be Judge Koh's court.

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Avanci, Nokia trying to escape Judge Koh's jurisdiction over Continental case: motion to transfer venue from San Jose to Dallas

In soccer terminlogy, Nokia's "Munich Maneuver" may be the Goal of the Century, subject to whether or not the anti-antisuit-injunction injunction ("AAII") is lifted. As of now, it appears Daimler supplier Continental, which argues that is hasn't been properly served yet, still hasn't filed an objection to the preliminary injunction. An objection would lead to a hearing. But presumably Continental wants to stay consistent with its views on service (I can't offer any opinion on that procedural part).

Service (of process) is also an issue affecting Continental's U.S. FRAND/antitrust case against Avanci, Nokia, and others. The defendants (mostly, but not exclusively, the Avanci licensing firm, Nokia, and some privateers holding former Nokia patents) have asked Judge Koh to postpone the upcoming case management conference because "[d]efendant Sharp Corporation has not yet appeared in this case."

At the same time, Avanci-Nokia are trying to get the entire case transferred out of Judge Lucy H. Koh's court in the Northern District of California by way of a motion filed on Wednesday Pacific Time (this post continues below the document):

19-07-31 Avanci Et Al. Moti... by Florian Mueller on Scribd

The motivation for this is not in the above motion, which instead states all sorts of largely or entirely pretextual reasons for the desired transfer from the Northern District of California (in this case, San Jose) to the Northern District of Texas (which practically means Dallas). The real reasons for this are Judge Koh and her case law. Forget about the rest, which is irrelevant for such a high-stakes dispute involving in no small part organizations from overseas.

Qualcomm, which just missed estimates and is anxiously awaiting the Ninth Circuit's decision on its motion to stay the enforcement of the FTC's antitrust remedies, is an Avanci member. But even if it weren't, the key findings in the Qualcomm case regarding component-level licensing and the smallest salable patent-practicing unit (SSPPU), and the conclusions Judge Koh had previously reached in GPNE Corp. v. Apple with respect to the SSPPU, would have Avanci, Nokia and the rest of the group concerned to an undiminished degree.

In the Northern District of Texas, those questions haven't been resolved. But it's a different circuit, and that's why I'm sure Avanci and Nokia wouldn't even want to go to another West Coast district because once the Ninth Circuit affirms any parts of Judge Koh's ruling, the other districts in the circuit would follow suit. If Avanci and Nokia got their way, they'd be in the Fifth Circuit, and they could at least make an argument based on Judge Rodney Gilstrap's HTC v. Ericsson decision in a neighbor district within the same circuit, the notoriously patentee-friendly Eastern District of Texas. While a decision by another district in the same circuit isn't binding, proximity may yet give this one slightly more weight than Judge Koh's very well-reasoned holdings in FTC v. Qualcomm. By contrast, Judge Gilstrap has often made extremely patentee-friendly decisions, as have other judges in his district, and the related reputation of the Eastern District of Texas limits the persuasive impact of any of its case laws in other circuits. Also, Judge Koh is a rockstar judge who was in the process of being appointed to the Ninth Circuit and on Hillary Clinton's list for the Supreme Court. But... she's in the Ninth Circuit, and all Texas districts (and some others) are in the Fifth.

The Avanci-Nokia motion to transfer venue doesn't make extremely strong arguments for Texas. Where they are certainly right is that there was no particular reason for NorCal (other than case law, which obviously doesn't count, and probably that Continental's lawyers hoped the case would be assigned to Judge Koh, for which there was no guarantee but which fortunately happened). A former Apple licensing executive, Boris Teksler, is still based in Silicon Valley, and he manages Conversant, one of the patent assertion entities in the case that hold former Nokia patents. Then there are some offices of various defendants in the Northern District of California, but Avanci and its co-defendants deny that those offices really are relevant to the issues in the case.

The convenience argument for the Northern District of Texas is relatively weak. To give you an example, they argue that Europe-based witnesses and experts (Nokia, Continental etc.) have a slightly shorter flight time to Dallas than to San Francisco. It's like a little less than 10 hours in one case and slightly over 10 hours in the other--something no traveler (and I've gone back and forth dozens of times) would care about. In that context, they didn't even do their research homework properly: they base their estimates on the distance from Munich to the two alternative venues, but Continental is headquartered in Hanover (far up north from Munich), where the nearest airport serving direct flights to many U.S. cities is Frankfurt (which is also the #1 airport in Germany, though Munich has become more important over time).

That reminds me of a non-fatal but stupid mistake they had in their otherwise very well-crafted opposition to Continental's U.S. motion for an antisuit injunction: they described a consumer class action against Qualcomm as an Apple case. Since the consumer case was consolidated with FTC v. Qualcomm, it was Judge Koh who made the decision (not to grant an antisuit injunction at the given time) that they cited. It doesn't make the motion weaker, but since I criticized the Continental side, and in the context of the use of Munich instead of Frankfurt as the originating airport in the latest motion, I wanted to mention this anyway.

What weighs in favor of the Avanci-Nokia venue transfer motion is that there was no absolutely pressing reason for bringing the case in San Jose, other than case law. But case law doesn't count, though it is relevant to the efficiency argument: the Northern District of Texas is less busy, and slightly faster to adjudicate cases, as the Avanci-Nokia motion argues. Obviously, if they really wanted rapid adjudication, they wouldn't slow things down with a transfer motion. And the fact that Judge Koh knows the issues at the heart of the case so well, and can cite to some of her own holdings, really does make NorCal the ideal place even from a pure efficiency point of view--just that the outcome will likely not be the one that Avanci and Nokia like.

Continental's lawyers now have some homework to do. They have to identify and explain some weaknesses in Avanci-Nokia's arguments for Dallas, and they have to explain why the Northern District of California is just as good a venue for this as North Texas--or that even if Dallas seemed preferable, it wouldn't be the better choice by a wide margin, and given what's at stake and how deep-pocketed all parties to this dispute are, some convenience factors that may be more relevant to lower-profile cases shouldn't be given too much weight.

What Nokia's flash-of-genius Munich Maneuver and Avanci-Nokia's motion to transfer venue have in common is that they are on the run from the one and only Judge Koh.

Now I just hope that Continental will do a better job on its opposition to the motion to transfer venue than in the antisuit injunction context.

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