OPPO outperformed Daimler and its numerous suppliers in litigation with Sharp, will likely give Nokia a run for the money now

Like my previous two posts (also published today) on IP Bridge v. Ford and Thales v. Avanci & Nokia, this one stems from my research into high-profile Munich patent cases.

Six days ago, Sharp announced a global cross-license agreement with Chinese smartphone maker OPPO. In connection with the Chinese part of the dispute, the Supreme People's Court of the People's Republic of China had made an interesting jurisdictional decision. Sharp was suing OPPO over alleged infringements in Germany, and it appears that OPPO defended impressively well.

The Munich I Regional Court has confirmed to me that Sharp's complaint over EP2854324 on a "communication system and mobile station apparatus (case no. 21 O 3514/20) was dismissed: the patent was not found to be infringed by OPPO.

OPPO defeated two other Sharp complaints by prevailing on its own nullity actions in the Federal Patent Court of Germany:

• EP2312896 on a "base station device, mobile station device and corresponding communication methods using carrier aggregation" was invalidated further to a nullity hearing on June 24, 2021 (decision (PDF, in German)). Sharp was asserting that patent in Munich (case no. 21 O 2917/20).

• Sharp's Mannheim case no. 2 O 34/20 suffered the same fate: EP2154093 (same title as the aforementioned EP'896) died in the Federal Patent Court (decision (PDF, in German)) on July 8, 2021.

The remaining two Sharp v. OPPO cases had not been decided at the time of the settlement, but it appears that OPPO was in pretty good shape based on its invalidity arguments. This applies to EP2129181 , which Sharp was asserting in Mannheim case no. 2 O 52/20, and--which is absolutely remarkable, EP2667676 on a "base station device, mobile station device, and uplink synchronization requesting method." EP'676 won Sharp an injunction against Daimler last year, which triggered a settlement. OPPO, however, came up with new prior art, and it looks like Sharp preferred to settle with OPPO rather than take any risks with respect to that patent in Munich case no. 7 O 2919/20.

OPPO is going into its next--and much larger--dispute as an undefeated defendant.

Just like Sharp, Nokia sued Daimler before it brought patent infringement complaints against OPPO. Given OPPO's patent litigation track record, it's probably not going to be an easy win. It also appears that Nokia sued OPPO very shortly after the expiration of a previous license agreement, which is different from Daimler, whose behavior over the years was characteristic of an unwilling licensee, and ultimately inconsistent. There's no reason to assume OPPO would underperform Daimler this time. It's probably going to challenge Nokia's patents-in-suit with greater sophistication than Daimler; it won't be easily portrayed as an unwilling licensee; and unlike Daimler it holds many wireless patents and is already known to be countersuing. This is going to get interesting, admittedly more interesting than I thought when it started back in July. Bring the popcorn!

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French industrial conglomerate Thales suing Avanci and Nokia in Munich over alleged antitrust violations by refusing to grant component-level patent licenses

Just like my previous post (on a newly-discovered IP Bridge v. Ford Motor Company case pending in Munich), this post relates to automotive standard-essential patent (SEP) licensing issues.

The Nokia v. Daimler dispute lasted almost two years, and only toward the very end did French industrial giant Thales intervene. Thales makes network access devices (NADs), which other companies then incorporate into their telematics control units (TCUs). Thales is a tier 2 supplier by automotive supply-chain terminology, and its customers are tier 1 (i.e., direct) suppliers.

A couple of weeks ago, OffshoreAlert listed a U.S. discovery request that Thales made from InterDigital in order to use the information so obtained in an antitrust litigation in Munich against the Avanci patent pool and Nokia. InterDigital is an Avanci licensor (as are Nokia and roughly three dozen other companies).

I've looked at the German complaint and expect it to go nowhere. I won't elaborate on any details today, but I did want to publish a couple of documents and share a few high-level observations. First, the memorandum of law in support of the U.S. discovery request (this post continues below the document):

21-09-30 Memorandum of Law ... by Florian Mueller

A copy of the Munich antitrust complaint was attached to the U.S. discovery request (this post continues below the document):

21-07-01 Thales v. Nokia &a... by Florian Mueller

Thales filed that lawsuit with the Munich I Regional Court's 37th Civil Chamber, which hears antitrust cases. However, the case has since been reassigned to the same court's 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier), which specializes in patents. The court's patent judges are already intimately familiar with automotive supply-chain licensing by virtue of having heard and decided a number of other automotive cases, including but not limited to Nokia v. Daimler. Not only would it have been grossly inefficient to have a different division of the court familiarize itself with the issues but there would also have been a clear and present danger of inconsistent decisions between the court's different divisions. Also, one of the members of the 21st Civil Chamber--Judge Dr. Anne-Kristin Fricke--is a former antitrust judge.

Thales is not seeking a license but asks for a finding that it is entitled to antitrust damages, the exact amount of which would be quantified at a later stage. Given that Thales is not praying for injunctive relief, the case is a lot less urgent than virtually all patent infringement cases filed with the same court.

Finally, here's the English translation of the complaint that Thales provided to the U.S. court:

21-07-01 (en Translation) T... by Florian Mueller

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Japanese patent licensing firm IP Bridge is suing Ford Motor Company in Munich over former Panasonic SEP

On the first of the month, L2 Mobile Technologies LLC, an entity affiliated with non-practicing entity Longhorn IP (named after the official state large mammal of its home state of Texas), sued Ford Motor Company over patent infringement in the District of Delaware (Courtlistener docket overview).

Ford is not the most willing licensee among car makers. With Nokia, it once entered into a short-term license agreement that was more of a standstill agreement, and provided material to Daimler for use in its (meanwhile settled) dispute with the Finnish wireless company. Ford may prefer to lock horns with Longhorn over signing up for a license quickly, but whether that is an economically wise decision is in the eye of the beholder.

I've now been able to find out, thankfully, from the press office of the Munich I Regional Court that there is at least one standard-essential patent (SEP) action pending against Ford in Germany (and I guess it's not even the only one). In case no. 7 O 9572/21, a patent licensing firm that belongs to the Japanese government, IP Bridge, a hearing has been scheduled for late February. The patent-in-suit (EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator") was originally obtained by Japanese electronics maker Panasonic, which declared it essential to 4G/LTE. The same patent has previously been asserted against Taiwanese smartphone maker HTC and possibly other defendants.

Both Longhorn IP and IP Bridge are contributors to the Avanci SEP pool. Ford could kill not only two but literally dozens of birds with one stone by taking an Avanci license. This, however, does not conversely mean that Avanci itself, which doesn't hold patents and thus lacks standing to assert them, is responsible for these infringement cases in any way. IP Bridge, which is also suing Daimler, and Longhorn are licensing firms who have to deliver. They have to make deals that generate licensing income: whether they acquire patents and need to recuperate that investment and/or have a royalty-sharing agreement with those who assigned those patents to them, it's their job to sign deals and if that's not possible without going to court, they have to sue. There is no plausible theory under which Avanci would control them; much to the contrary, Avanci can only do business on terms that licensors and licensees deem acceptable. Ford seems to be extremely difficult to please, though.

Car makers can't just infringe the Avanci licensors' patents forever. If they don't take a pool license, they need bilateral licenses. If they're unwilling to do either type of license deal, it's only a matter of time until SEP holders sue them--and Ford now has to ask itself how it wants to try to persuade the courts in various jurisdictions, particularly Germany and the UK, of its willingness to take SEP licenses on FRAND terms...

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Restoring the America Invents Act: legislative measure to defend post-grant review of U.S. patents welcomed by tech industry, patent experts

About a year ago I described a complaint by Apple, Google, Intel, and Cisco over then-USPTO Director Iancu's PTAB rulemaking as "litigation to the rescue of legislation" because the case was brought in defense of the ideas underlying the Leahy-Smith America Invents Act (AIA). Essentially, Mr. Iancu had gutted the PTAB IPR (inter partes review) part of the AIA by establishing a discretionary-denial regime.

By now there is also hope for the PTAB IPR process because of developments on other fronts. The next USPTO Director may undo some of Mr. Iancu's rulemaking, and now there's a proposal in the United Senate that amounts to "legislation to the rescue of (earlier) legislation": the Leahy-Cornyn Restore AIA bill ("RAIA"). Sen. Patrick Leahy (D-Vt.), one of the sponsors of the original AIA, is now the President pro tempore of the Senate. Sen. John Cornyn (R-Tex.) has also taken an interest in patent policy for some time. Both have a reputation for balanced positions on patent enforcement: neither are they in the "Coons camp" (which favors ever stronger enforcement even of weak patents) nor could they be reasonably accused of seeking to weaken patent protection.

Litigation, executive action, legislation--three ways to reverse Mr. Iancu's PTAB rules, any single one of which could do the job. Executive action would potentially be quickest (as it won't take that much longer until the new USPTO Director has been named). Durability is the most important quality of new legislation: the Restore AIA would not only solve the problem at hand but would also prevent it from reoccurring, unless and until Congress would decide otherwise.

None of these options are mutually exclusive, so in the ideal scenario for the U.S. technology industry the USPTO would alter course (the sooner, the better) and Congress would pass legislation with a view to future administrations. App stores are an entirely unrelated subject (except that Apple and Google, which frequently defend against patent infringement complaints, are involved again, though as reform opponents), but it's another example of parallel efforts on multiple fronts (legislation such as the Open App Markets Act (U.S.) and Digital Markets Act (EU), antitrust enforcement, and private litigation such as Epic Games v. Apple), some of which may even serve to reinforce each other.

A few days ago, Law360 published an opinion piece that makes a very compelling case for the RAIA. The author, Haynes Boone's Joseph Matal, was personally involved with the creation of the original AIA, and served as Acting Director as well as Acting Solicitor of the USPTO. Not only does this background make him an interesting voice to chime in but he makes an argument that policy makers can't brush aside in these times of chip shortage: "[T]he bill would protect American manufacturers against the depredations of hedge funds and other unscrupulous actors that have been exploiting recent opportunities to leverage invalid patents against America's industrial base."

Mr. Matal's op-ed points to estimates according to which "American automobile manufacturers are expected to lose almost $300 billion in revenue because of a lack of access to the semiconductors that control so many of the functions on a modern car." That is an example of the disruptive impact of problems at or near the top of a multi-tiered supply chain. It is in the national economic (and also the national security) interest of the United States to encourage manufacturing companies to invest. And industrial policy also involves IP policy.

The opinion pece points to the record $2.175 billion verdict in VLSI v. Intel. According to Mr. Matal's article, one VLSI patent "claimed simple insights into the voltage needs of integrated circuits" and faced a PTAB challenge by Intel that allegedly "showed that these things had been understood by electrical engineers years before the patent was filed." But irrespectively of the merits of that PTAB petition, the USPTO declined to conduct a post-grant review. It was one of many discretionary denials of its kind.

Mr. Matal notes that the amount of that staggering verdict "is a substantial portion of the cost of building a new microchip fabrication plant" and goes on to ask a (rhetorical) question: "Before we transfer that amount from the nation's premier chip manufacturer to a hedge fund, shouldn't we at least want an accurate and technically reliable assessment of whether the patent is valid?"

Due to that VLSI verdict and the chip shortage crisis, Intel may be the perfect poster child in the U.S. when it comes to being a victim of patent overleveraging.

I wish to clarify that I also take criticism of "patent holdout" and "intelligent infringement" very seriously. Others have argued that the PTAB had too much of a motivation to grant IPR petitions, and I'm philosophically against giving government officials the wrong incentives. If there are issues to be addressed with respect to abuse of the PTAB process by defendants, let's have a debate--and come up with solutions. But the RAIA goes in the right direction, and discretionary denials are not the answer. It should be all about the merits, and that's the way I interpret Mr. Matal's Law360 contribution.

He draws an interesting comparison between two cases in which Huawei asserted U.S. patents. Samsung had some success at the PTAB, but later, when Huawei sued Verizon, the U.S. telecommunications carrier "received a total of six discretionary denials from the USPTO -- the agency refused to consider Verizon's challenges on their merits." The end of the story was that Verizon felt forced to settle with Huawei, and to pay up.

Mr. Matal's opinion piece notes that the country of origin of a patent lawsuit is irrelevant: "Regardless of who is asserting a patent, the public interest demands that we only award infringement damages for valid patents — those that claim a technological advance. Allowing invalid patents to be monetized does not reward innovation — it simply corrupts the system and encourages more investment in this type of litigation." In the alternative, we will see more lawsuits over patents of dubious quality, more damages awards and settlements, and as a result, ever more litigation. A vicious circle.

There are other benefits of the RAIA that Mr. Matal touts, such as that it "would also safeguard patent judges' independence by prohibiting political interference in pending PTAB cases — abuses that are currently the subject of a bipartisan Government Accountability Office investigation."

Here's the most optimistic paragraph from the article:

"Americans are a highly inventive people. There is no shortage of strong patents that are being issued and enforced in the U.S. Providing access to accurate and technically proficient validity review ensures that the patent system's rewards flow to the true innovators rather than to legal opportunists and ultimately preserves the integrity and credibility of the U.S. patent system."

As a litigation watcher with a long-standing interest in patent policy, I couldn't agree more. Reward the innovators, not the mere opportunists--and an assessment of patent quality by the agency that is best-placed to do (and infinitely better placed than a layperson jury) is the way to make that critical distinction.

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Apple's adamant refusal to reinstate Epic's Fortnite developer account is regrettable--but unfortunately rational, at least in the short term

This is a follow-up to my previous post on the Epic Games v. Apple Unfair Competition Law (not antitrust) injunction. In the meantime, iMore quoted me on an announcement of an in-app purchasing (IAP) alternative by a company named Paddle that believes its drop-in replacement for Apple's IAP API will be allowed soon as a result of the Epic injunction.

Now that Apple has filed a motion to stay the injunction (PDF), I'd like to share a few observations and perspectives.

That whole motion-to-stay process could be avoided if both parties acted more constructively. To the extent that any correspondence between them has come to light, neither of the parties is being constructive, and they could not complain should Judge Yvonne Gonzalez Rogers--who has already put so much effort into her handling of this huge and complex case--scold them at next month's motion hearing.

It is utterly disappointing to see Apple break a promise. It adds to this picture of Apple stopping at nothing to defend its App Store monopoly. Last year, at the preliminary-injunction stage, Apple wrote that it "wants Epic on iOS" provided that it complies with the rules. The Apple apologists out there, of whom there are quite a few, may argue that some of Epic's public statements since the grant of the injunction justify Apple's current stance. They may say that Apple has a reasonable apprehension of Epic being hell-bent to break the rules again, just like in August 2020. But Epic CEO Tim Sweeney's statements are neither what I believe to be the true motivation for Apple to keep the door closed nor are they sufficient justification for walking back on last year's promise.

There is a motivation that makes it a perfectly rational choice for Apple, at least if Apple takes a short-term perspective. It's that Apple wants to get the injunction stayed, which is a legitimate objective. And in order for the district court or (more likely) the appeals court to grant a stay, Apple must argue that the balance of the hardships tips (clearly) in its favor. That's why Apple is telling the court (and will tell the appeals court) that Epic loses nothing from a stay, as it's not on iOS. It's out of the game because Apple, based on the judgment that even entitles it to breach-of-contract damages from Epic, rightfully terminated Epic's account.

It's obviously also a factor that Apple seeks to discourage similar behavior by other app developers. As far as I am concerned, I just have a different style. I had my disagreement with Apple last year about its COVID app guideline, and I submitted multiple versions of it, but I was always totally transparent about what was in there (and what was not). I told them, and they decided. I disagreed with some of their decisions (and still do), and even brought formal complaints. But I don't think it's a good idea to defraud the app review process. Apple's dogged refusal to reinstate Epic's account may dissuade some others from playing that kind of game.

Even Judge YGR could easily grant Apple's motion to stay the injunction just because Epic--the sole opponent to that motion--stands nothing to gain from the injunction. She wouldn't even have to doubt that her judgment would be upheld on appeal. If there is no Fortnite on the App Store at all, it doesn't matter whether it could link to some website that promotes other purchasing options.

I'm sure this wasn't an easy decision for Apple. The short-term benefits are clear. In the mid term, however, it is hard to predict how the appeals court will view this situation: the fact that Epic is shut out of the App Store does demonstrate Apple's enormous market power. Now, Epic faces an uphill battle on appeal anyway. It won't be able to make up for some of what went wrong, and which among other things led the trial court to conclude that web apps were a pretty viable alternative to native iOS apps (a conclusion that I'm sure a court-appointed technical expert with a minimum level of understanding of market realities would have disagreed with). And the appeals court might not view Epic's aggressive approach more favorably than the court below. But the overall situation does allow Epic to portray itself as a victim.

The bigger risk for Apple is that this may strengthen the resolve of Capitol Hill (and European Union) lawmakers to bring about change.

I credited Epic for conceding defeat after the judgment. I wish Epic also gave up on the idea of trying to stretch the envelope of the consolation prize that is the UCL injunction. Epic itself can't do it anyway. If Epic successfully opposed Apple's motion for a stay, other companies (such as Paddle's prospective customers) would do that job. It won't do any good. It would be more gracious and reasonable to accept that the injunction is next to useless. I agree with the following passage from Apple's motion to stay:

"The Court has stricken one sentence of Guideline 3.1.1, but did not disable Apple from otherwise running its business or protecting consumers."

Apple will have to tolerate links and buttons of certain kinds, but that doesn't mean app developers will effectively be able to circumvent Apple's IAP rule. Unless its Japanese "reader" settlement required it, Apple would still be free to disallow that iOS apps make certain functionality or content (such as game passes) available even though the related purchases occurred outside of Apple's IAP system. And, as Apple notes, it can still demand its cut, even if a transaction occurs on a website. If Apple had to collect its cut by means of intellectual property enforcement, I don't think it would get a lot, if anything. But Apple wouldn't have to sue for patent and/or copyright infringement: it could simply use its gatekeeper power (just like Qualcomm normally doesn't have to enforce its patents because smartphone makers buy its chips, which they won't get unless they previously take an IP license).

Apple's motion to stay also correctly identifies other issues with the injunction. It's true that the court based its judgment on a particular market definition (game transactions), but the injunction doesn't appear to be specific to that market. This is again one of those limitations that affect private antitrust actions brought by companies as opposed to governmental entities. Also, Apple is right that some of what the injunction seeks to accomplish is actually taken care of by settlements (in a different case pending before the same judge, and the Japanese "reader" deal).

It doesn't have to be this way. Instead of fighting over the enforcement of that next-to-useless injunction, the parties should work out a mutually beneficial--or at least mutually unharmful--solution. I completely understand that Apple wants to avoid in the first place that it would have to fight with Epic and potentially various other app developers over the scope of the injunction. My unsolicited advice is that the parties stipulate to a stay (saving the court(s) the trouble of having to decide), and that Apple reinstate Epic's developer account, provided that reasonable assurances are provided to Apple that Epic won't engage in another "sneak assault." The parties could agree on a substantial contractual penalty, on top of which Apple could seek damages.

The exhibits to Apple's motion may give an incomplete picture of the dialog between the parties. Maybe--and hopefully--they are being a lot more constructive than meets the eye.

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Monopolistic patent aggregation can give rise to antitrust liability, Judge Chen clarifies in dismissal of Intel's (and previously also Apple's) antitrust case against Fortress Investment

On September 28, 2021, Judge Edward M. Chen of the United States District Court for the Northern District of California granted a motion by Fortress Investment and certain entities funded by Fortress to dismiss with prejudice an antitrust complaint that Intel was still pursuing and from which Apple withdrew in June as this blog was (to the best of my knowledge) first to report.

Meanwhile, a public redacted version of the order has become available (this post continues below the document):

21-10-07 Public Redacted Ve... by Florian Mueller

From the beginning I've looked at this case--with or without Apple being involved--as a test case for whether antitrust claims could still be brought in the United States against anything involving patents. The year after the dispute started, the Ninth Circuit's reversal of the district court's FTC v. Qualcomm judgment was in part based on a reasoning that appeared to generally raise the bar for antitrust theories targeting patent licensing and litigation practices. I never thought that the door was entirely closed to such claims, and that's why I'm glad to see that Judge Chen--a very well-respected district judge in that same circuit--carefully distinguished the specific problems facing Intel's complaint from what would otherwise amount to antitrust immunity for patent holders.

The key passage begins on page 11 of the above order:

"In so holding, the Court does not take issue with the general theory being put forward by Intel – i.e., that aggregation of substitute patents could, in theory, harm 'competition in the same way as any merger or combination of competitors that lessens competition.' [...] The narrative told by the operative complaint, in principle, is compelling. It is not hard to imagine that a person or entity could accrue market power by obtaining a dominant share of substitute patents and threaten a barrage approach to litigation wherein an imperfect civil justice system may yield an erroneous outcome, thus allowing legally unjustified leverage over licensees, a result which could well constitute an unreasonable restraint of trade." (emphases added)

Judge Chen goes on to note:

"The problem for Intel is that the SAC lacks sufficient facts to demonstrate the narrative has been carried out against the company, at least at this juncture." (emphases added)

The last part--which other passages of the order are totally consistent with--makes this a semi-prejudicial dismissal. At first sight the type of dismissal is binary: if the court dismisses a case with prejudice, you can't refile, and if it's without, the court either means to send you back to the drawing board to do a better job or just wants to give you the opportunity to try again some other time. Here, however, the prejudice is only to the combination of the theories Intel presented with the lack of facts that would allow the court to consider it a possibility that, as Judge Chen put it, "the narrative has been carried out against [Intel]." There isn't much left of the original allegations, especially as Judge Chen rejected the idea that complementary patents could be in a patent-based antitrust market (as complements can only form part of a common market when this reflects commercial realities), but there still are some substitute patents in a few markets left, and depending on whether substitutes would be asserted against Intel, they could refile. That doesn't mean there'd automatically be an antitrust violation, but at least there would be a basis for a new complaint.

This may serve to dissuade Fortress from asserting certain combinations of patents in court, in which case Intel would have actually accomplished something of tangible value despite the dismissal. Moreover, Intel may gain mileage out of this case at the policy level, especially now that the Biden Administration appears to be more sympathetic to makers of innovative products.

The key takeaways are that patent aggregation is not without antitrust risks. But if you, as an alleged infringer of aggregated patents, want to bring an antitrust complaint over patent aggregation in the Northern District of California, you can give it a try, but you must plead specific patent markets consisting of substitutes (not complements), and you better do so only when any potentially abusive behavior has actually occurred.

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Ericsson seeks $5 per iPhone for its 5G standard-essential patents, asks federal court to bless that rate, and will probably prevail over Apple unless Samsung pays much less at the upper end

There's a huge new patent licensing dispute in town, and it's hard to see how Apple could realistically win it unless Ericsson made an unlikely mistake in structuring its recent settlement with Samsung. What Ericsson is asking for is FRAND, not only in my opinion but simply in light of a recent decision by the Fifth Circuit in HTC v. Ericsson.

In 2015, it took about a year of litigation between Ericsson and Apple before a new license agreement was signed. That one is going to expire soon--presumably by yearend--but litigation has already commenced. We are not yet talking about any patent infringement assertions (which are barred while a license is in effect), but a declaratory judgment complaint that Ericsson brought against Apple in the Eastern District of Texas on Monday, effectively asking the court to declare that Ericsson's royalty rate of $5 per device is FRAND and that Ericsson's overall conduct is FRAND-compliant (this post continues below the document):

21-10-04 Ericsson v. Apple ... by Florian Mueller

Timing: At first sight, it may seem premature that Ericsson should run to the Marshall, TX courthouse three months prior to the presumed expiration of an existing license agreement. But Apple can't complain. According to Ericsson's new complaint, what happened during the negotiations before the previous agreement expired was that "while Ericsson’s license with Apple was still in force, Apple filed a surprise suit against Ericsson attacking seven Ericsson U.S. patents as not essential and also seeking, in the alternative, a patent-by-patent FRAND adjudication."

Interestingly, Ericsson already reached out to Apple in December 2020 to start discussions of the terms of a renewal. Ericsson knew there was going to be a high risk of a major disagreement. Not only is Apple generally known to play hardball with SEP licensors just like any other suppliers, but Ericsson also took note of Apple's public statements on SEP licensing terms after Ericsson's own 2017 ex ante disclosure of its 5G royalty rates.

U.S. venue: In an international dispute, the race to the courthouse always has something to do with venue choices. Apple dreads Ericsson's choice--the Eastern District of Texas--so much that it doesn't even operate any Apple Store there anymore as any permanent business presence weighs against a motion to transfer a case out of a district. Ericsson, by contrast, has major operations in the Eastern District of Texas and frequently litigates there, recently with a spectacular success against HTC that was upheld by the regional appeals court, the United States Court of Appeals for the Fifth Circuit, which is great for the Swedish wireless innovator and terrible for the smartphone luxury brand from California.

In the venue and jurisdiction part, Ericsson's complaint discusses Apple's "Texas ties" and growing Austin campus. However, Austin is in the Western District of Texas. While Ericsson also argues that Apple sells products to customers in the Eastern District and that it negotiated with Ericsson executives based there, I doubt that Apple would even want to go to the Western District, which has been so good to patent holders in recent years--and where Ericsson's Fifth Circuit victory over HTC would be controlling law, too. If Apple wants to go west, it will want to go much further west, i.e., to the Northern District of California, its home district. But I can't see how Judge Gilstrap would grant such a motion, and the predictable denial would hardly be overturned by the Federal Circuit if Apple brought a mandamus petition.

China: Apple is a major investor in China compared to other foreign companies. In August, the Supreme People's Court (SPC) of the People's Republic of China affirmed a jurisdictional decision in an OPPO v. Sharp case. Apple could try to seek a global royalty determination in China, but other than manufacturing it wouldn't really have a strong argument--and even though some (especially in the EU) misapprehend those Chinese decisions, it's not like the Chinese courts always agree that they should set global licensing terms: their decisions are highly case-specific. Should Apple try anything in China, Ericsson would likely be able to obtain an antisuit injunction in Texas, or at a minimum an anti-antisuit injunction against an actual or potential Chinese antisuit injunction.

UK and Germany: Those two European countries--one of them in the EU, the other not anymore--will become key venues once the existing license agreement has formally expired without a new deal being in place. In those jurisdictions, Ericsson's strategy would predictably be to obtain SEP injunctions unless Apple takes a global portfolio license. In the UK, the court will set terms that Apple will have to accept lest it be enjoined on a UK-wide basis. Apple is losing big-time against Optis, a group of non-practicing entities that also assert former Ericsson patents by the way. A Form of Order hearing will be held in London next Monday after Optis obtained a favorable judgment, and Apple will come under serious pressure in Mr. Justice Meade's courtroom. In Germany, the courts would not engage in rate-setting at the infringement stage. The big question would be whether Apple could avoid a sales ban by means of a § 315 licensing offer (i.e., taking a license but leaving the royalty determination to a subsequent court proceeding if the parties fail to agree). In the meantime, there would already be a decision from Texas on the FRAND compliance of Ericsson's royalty demands.

Alston & Bird again: The lead attorney and first signatory under the new Ericsson v. Apple complaint is Dallas-based Alston & Bird partner Theodore "Ted" Stevenson, III. He helped Ericsson defeat HTC, and that case is the one for Ericsson to build on in the new dispute with Apple. Apple's phones are way more expensive than HTC's, so if HTC owes Ericsson up to $4 per device and for 4G, there's no reason Apple shouldn't pay $5 and for 5G. The parties appear to be so far apart that Apple isn't even prepared to pay what the courts have already found Ericsson can reasonably demand from HTC.

As in most Ericsson patent cases in the U.S., such as the recently-settled dispute with Samsung, the firm of McKool Smith is also involved. Alston & Bird is frequently seen on Nokia's side, but by now it's apparently the go-to firm for both major Northern European wireless SEP holders.

ETSI IPR Policy: Just like in Ericsson's dispute with HTC, the applicable FRAND framework is the ETSI IPR Policy.

Past dispute with Qualcomm hurts Apple in two ways: From early 2017 to the spring of 2019, Apple was embroiled in SEP-related litigation with Qualcomm and supported (already during the investigations preceding litigation) the Federal Trade Commission against the San Diego chipmaker. Ultimately, Apple needed 5G chips--and caved. The FTC kept fighting, but was trounced in the Ninth Circuit, and then didn't even dare or couldn't build a majority (of the commissioners) to file a cert petition with the Supreme Court. While the Ninth Circuit's Qualcomm decision isn't formally binding in the Fifth Circuit and the Eastern District of Texas, it does help Ericsson psychologically. What's more important is that Qualcomm's lead counsel against Apple, Cravath's Evan Chesler, presented in open court (at a time when the parties had actually already signed a settlement, but opening arguments had not been halted) an Apple-internal document according to which the iPhone maker made it a strategic objective to devalue SEPs. Ericsson's new complaint contains six occurrences of the verb "to devalue" and four of the noun "devaluation." In paragraph 44, Ericsson says that "Apple's attacks [meaning public statements directed against Ericsson's 5G royalty rates as well as similar behavior against other major SEP holders] are part of a self-described strategy to devalue standard essential patents" (emphasis added).

Portfolio litigation: Ericsson says that according to a 2019 FRAND policy statement by Apple, Ericsson should have to prove that each and every SEP to be licensed is actually valid and infringed by Apple, which is obviously not doable and simply not the way the courts view it. The following passage makes a compelling case against patent-by-patent country-by-country litigation:

"Apple knows that it would take hundreds of millions, if not billions, of dollars and several human lifetimes to individually adjudicate infringement, essentiality, and validity of the thousands of essential patents owned by Ericsson, then individually value them, in dozens of courts worldwide. By publicly committing to this licensing methodology, Apple intentionally foists the threat of enormous transaction costs on patent owners as a tactic to make them acquiesce to sub-FRAND royalty rates offered by Apple."

Royalty base: Ericsson argues that the price of the end product (in this case, the insanely overpriced iPhone) needs to be considered in a FRAND determination. Apple, however, makes the smallest salable patent-practicing unit (SSPPU) argument, which Ericsson overcame in its dispute with HTC in Texas as well as the Fifth Circuit.

Ericsson-Samsung terms: The overall circumstances suggest to me that Ericsson is going to win this, and the only leverage Apple has is "hold-out." Ericsson needs patent licensing revenues. Apple can try to delay the inevitable. Ericsson will most likely get a favorable decision in the U.S., and it can obtain sales and import bans in multiple jurisdictions, some of which will expect Apple to take a global license on Ericsson's FRAND terms. If there is any risk here to Ericsson, it's purely hypothetical and most likely a non-issue: Ericsson and Samsung settled so quickly this year that I can't rule out Ericsson made major concessions to the Korean consumer electronics giant. However, Ericsson knew that it was anything but unlikely to run into another dispute with Apple, and Samsung won't have had any desire to help Apple. Therefore, I believe the Ericsson-Samsung license deal involves a somewhat lower royalty rate on those Samsung phones that cost a fraction of an iPhone, but that whenever the terms of the Ericsson-Samsung license come into play (comparable licenses, non-discrimination), Ericsson can argue that even Samsung accepted to pay a royalty rate that is consistent with demanding $5 per iPhone from Apple.

Implications for EU policy making: The European Commission's DG GROW is preparing a consultation on potential legislative and/or other policy action regarding SEP enforcement. With Ericsson now having such problems getting Apple to pay a royalty rate that is pretty reasonable, and with everyone out there knowing that Nokia will also have to talk renewal with Apple in the not too distant future, I frankly can't see that the executive branch of the EU government would make any proposal next year that would bring down SEP license fees. There simply wouldn't be any political support for that, much less after the AUKUS deal as a public statement by arguably the most powerful EU commissioner, Thierry Breton, on the need to "rebalance the EU-U.S. relationship" shows.

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