HTC recently filed two additional lawsuits in Germany to target newer Nokia Lumia phones

The patent dispute between Nokia and HTC continues to escalate. With Nokia's recently-lodged second ITC complaint against HTC, which is now being investigated, and simultaneous filings in the Southern District of California the number of patents Nokia is currently asserting against HTC has reached (if not surpassed) 50. Meanwhile, the number of HTC complaints against Nokia (all of them filed in Germany) has increased from three to five. At an HTC v. Nokia trial held in Munich today I learned about HTC's attack on half a dozen new (Windows Phone 8-based) Nokia Lumia smartphones, which it is targeting in two courts in parallel (HTC is suing Nokia's German subsidiary in Mannheim and the Finnish parent company in Munich) over a power-saving patent it's also asserting in Mannheim and Munich against older (Windows Phone 7-based) smartphones. The accused functionality is implemented by chipsets, not the Windows Phone operating system per se.

The number of distinct patents asserted by HTC against Nokia is still the same: two. In one Mannheim case, HTC subsidiary S3 Graphics is alleging infringement of a video processing patent by Qualcomm's Snapdragon chip. That case will go to trial tomorrow. In another Mannheim case, which went to trial on May 31 and in which a decision (which may or may not be a final ruling) has been scheduled for August 23, and in a Munich case that went to trial this morning (with a decision scheduled for September 12), HTC is asserting EP2073096 on "power management systems and methods for electronic devices". The cases that have already gone to trial involve previous-generation devices. HTC's amendments to both power management patent complaints for the purpose of accusing newer Lumia phones were severed by the Mannheim and Munich courts and put on separate schedules. The Munich case will be heard on October 31.

In all jurisdictions the fast pace of this industry poses challenges to patent enforcement. Yesterday a United States Magistrate Judge suggested to Apple (in a footnote of a ruling) that it bring a third infringement complaint against Samsung in the Northern District of California in order to accuse the Galaxy S4.

In mid-February I reported on the first Munich hearing (patent infringement cases in the Munich I Regional Court typically involve an "early first hearing" and a second trial, which is tantamount to a trial). Since then HTC has apparently, besides bringing an amendment, addressed some of the evidentiary issues highlighted in February. The court had suggested some measurement of power-saving effects, and some such effort was mentioned today (without much detail). And HTC has amended its infringement contentions so as to capture non-literal infringement based on the German equivalent of the Doctrine of Equivalents (DoE).

Even though Nokia filed a nullity (invalidation) complaint with the Federal Patent Court of Germany in December 2012, today's discussion was solely about administrative issues (court fees and a bond covering Nokia's legal fees in the event HTC loses and fails to pay) for the first hour and about claim construction and infringement analysis during the next two hours. There was no time to discuss Nokia's motion to stay the case (should an infringement be identified) pending the nullity proceeding. Judge Dr. Zigann said that an unusual (but not unheard of) third hearing may have to be held to discuss the likelihood of success of Nokia's nullity action, but this will be necessary only if the court is convinced of there being an infringement. The court did not take a clear position on the merits of the infringement allegations, but if it felt that HTC had a strong infringement theory, it would have set aside some time today for the (in)validity part of the case or at least would have scheduled a near-term subsequent hearing for that purpose rather than wait until mid-September to decide whether to hold that other hearing at all. Should the third hearing be necessary, HTC has already requested that it take place on October 31 when its more recently-filed claims will be heard as well.

The challenge HTC faces here is the same that Nokia faces in the dozens of cases in which it is the plaintiff (and in which HTC has so far been an amazingly effective defendant, so far losing only one case that didn't have devastating consequences): a defendant can raise multiple non-infringement arguments, and if only one of them succeeds, the case is dismissed. I don't know whether HTC has a stronger infringement case for those newer Nokia Lumia devices, which come with different chips, but today it was clearly struggling to deal with Nokia's defenses to infringement.

The patent's literal scope is that a telecommunications chip will wake up an application processing chip from its sleep state if certain messages are identified based on patterns. This way the application processing unit can save power when not needed, but incoming calls (including voice-over-IP calls) won't be missed. Simply put, Nokia's noninfringement arguments are that the devices accused in this action don't conduct positive filtering (finding and processing matches) but sort out by means of negative filtering (throwing out non-matching messages), which HTC says is, if not a literal infringement, an equivalent. Nokia says there's neither a literal nor a non-literal infringement because, in any event, what's missing is a wake-up messages to the application processing unit. In response to this, HTC contends that the inter-chip messaging by means of interrupts has the effect of a wake-up message. Nokia does not dispute that interrupts are involved (it's simply the way chips typically communicate with each other) -- but it says that the interrupts HTC means don't fall within the scope of the claims. Not all interrupts are wake-up signals.

According to Nokia, HTC's broad construction of the term "wake-up signal" would result in an extremely high frequency of switches from sleep to normal state, which Nokia says cannot possibly be meant to be the idea covered by this patent. Nokia does not deny that its chips consume more power if they have more work to do. It does dispute, however, that the claim language, which also refers to the process of entering a state, has scope for the usual inter-chip communication by means of interrupts unless there's such a thing as an identifiable wake-up signal, triggered by identification of a certain data pattern.

These are just HTC's primary challenges on the infringement side; Nokia may also have raised some other points that weren't discussed today. And even if there is an infringement, an injunction won't issue unless HTC fends off Nokia's motion to stay.

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Implications of Nokia's new strategy for the smartphone patent wars

This morning Nokia announced its new strategy, a wide-ranging alliance with Microsoft, and the adoption of Windows Phone as its principal smartphone operating system.

I'm not going to comment on what this may or may not mean for the smartphone market like so many others. I'm looking at this from my special angle: that of a close observer of the smartphone patent wars, including Apple's dispute with Nokia, which this new alliance makes more likely to be settled amicably.

Importance of intellectual property to Nokia and Microsoft

Microsoft and Nokia are both known for an in-depth understanding -- including at the highest level -- of the strategic importance of intellectual property rights in the knowledge-based economy. In 2003, Illka Rahnasto, Nokia's vice president of legal affairs and intellectual property, published a book on "Leveraging Intellectual Property Rights in the Communications Industry", which talks a lot about how Nokia views and uses patents in strategic ways.

Therefore, I'm sure those organizations also take patents into consideration when structuring such alliances as the one they just announced. More importantly, they will do so in going forward.

IP is Android's Achilles heel. I'm an Android user (who switched from a Nokia N97), but just looking at the facts, and Android has bigger IP issues than any other mobile platform. In no small part that's due to the weakness of Google's own patent portfolio. I also see indications that the Android team doesn't manage its software licenses well, and its apparent negligence also seems to expose OEMs to liability risks.

A company as sophisticated about IPR strategies as Nokia is less likely than many of its competitors to inherit such issues if it can be avoided.

Nokia plans to "leverage its huge patent portfolio" even more than before

AllThingsD published one of the most interesting reports in the build up to the actual Nokia-Microsoft announcement, and among the topics Nokia planned to discuss with the investment community today, I found this one particularly interesting:

"Friday’s investor meeting will also address other aspects of the company, including [among others] its plans to leverage its huge patent portfolio."

Last time I checked, Nokia had patented about 11,000 inventions, and we're not talking about a company that has been sitting around so far doing nothing with them. If they now plan to step up their IP activities, I they will seek to strike more outbound license deals with other industry players and will probably be less hesistant than in the past to take enforcement action against companies refusing to respect Nokia's intellectual property.

In his presentation to investors, Nokia CEO Stephen Elop said that they have "one of the strongest patent portfolios out there" and they are willing to license it to others "at an appropriate royalty rate." This translates as stepping up their outbound licensing efforts.

Nokia's head of investor relations later underscored the "tremendous value" that this activity can generate for shareholders.

One thing is for sure: the importance of patents in the smartphone industry will only continue to grow.

The Nokia-Microsoft alliance may facilitate a settlement between Apple and Nokia

I've been following the huge patent dispute between Apple and Nokia, and I produced a visualization that shows the battlelines between the two companies.

It's a tale of escalation, and at some point there must be a solution. Those two players may have the potential for mutually assured destruction, and they're not going to want that.

If Nokia had chosen Android, that conflict would have exacerbated, and Google wouldn't have strengthened Nokia in any meaningful way concerning patents. Apple is already enforcing patents vigorously against Android device makers HTC and Motorola (I also produced a visualization of that battlefield).

But Nokia decided against Android. The partnership between Nokia and Microsoft should make it much easier for Apple and Nokia to work things out between them and strike a cross-license deal:

• I can't imagine that Apple would assert any of its patents against Windows Phone 7. Nokia is now covered by Microsoft as far as Windows Phone-based devices are concerned, and it's been a long time since Apple and Microsoft had (and settled) a patent dispute. They need each other.

• Apple primarily asserts patents on touchscreen interfaces and other elements of modern day smartphones against Nokia. Now that Nokia has a partnership with Microsoft in place, it can deliver that kind of user experience anyway. It might still need a license to some of Apple's patents with a view to its other phones, but if all else failed, it could always use Windows Phone 7 even on lower-cost devices and solve the patent problem. Today's smartphone is tomorrow's feature phone. Therefore, Apple might as well make those patents available to Nokia on a cross-licensing basis.

• In light of market dynamics, it would now make a whole lot of sense for Apple and Nokia to stop wasting resources on their fight with each other and instead focus on license deals with all those makers of Android-based devices.

I won't venture to predict when Apple and Nokia will finally settle, but I wouldn't be surprised if it now happened within a matter of months. Should it take longer than that, then it would have taken even longer if Nokia had picked Android.

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Update on ITC investigations involving smartphones

Several key players in the smartphone business are entangled in ITC investigations. While there haven't been any spectacular news concerning smartphone patent litigation in recent weeks, there has been some progress on different fronts that's worth taking a quick look at.

New investigation of Sony's complaint against LG (investigation no. 337-TA-758): On January 27, 2011, the ITC voted to investigate Sony's complaint against LG. As I explained in a similar case, this kind of ITC decision doesn't mean that a complainant has taken a major hurdle. In all of the cases I've been watching so far, complaints resulted in investigations.

The Sony vs. LG dispute is an interesting one in some respects. It's the first such dispute between two Android adopters. While Sony's complaint doesn't list Android phones among the specifically accused devices, it appears broad enough to cover phones running on different operating systems. One of the accused products happens to be the LG Quantum, a Windows Phone 7 device. So this is the first patent infringement action I've become aware of that involves WP7 in some way. The asserted patents are typical "computer-implemented inventions" patents, meaning they specify hardware as well as software components and it isn't easy to tell whether the operating systems of those phones play a key role in the alleged infringement. The list of accused products suggested that Sony mostly looked at the hardware components built into those phones.

Eastman Kodak vs. Apple and RIM (investigation no. 337-TA-703): I haven't previously commented on this smartphone-related patent case on this blog (even though I have covered so many of them). The latest turn in that investigation is an example of how careful one has to be when assessing any interim news concerning those ITC proceedings.

When news surfaced in early November that the ITC staff had a negative view of several infringement allegations brought by Apple against Nokia, I pointed out that the ITC staff opinion is just an opinion and far from a definitive decision. The Kodak case is now a perfect example of how the wheel of fortune can turn during such a process. On January 25, 2011, Kodak announced that it received notice of initial determination in its case against Apple and RIM, and that initial determination (by the Administrative Law Judge in charge) was negative for Kodak. But in the same announcement, Kodak vowed to fight on, trying to still convince the ITC's ultimate decision-making body (the Commission) to overturn the ALJ's determination. And while I don't have access to the ITC staff report on this case, Kodak claims that it was favorable. If that is true, it means that the ITC staff report was overturned by the ALJ, and Kodak is now trying to get the Commission to overturn the ALJ's initial determination.

The lesson to be learned: he who has the last laugh, laughs best.

Apple vs. HTC and Nokia (investigation no. 337-TA-710): This is a rather important case. It started with an Apple complaint against HTC, but Apple's allegations that Nokia infringes five of its patents were consolidated into this one as well (since the same patents were also asserted against HTC). On January 3, 2011, the Administrative Law Judge in charge of this case determined that the process was going to take longer than previously anticipated and extended the target date (the date on which the final decision is expected) by two months from October 6, 2011, to December 6, 2011. Previously, the parties had asked for a postponed hearing, which is now scheduled to take place from April 18, 2011, until May 6, 2011. The Administrative Law Judge plans to make his initial determination on August 5, 2011.

Microsoft vs. Motorola (investigation no. 337-TA-744): In December, the Administrative Law Judge set an approximate target date for the final decision in this case -- March 5, 2012. On January 10, 2011, the ITC set a procedural schedule in accordance with that target date. The procedural schedule was jointly proposed by the two parties and the ITC staff.

Motorola vs. Apple (investigation no. 337-TA-745): On December 14, 2010, the Administrative Law Judge set a target in this case for March 8, 2012. On December 23, 2010, a detailed procedural schedule was set in accordance with that target date.

Apple vs. Motorola (investigation no. 337-TA-750): On January 20, 2011, the ITC accepted a procedural schedule jointly proposed by Apple and Motorola. The target date for this investigation is March 30, 2012.

Motorola vs. Microsoft (investigation no. 337-TA-752): This case is related to the Xbox but was brought by Motorola after Microsoft complained over various Android-based Motorola devices. On January 13, 2011, the Administrative Law Judge made the initial determination that the target date for this investigation is May 23, 2012.

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