OPPO gets second chance to defend itself against VoiceAge EVS patent in Munich, where OPPO, Xiaomi, Apple are facing NPE lawsuits over former Huawei codec patents

The Munich I Regional Court is the world's most popular patent injunction forum. Five years ago, standard-essential patent (SEP) cases were rarely filed in Munich. By now it's a major SEP venue, which increasingly also involves video and audio codecs as the Seventh Civil Chamber's Presiding Judge Dr. Matthias Zigann noted at a K.Mizra v. Niantic trial in July (that one was not a codec case, but there was an analogy).

I've been able to find out from the court's press office about some interesting developments in connection with EVS (Enhanced Voice Services) enforcement actions. OPPO has won a reopening of the record (a retrial before a decision even came down) in a case brought by VoiceAge EVS; meanwhile, they as well as Apple and Xiaomi are defending themselves in Munich against various infringement lawsuits filed by Crystal Clear Codec, a non-practicing entity (NPE) equipped with patents that originally belonged to Huawei.

Reopening of record in VoiceAge EVS v. OPPO case

Things were going smoothly--in fact, perfectly--for VoiceAge EVS in Germany: it had won every single one of half a dozen cases, which was amazing and possibly unprecedented, and it had licensed more than half of the global smartphone market, with Xiaomi apparently settling in the summer. Then came OPPO, which after its withdrawal from the German market is not going to come under pressure soon--a nightmare for patentees--and which is also giving Nokia's world-class in-house and outside litigators a hard time:

The first VoiceAge EVS v. OPPO decision resulted in a stay, as OPPO's challenge to the patent-in-suit succeeded to some degree in the Federal Patent Court.

The second VoiceAge EVS v. OPPO decision (case no. 7 O 9609/21 over EP2102619 on a "method and device for coding transition frames in speech signals"; HMD was enjoined over the same patent in May) came down on Thursday (October 13), and it's not an injunction either. Instead of rendering a final judgment at this stage, the Seventh Civil Chamber under Presiding Judge Dr. Zigann decided to reopen the record, with a new trial date to be determined at a later stage. The court will firstly await the written decision of the Federal Patent Court, which at the end of a June 30, 2022 nullity hearing upheld the patent in a modified form.

OPPO argued that the Federal Patent Court construed the patent-in-suit differently from the Munich I Regional Court's claim construction in the infringement proceedings. VoiceAge EVS didn't deny that divergence, but asserted that the patent was infringed either way. As the Munich I Regional Court has not heard oral argument from the parties on the basis of the allegedly divergent claim construction by the Federal Patent Court, it determined that a retrial (even prior to a judgment following the first trial) was warranted.

While I can't predict the final outcome, it's clear based on the information the court provided to me that there won't be a judgment too soon. It usually takes quite some time until the Federal Patent Court hands down its written reasons. Thereafter, the parties will be able to amend their pleadings accordingly. And sometime thereafter the court will conduct the retrial.

This is almost as good for OPPO as a stay.

Non-practicing entity Crystal Clear Codec asserting former Huawei patents in Munich against Apple, Xiaomi, and OPPO

A whole new enforcement campaign over EVS SEPs is pending in Munich, and the plaintiff is named Crystal Clear Codec (CCC). It has offices in the United States and in Poland (where the address is apparently a letterbox in a Sheraton hotel). Chinese website C114 reported in late August on post-grant challenges brought by OPPO and Xiaomi over six Chinese patents. Those six patents are from the same patent families as patents that CCC asserted against LG.

All of the patents listed on CCC's website were originally obtained by Huawei, and some of the assignments haven't even been recorded yet in certain patent databases. CCC notes that the founder of CCC, David Sewell, had previously set up another NPE named EVS Codec Technologies (ECT), which settled litigation with Huawei, a while after which Huawei assigned patents to CCC.

The Chinese report furthermore says that CCC is asserting patents in multiple jurisdictions. Today the Munich I Regional Court has confirmed the pendency of the following CCC lawsuits:

• against Apple: cases no. 21 O 3789/22, 21 O 3790/22, and 21 O 3791/22 (with a different Apple entity being named as the defendant in each of those cases, so practically it's like a single case with multiple defendants) over EP2940685 on a "prediction method and decoding device for bandwidth expansion band signal"

• against Xiaomi: case no. 21 O 11199/21 over the same patent (EP'685)

• against OPPO: cases no. 21 O 11198/21 over EP2983170 on a "frequency domain envelope vector quantization method and apparatus" and no. 21 O 10517/22 over EP2352145 on a "transient speech signal encoding method and device, decoding method and device, processing system and computer-readable storage medium"

Xiaomi is conducting discovery of CCC in the United States for the purpose of using the information in the Munich proceedings. Here are a couple of related U.S. court documents:

Xiaomi's September 7, 2022 application to obtain discovery for use in foreign proceedings (28 U.S.C. § 1782)

September 19, 2022 order on report and recommendation

Presumably the companies defending against CCC's infringement actions are not licensed to Huawei's patents, or at minimum were not licensed at the time when those patents were assigned to CCC.

Huawei has been on the receiving end of NPE lawsuits involving patents formerly owned by operating companies, most famously Unwired Planet. That litigation reached the UK Supreme Court, which held that implementers may be enjoined in the UK market if they refuse to take a global portfolio license (at the time, just prior to Brexit taking effect, applying Huawei v. ZTE).

It is unfortunate for consumers in the Western hemisphere that--starting under the Trump Administration and continuing under President Biden--Huawei has been forced out of key network infrastructure markets and lost its competitiveness in Western smartphone markets (by not being able to distribute Google's Android apps such as the Google Play Store; a non-issue in China, but a huge disadvantage elsewhere). Huawei continues to be very innovative, but it must seek compensation for the use of its patented inventions more than ever. In July, Huawei was announced as an initial contributor to a WiFi 6 patent pool run by Sisvel. Huawei is not only a licensor, but continues to be a major implementer of the WiFi standard, even if no longer on a worldwide basis.

My recommendation to implementers is to take a license to Huawei's portfolio and to ensure that the license will travel with patents as they get assigned (normally that's the way license agreements work). But if some infringement lawsuits by assignees of Huawei patents--such as CCC--are already pending, they must be resolved separately.

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Munich trial canceled as Apple settles with Japan's national patent licensing firm IP Bridge; ITC assigned Apple's case against Ericsson to ALJ Bhattacharyya

This morning's patent licensing and litigation news comes from the world's #1 patent enforcement hotspot, the Landgericht München I (Munich I Regional Court):

The Munich trial in IP Bridge v. Apple that was scheduled to take place today and tomorrow before the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann) has been vacated as per a joint stipulation by the parties.

The only plausible explanation is that Apple and IP Bridge have settled. Otherwise plaintiffs want to get their day in court.

Previously, Daimler (which was also going to be among the defendants in this week's megatrial) also settled--by means of taking an Avanci pool license (which became known in December).

The two remaining defendants are now Ford (see my report on case no. 7 O 9572/21) and Chinese smartphone maker OPPO (case no. 7 O 8133/21). The patent-in-suit is EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator"). EP'737 was originally obtained by Japanese electronics maker Panasonic, which declared it essential to 4G/LTE and later assigned it to Japan's national patent licensing firm IP Bridge. IP Bridge was set up by Japan to help the country's innovators monetize their intellectual property more effectively, comparable to entities like France Brevets or Korea's ETRI. In order for IP Bridge to have standing, companies like (in this case) Panasonic must assign patents to the non-practicing entity, which can then go out and sue implementers and infringers.

The trial is taking place in a courtroom below Munich's Stadelheim prison. That spacious room is mostly used for criminal trials, but since the outbreak of the pandemic the Munich court has sometimes held patent trials there.

Enforcement in Germany--above all, in Munich and Mannheim--gives patent holders decisive leverage. Just yesterday I reported on the unavailability of most Nokia-branded smartphones (which are made by trademark licensee HMD Global) as a result of the ongoing enforcement of a Mannheim injunction by Fortress-funded VoiceAge EVS. Apple settled with VoiceAge EVS and other Fortress-financed entities last year--and with its past experience, particularly Judge Dr. Zigann's 2018 Qualcomm v. Apple injunction relating to some older iPhone models, Apple apparently didn't want to take its chances.

One of the world's largest cellular SEP holders, Ericsson, is also suing Apple in Germany (as well as the U.S. and a few other jurisdictions, with preliminary injunction requests pending in Brazil and the Netherlands, including a recently discovered case against a Brazilian Apple distributor).

In the U.S., the closest jurisdiction to Germany in terms of leverage from injunctive relief is the United States International Trade Commission ("USITC" or just "ITC"). The ITC's Chief Administrative Law Judge assigned Ericsson's SEP case to ALJ Shaw, and the first of Ericsson's two non-SEP cases to ALJ McNamara. The second Ericsson non-SEP case (third Ericsson case in total) was assigned to ALJ Elliot. An investigation of Apple's countersuit was instituted last week as well, but only today have I been able to access a document according to which the investigation has been assigned to ALJ Monica Bhattacharyya, who became an ALJ only a few months ago but has been with the U.S. trade agency for a long time as a staff attorney with the Office of Unfair Import Investigations (OUII) and previously worked in private IP litigation practice. The OUII participates in some ITC investigations as a third party representing the public interest, which does not mean that the OUII focuses on the parties' public-interest argument concerning the appropriateness of limited exclusion orders (import bans): the OUII's job is to increase the likelihood of correct decisions on the merits. Apple's attempt to get mobile base stations banned does raise public-interest concerns, however.

Interestingly, ALJ Bhattacharyya "studied comparative legal systems as a Bundeskanzler [Federal Chancellor] Scholar at Goethe University in Frankfurt, Germany" (quoting from an ITC press release), so when she hears about patent injunctions handed down by German courts or other litigation events in that jurisdiction, she may be in a privileged position to draw parallels between the world's two most important jurisdictions for patent injunctions.

The likelihood of an Ericsson-Apple settlement will definitely increase around trials and rulings by the ITC and by German courts, as well as when certain courts in Brazil and the Netherlands adjudicate Ericsson's preliminary injunction motions.

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After more than 12 years, HTC and Fortress's IPCom settle standard-essential patent dispute over former Bosch and Hitachi patents

I'm still waiting for an official confirmation of IPCom's recent "eight-figure US$ settlement deal" that IAM mentioned on Twitter, citing to "reports out of China." While I was on the lookout for that, I just spotted the following terse statement on IPCom's website that according to the timestamp went live yesterday afternoon:

"We are pleased to announce that HTC and IPCom have settled their long-running dispute by entering into a license agreement covering all of IPCom's assets."

What an understatement. In the standard-essential patent (SEP) space, any dispute that last more than two years is already "long-running" by my definition--and I doubt anyone watching that space would dispute that a four- or five-year patent spat is "long-running." This one here lasted more than a dozen years--an eternity that has finally come to an end.

Over the years I attended several IPCom v. HTC trials in Germany, mostly in Mannheim, where Deutsche Telekom recently sued for a refund to the tune of 270 million euros. HTC and Nokia were the first two smartphone makers IPCom sued after acquiring a 3G SEP portfolio from Bosch, a company that used to make phones but exited that business even earlier than the likes of Nokia and Ericsson. The fact that HTC and Nokia had to defend against many of the same patents turned those two competitors--otherwise rivals--into brothers-in-arms. In-house and outside counsel of both companies coordinated their defenses like they were one company. Even when Nokia sued HTC over non-SEPs in 2012 (and ultimately got HTC to pay some additional royalties), their friendship survived. They were seen drinking beer on high-speed trains from Mannheim to the Cologne-Dusseldorf region just hours after fighting hard in court.

While I occasionally disagreed with him and disapproved of a couple of remarks he made at the Nokia-HTC settlement party (after inviting me as a surprise keynote speaker), I do wish to give credit to the late Martin Chakraborty, a Hogan Lovells partner and HTC's outside counsel against IPCom and Nokia at the time.

Nokia once claimed that IPCom was seeking a royalty payment of 12 billion euros, which IPCom disputed. The IPCom v. Nokia dispute lost relevance as Nokia's smartphone sales were dwindling, and ultimately Microsoft took over Nokia's handset business. Microsoft told investors that "[i]n November 2014, Microsoft and IPCom entered into a standstill agreement staying all of the pending litigation against Microsoft to permit the parties to pursue settlement discussions," and somehow those talks eventually came to fruition.

Unlike Nokia, HTC even faced contempt proceedings when IPCom was enforcing an injunction. What IPCom demonstrated (and many other litigants don't even seem to know) is that it's far harder to actually enforce a SEP injunction in Germany than to obtain one. In the merits proceeding, you can base your infringement theory on the specification of the standard. At the enforcement stage, you have to prove an actual infringement. HTC had guts.

For IPCom's relatively new management, it's meaningful progress to put some cases behind that it inherited from its predecessors led by Munich-based patent litigator Bernhard "Bernie" Frohwitter. IPCom still has Fortress Investment as its key backer, but it's been noticeable for a couple of years that IPCom's new leadership has taken steps to position the organization--which by the way has its own researchers on staff who keep applying for new patents--as a constructive and solution-oriented licensing firm. They even emphasize corporate social responsibility in such contexts as diversity. The message is like "we're still a non-practicing entity, but don't call us a troll."

IPCom's agreements with HTC and (I'll take IAM's word for it) Apple show that the new IPCom is putting some old problems behind it and focusing on its future in the patent licensing industry. I'll be watching IPCom's activities with interest. There is an interesting parallel: Sisvel, which like IPCom is headquartered in Europe (though it has been around for much longer, and is also a pool administrator) and a "key account customer" of the Mannheim court, also appears to have a new leadership style versus where they were a decade ago. Sisvel announced some interesting settlements last year, most importantly with Xiaomi. Actions speak louder than words. Both IPCom and Sisvel have now demonstrated over the course of several years that their current leaders have nothing to do with exceedingly aggressive--or "trollish" if you will--tactics employed by their predecessors. They still enforce patents if they have to--but with a more constructive attitude.

I believe EU policy-makers have an interest in both Sisvel and IPCom doing well. They are the most prominent European patent licensing firms, and IP licensing is a very high priority when the EU defines its economic policies and strategies. At the same time, the EU also has to take the interests of major SEP implementers into account, of course.

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Anti-judge-shopping initiative by Judicial Conference may spur internationalization of patent enforcement, further concentration of NPEs and litigation funders

There undeniably is a problem to be solved when one United States District Judge--Judge Alan Albright--gets about 20% of all U.S. patent infringement complaints. With the greatest respect for his admittedly tremendous expertise in patent litigation and his ability to work both smart and hard, it's mind-boggling when you consider that there are roundabout 700 U.S. district judgeships, and every district judge can hear patent cases (unlike in jurisdictions where patent complaints may be brought only before specialized divisions of particular courts).

Apart from his reluctance to transfer cases out of his district (and his division, unless he gets to preside over them anyway), and some other positions that patentees love him for, he may actually be much more balanced than people think. For example, he has recently invalidated patents on Alice abstraction (§ 101) grounds in a Facebook case and some other case. There was a fracking case last year in which I acknowledged he had a point. I listened in to a VLSI v. Intel trial, at the end of which Intel was cleared of infringement last summer, and saw no indication of pro-patentee bias. Let's put it this way: I keep watching developments in that district, but I try hard not to be intellectually dishonest when I voice criticism.

Now, it looks like his "market share" is going to go down soon. The annual report of the Judicial Conference under Chief Justice Roberts contains the following passage that is all about the W.D. of Tex.:

"The third agenda topic I would like to highlight is an arcane but important matter of judicial administration: judicial assignment and venue for patent cases in federal trial court. Senators from both sides of the aisle have expressed concern that case assignment procedures allowing the party filing a case to select a division of a district court might, in effect, enable the plaintiff to select a particular judge to hear a case. Two important and sometimes competing values are at issue. First, the Judicial Conference has long supported the random assignment of cases and fostered the role of district judges as generalists capable of handling the full range of legal issues. But the Conference is also mindful that Congress has intentionally shaped the lower courts into districts and divisions codified by law so that litigants are served by federal judges tied to their communities. Reconciling these values is important to public confidence in the courts, and I have asked the Director of the Administrative Office, who serves as Secretary of the Judicial Conference, to put the issue before the Conference. The Committee on Court Administration and Case Management is reviewing this matter and will report back to the full Conference. This issue of judicial administration provides another good example of a matter that self-governing bodies of judges from the front lines are in the best position to study and solve—and to work in partnership with Congress in the event change in the law is necessary.

"Chief Justice Taft was prescient in recognizing the need for the Judiciary to manage its internal affairs, both to promote informed administration and to ensure independence of the Branch. He understood that criticism of the courts is inevitable, and he lived through an era when federal courts faced strident calls for reform, some warranted and some not. [...]"

This Chief Justice is particularly institutional in his thinking. One can see that all the time, such as when he managed to avoid an overturning of the Illinois Bridge doctrine while still finding for the plaintiffs in the Pepper v. Apple dispute. Here, his desire--and he's obviously not speaking for himself alone--is to address the issue with the means at disposal of the judiciary, hoping to obviate the need for legislative intervention. It's about self-governance by the courts to the greatest extent possible.

The solution designed to curb Judge Albright's market share is to assign the patent cases brought in the W.D. of Tex. to different judges there, even though plaintiffs would obviously choose Judge Albright and file their complaints with the Waco division, which amounts to judge-shopping under the current framework.

Let's analyze this like any proposed solution to any identified problem must be looked at. Is it going to work in principle? Are there workarounds? And what about unintended consequences?

I would be shocked if the highest echelons of the federal judiciary of the United States couldn't make it work in principle. The proposal wouldn't have reached this milestone if they knew they couldn't make it happen--and in this case probably without requiring help from Congress.

But whether something works or "works-works" are two separate things. Would defendants necessarily be better off in other W.D. Tex. divisions? I know companies who would probably answer with "it can't get worse." Still, some of the other judges in the same district may also develop a predilection for patent cases, and in any event they'll likely look at the local case law. There are currently 13 district judges there plus 6 senior district judges.

There was a time when the Munich I Regional Court--a different jurisdiction, but one that has a rotational intradistrict assignment in place--had one plaintiff-friendly rocket docket and another division that was pretty much the opposite (by now they have three that are all very similar). What plaintiffs did there might also work in W.D. of Tex., provided they assert multiple patents from a portfolio and not just one or two patents:

Plaintiffs could bring multiple cases, either asserting patent P1, P2 and P3 separately against defendant D1, or a pattern of P1 v. D1, P2 v. D2, and P3 v. D3. They would then see to whom those cases get assigned, and then drop cases assigned to other judges in favor of amending their complaints pending before Judge Albright or a likeminded judge in the same district by adding more patents and/or more defendants. A patentee with a very large portfolio might actually bring the first few cases over patents that aren't as important as the ones that would be introduced later (through amended complaints). Now, it probably won't be practical to really bring dozens of cases just to be sure that one case will end up with Judge Albright. But if a few other judges there also turn out plaintiff-friendly, then the gamble might work.

What could patentees do for whom the workaround doesn't solve the problem--or if the workaround was thwarted as well?

That question leads us to a limitation of the focus of the Judicial Conference on intradistrict assignments. They try to do what they can, and no one can criticize them for that. Still, the ultimate impact may fall short of the expectations with which some companies and lobbying entities have lobbied Congress for this (which in turn got the Judicial Conference interested).

Patentees seeking to enforce their intellectual property rights increasingly have to "think global." If a patent is on the verge of expiration, or has already expired, then it's all about damages and there's probably no better place in the world to sue for damages than the Western District of Texas--or the Eastern District, but after TC Heartland some defendants are in a better position to get cases moved out of there (the rise of the Western District, where many tech companies have actual operations, is a result of TC Heartland to some degree). But the most effective kind of enforcement is to obtain injunctions (or import bans, such as from the ITC, which are just a special type of injunction).

As I wrote on LinkedIn a few hours ago, the Western (and also the Eastern) District of Texas can "compete" with venues like Munich, Mannheim, or London--not on injunctions (due to eBay), but by giving patentees leverage through the threat of major damages verdicts. Any change in U.S. patent enforcement policy (such as a new position paper by three federal agencies) that softens, slows down, or otherwise complicates enforcement results in ever more litigation in other jurisdictions:

• In Europe, the "race to the bottom" continues and will likely heat up when the Unified Patent Court (UPC) commences its operation sometime this year. For a long transitional period, patentees can choose to bring their complaints in the equivalent of a U.S. district court or a local UPC division-and if they assert more than one patent, they can do both in parallel and see how it works out. After Brexit, the UK judiciary is no longer bound by European Court of Justice decisions, which has actually made the UK an even more attractive place to enforce (though a local legislative initiative concerning standard-essential patents may reverse that trend in the specific context of SEPs). So if one seeks leverage from patent enforcement in Europe, one has the choice between multiple national courts, the UPC, and the UK, which is totally independent.

• China is an increasingly important patent litigation venue. And there are other Asian countries. For example, OPPO is now defending against patent infringement complaints by both Nokia and InterDigital in India, where InterDigital won an anti-antisuit injunction against Xiaomi that probably helped it obtain a settlement last year.

Globalization favors big budgets and large portfolios. I believe that the America Invents Act (AIA)--while the idea wasn't bad--is part of the reason (as is eBay) we've seen the rise of "mega-NPEs." The "anti-Judge-Albright rule" might further contribute to that.

Again, I do understand the concerns of those who have been sued in the Western District of Texas lately. But they should all think it through. The less leverage a person or entity holding a single U.S. patent has, the more the patent enforcement game becomes a battle of materiel, a question of scale. And then the same ones who lobby for stronger defendant's rights are exactly the ones who will complain about hedge funds and other major litigation financiers becoming involved.

The UPC favors deep-pocketed patent holders. What's happening (or about to happen) in the United States with respect to SEPs and the Western District of Texas will serve to reinforce the trend toward consolidation and concentration. We may see some of the effects this year, but more likely in 2023 and 2024.

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Munich I Regional Court's third patent litigation division (44th Civil Chamber) held its first-ever patent infringement hearing: multitouch patent case against Samsung

For only the second time in more than a year, I went to the Landgericht München I (Munich I Regional Court) today. The case itself--Solas OLED v. Samsung Electronics (case no. 44 O 9702/21)--lacks everything that a patent infringement action needs in order to be taken seriously. If it raises any interesting question at all, it's whether Google is supporting Samsung against a case that targets the Android operating system. I'll get to that later. I'd have attended that hearing even if the case had been outside of my industry focus. All I wanted to see the court's third patent litigation division's premiere session. Icing on the cake: I got to see a new courtroom, too.

Here's a picture of the Munich I Regional Court's 44th Civil Chamber that I took with my limited talent and a Google Pixel phone (click on the image to enlarge):

In the middle, you see Presiding Judge Dr. Georg Werner. To his right (from the beholder's angle), his deputy, Judge Dr. Anne-Kristin Fricke (who brings not only patent but also significant competition law expertise to the table and is the rapporteur on today's case). To his left, Judge Dr. Franziska Greiner-Wittner.

Don't infer from the medieval-looking banner behind the judges that this courtroom (Lenbachplatz building, room 101) is old-fashioned. It used to be a library, but has recently been transfomed into a courtroom--and with a view to videoconferencing capabilities, it presumably has better technical equipment than any other courtroom in Munich.

In recent years, the Munich court's patent infringement panels have clearly demonstrated thought leadership, arguably to a greater extent than any other trial court in the world:

• The Munich application of the Huawei v. ZTE case law of the European Court of Justice was subsequently adopted by one Mannheim division, then adopted by the Federal Court of Justice, and meanwhile all German courts including the Dusseldorf Regional Court faithfully apply Sisvel v. Haier I and II. An ECJ review of the German application of Huawei v. ZTE is very unlikely by now.

• Earlier this year, the Munich court referred to the ECJ a question concerning the availability of preliminary injunctions over non-battle-tested patents. That case has the potential to result in more patent PIs throughout Europe.

• Since the 2019 Nokia v. Continental anti-antisuit case, other courts have also been more willing to apply a very similar standard to motions for anti-antisuit injunctions. In January, Judge Gilstrap (Eastern District of Texas) granted Ericsson an anti-antisuit injunction against Samsung, and in October, Ericsson was denied an anti-antisuit injunction against Apple at this stage, but a Dutch court, in principle, performed an analysis similar to the one first seen in Munich. The Dusseldorf Regional Court followed suit as well (in a Xiaomi case).

It is no secret in the local patent law community that Judge Dr. Werner, who is also very well-liked in academia, made important contributions to the development of patent jurisprudence in Munich. Consistency is assured: the court's three patent litigation divisions (the 7th, 21st, and now also 44th civil chambers) will be perfectly synced. There was a time when Munich plaintiffs viewed the 7th Civil Chamber the "grand prize" in the lottery that is the assignment of new cases to a division. The only way to engage in "judge-shopping" was to amend existing complaints by throwing in new patents, which claims were immediately severed but remained with the same division. That's a thing of the past. If you're looking to assert patents in Munich, your case will be put on a very similar timeline and your chances of success will be at the same level no matter which of the three divisions your complaint gets assigned to.

Before he became the 44th Civil Chamber's Presiding Judge, Judge Dr. Werner left the 7th Civil Chamber (where he was Judge Dr. Matthias Zigann's deputy) earlier this year and took over a non-patent division that nevertheless heard cases with an IP element. He's since presided over a number of hearings and trials, so it came as no surprise that his moderation of today's session looked like he'd been doing this for many years.

Next year we'll probably start to hear about landmark decisions by the 44th Civil Chamber, but the case they heard today is just too weak to lend itself to anything spectacular.

Non-practicing entity Solas OLED asserts patent against Samsung that doesn't even make a technical contribution to the state of the art

Ireland-based patent licensing firm Solas OLED is suing Samsung over a number of patents in different venues, and a Texas jury has already awarded it more than $60 million in patent infringement damages.

There are cases in which NPEs (or the ones who sold them patents) came up with a brilliant idea before anyone else patented it. But there are also cases in which someone just tries to obtain a patent on a technique that is not innovative in any respect, and the plan is just to capitalize on legal uncertainty by suing those who make actual products (like Samsung), hoping that a court will be gaslighted into an overbroad claim construction resulting in a lucky punch for some troll. And Samsung has a hard-earned reputation for declining to feed the trolls.

The German Patent and Trademark Office can be anyhing but proud of having issued German patent DE102009019910 on gesture recognition. The court phrased it diplomatically today, but Judge Dr. Werner noted their real struggle to identify some claimed inventive substance. Let's keep in mind that when that patent was filed in 2009, capacitive multitouch touchscreens were already in widespread use: the first iPhone was launched in 2007, and the first Android devices not much later. This doesn't mean that there wouldn't be any more room for multitouch patents, or even gesture recognition patents, but a claimed invention has to make a technical contribution to the state of the art as it solves a technical problem with technical means. This particular Solas patent makes no technical contribution, and here's why:

The closest thing to a technical contribution that the court--only hesitantly, for good reason--identified is found in paragraph 15 of the specification of the patent. The argument for patentability comes down to saying that a particular way to structure computer program code is more efficient to develop and easier to test than another. However, this is not a software patent of the kind that is considered a computer-implemented invention, which solves a technical problem with technical means involving a computer program. What this is all about is a software architecture, if not a coding style.

The patent fails to provide any efficiency gains at the machine level. If it has any effect, it has to do with how to organize the work that computer programmers perform. It's astonishing that some German patent examiner granted that patent application in clear contravention of § 1 PatG (§1 Patent Act), which is the German implementation of Art. 52 of the European Patent Convention (EPC). There is no technical effect here: all that the patent specification itself claims is that it#s "hard to reliably and efficiently add code to identify a new gesture in an existing code segment, and that testing such code presented difficulties.

Reliability and efficiency can justify the patent-eligibility of a software-related invention under European case law. But that applies only if the invention is technically superior and, therefore, more reliable and more efficient. In this case, there's nothing that would stop programmers from developing equally (if not more) reliable and efficient program code for the purpose of the identification of new gestures whether or not they choose the code structure claimed by the patent. Sure, some programming styles are more error-prone than others, but that's not capable of establishing technicity. Technicity means that you develop a program, execute it, and the execution of the code then reliably delivers a tangible benefit. Otherwise the authors of books like Clean Code could also have filed for patents before publishing their works...

Any machine-learning algorithm would make it even less time-consuming to teach a system to recognize new gestures. The patent in question does not contain a specific solution to the problem of recognizing new gestures: the whole argument is that if you modularize (or one might also say "partition") the code and have one Turing machine (state machine) for the identification of single-touch gestures and a second that interprets a timestamped sequence of single-touch gestures as multi-touch gestures, you'll find it easier to write the additional program code needed to recognize new gestures. But someone still has to write that code. That someone is a human being. And if you let a very good programmer A write such code under a different software architecture, the result may be even more reliable and the development process even more efficient than if an average programmer B was assigned to the task but adopted this particular architecture.

The human factor here distinguishes the claimed invention in question from cases in which the EPO's boards of appeal and national courts have deemed software patents valid. This here is not a computer-implemented invention, but purely about how human beings organize their work (i.e., the code they write). The EPO itself has always made it clear, including in debates during the European legislative process on CIIs in the 2000s, that program code is not patent-eligible due to the exclusion of "computer programs as such" under the EPC. Firstly identifying single-touch gestures and then putting those intermediate results together and perform some further analysis is not just trivial: it simply fails to meet the European technicity requirement.

The way such patents are usually shot down in Europe is, however, not on the basis of Art. 52 (or its equivalent in Germany, § 1 Patent Act). Normally, all non-technical claim limitations are ignored in the novelty analysis, and what is not novel cannot contribute to an inventive step either. In this case, I don't think the piecemeal approach is appropriate, and prior art is not needed: the patent itself doesn't claim any technical efficiency or reliability gain; it merely claims that human beings who adopt the structural recommendations of the patent are more likely to arrive at a good result.

It speaks volumes that the closest thing to a technical contribution identified by the court is totally detached from the claims, which do not in any way address the question of how to support new multitouch gestures.

Other than a mention of four invalidity contentions brought by Samsung, validity was not discussed today, however. First hearings in Munich--unless infringement is conceded--do not address validity; it's too early for that. The focus was on the infringement analysis. Samsung disputes Solas OLED's allegations of infringement, arguing that Android's MotionEvent object does not have the two separate types of state machines described in the patent.

Samsung's lawyers--Allen & Overy patent litigators Dr. Jan Ebersohl and Denise Benz, and Zimmermann & Partner patent attorney Dr. Joel Naegerl ("Nägerl" in German)--have jointly achieved that the court is, for now, unconvinced of Solas OLED's case. In the U.S., the court would construe the patent, but would then let a jury decide the factual questions. In Germany, courts resolve these cases based on the pleadings, and Samsung's non-infringement argument may be sufficiently substantiated that Solas OLED will not overcome that hurdle.

It also became known today that Samsung has also, out of an abundance of caution, raised a proportionality-based affirmative defense to Solas OLED's prayer for injunctive relief. However, not only does it appear unlikely that the court will reach that question (as the patent may be neither infringed nor valid), but this year's patent "reform" bill falls into the "plus ça change" category anyway. Of course, defendants like Samsung cannot leave that stone unturned. It's just not going to help unless a plaintiff makes a huge mistake.

What Solas OLED is doing in this litigation gives NPE litigation a bad name. They're trying to monetize the mistake that the German Patent & Trademark Office made when it granted this patent. If they won, other Android device makers and, therefore, Google itself would have to be concerned. I didn't see any Google representative in the room, nor did Google appear to formally intervene. Maybe Google doesn't support device makers the way it should--or neither Google nor Samsung take this case seriously, which I couldn't blame them for.

I'm pretty sure that the 44th Civil Chamber's first patent injunction will come down next year (anything else would be a statistical anomaly), but in a rather different case. Despite today's case being a stupid one over a bad patent, the 44th is off to a good start.

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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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Fortress Investment once again urges district court to dismiss Intel's antitrust case over patent aggregation by non-practicing entities

In mid-June, both Apple and Intel opposed Fortress Investment's motion to dismiss their second amended antitrust complaint in the Northern District of California. A week later, Apple withdrew from the case, allowing Apple to take a purely defensive perspective on antitrust law (case in point, Apple just lost an appeal to Epic Games in Australia).

Last night, Fortress filed its reply brief in support of its motion to dismiss (this post continues below the document):

21-07-08 Fortress Reply ISO... by Florian Mueller

My impression was that some of the arguments in favor of dismissal are more like summary judgment than motion-to-dismiss arguments. I will give this more thought, and if there are any other observations worth sharing, I may do a follow-up post. What I found most interesting at first sight is that Fortress argues that, after Apple's withdrawal, "five out of the nine alleged 'markets' now contain no Defendants or patents that have ever been involved in a lawsuit against Intel." According to Fortress, the complaint failed to properly allege antitrust injury even while Apple was a party to the case, but Fortress believes it is now in an even stronger position.

Fortress makes a similar argument in connection with supracompetitive royalties (which are key to the complaint's theory of harm):

"[...] Intel does not dispute there is no allegation that it has ever paid any royalties to any Defendant ('supracompetitive' or otherwise). Intel states that 'Plaintiffs have 'engaged in licensing negotiations' with Defendants,' [...], but the only 'negotiations' alleged in the [Second Amended Complaint] occurred between Inventergy, INVT, and Apple, who is no longer a plaintiff in this case. [...] There are no allegations that Intel has been involved in any licensing negotiations with any Defendant, let alone any that would be likely to result in a deal."

The Fortress-funded companies mentioned in that passage--Inventergy and INVT--also made a separate filing (Scribd, PDF) arguing that there is no patent aggregation issue with respect to the standard-essential patents those entities hold.

Fortress also replied to amicus curiae briefs filed in support of Intel (and, at the time, Apple) by ACT | The App Association and Unified Patents (this post continues below the document):

21-07-08 Fortress Reply to ... by Florian Mueller

Fortress disputes that ACT | The App Association's members have actually experienced any problems with patent assertions by Fortress-funded NPEs:

"Notably, the App Association does not name a single 'small company' out of its 5,000 members that has supposedly been 'abused' by any of the Defendants. Thus, whatever the merits of the App Association's arguments about supposed abusive patent assertions against small companies, they are simply irrelevant here."

The motion-to-dismiss hearing will be held in San Francisco in a couple of months.

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Explain-away exercise: mention of antisuit injunction case in negotiations may lead to Munich anti-antisuit injunction (IP Bridge v. Huawei)

It's antisuit time again. The related case law is evolving in ever shorter intervals, and I'll give a talk about that topic on May 19 in a European Commission (specifically, DG GROW) webinar, entitled Enforcement of Standard-Essential Patents -- current bottlenecks and possible solutions. I'll be one of the three panelists on antisuit injunctions, and I'm looking forward to providing an overview of extraterritorial issues in standard-essential patent (SEP) litigation and their interdependencies. I'll talk about developments in multiple jurisdictions on three continents and make a specific proposal for a way out without having to agree on a new international treaty. Access will be free, but typically those webinars have only a limited window for sign-up. Subsequently to my little contribution to the event, I'll upload my slide deck to Scribd and post something to this blog.

Both the European Commission and the Munich I Regional Court are aware of my occasional criticism of their COVID and/or patent policies, yet I know they completely accept that I exercise (within reason, of course) my freedom of speech, and I don't feel unwelcome in those institutions.

Yesterday I was the only member of the general public with a sufficient interest in antisuit injunctions (especially so close to my upcoming presentation) to follow the IP Bridge v. Huawei anti-antisuit injunction hearing held by the Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judges Dr. Benz and Kuttenkeuler) of the Landgericht München I (Munich I Regional Court)--my first visit to that court in about nine months. Counsel and parties participated via videoconferencing, so there were only a total of four people in the 700 sq. ft. courtroom, a super low density that facilitated social distancing. Nevertheless we were all wearing N95 masks (all the time); all of us had taken a rapid test across the courthouse before the session; and there were multiple ventilation breaks during the two-hour hearing. This sense of responsibility was exemplary, and I hope the United States District Court for the Northern District of California--sort of my other "home court"--will protect judges, court staff, counsel, parties, and a press pool member at a comparably high level when the Epic Games v. Apple antitrust trial kicks off on Monday.

IP Bridge is a Japanese state-owned licensing firm (link to IAM article), or non-practicing entity (NPE), or if you'd rather have it the disparaging way, a "sovereign patent troll."

It monetizes patents for contributors such as (in this case) Panasonic. In the course of licensing negotiations with Huawei, it undisputedly so occurred in a mid-December video conference that the Chinese mobile equipment and smartphone maker dropped the caption of an already-settled dispute: Huawei v. Conversant. In that one, Huawei had obtained a Chinese antisuit injunction against the other party (an NPE just like IP Bridge).

A couple weeks later, IP Bridge electronically ran to the Munich courthouse and moved for an anti-antisuit injunction, arguing that Huawei had threatened with an antisuit injunction by way of its reference to the Conversant case. This was a clever forum choice by EIP's German lawyer, who are representing IP Bridge--and almost prescient, as the Munich court shortly thereafter handed down its InterDigital v. Xiaomi A2SI/A4SI, not without listing a litany of potential circumstances under which an A2SI/A4SI may be granted in the world's #1 venue for patent and anti-antisuit injunctions. The icing on the cake, according to an obiter dictum in InterDigital v. Xiaomi, is that when you as an implementer of a standard are hit with a Munich A2SI/A4SI, you may also be deemed an unwilling licensee.

Huawei disagreed sharply because of the specifics of its dispute with IP Bridge, and requested yesterday's hearing to discuss the ex parte preliminary injunction. While it appears more likely than not that the Munich court will uphold the PI, the fact pattern is distinguishable from a definitive threat to obtain an antisuit injunction. The question is whether it is distinguishable to the extent of a game changer. The court will have time until June 10 to reflect on the question of whether Huawei's counsel managed to explain away the alleged connection between the mentioning of Huawei v. Conversant and a thinly-veiled threat to throw a wrench in IP Bridge's German SEP enforcement works from China.

Judge Dr. Zigann clarified that his InterDigital v. Xiaomi criteria are neither exhaustive nor per se prohibitions: other circumstances may also give rise to A2SI/A4SI grants, and even if a criterion is met, there may be countervailing facts that might dissuade the court from an A2SI/A4SI.

Whatever the outcome will be here, there is a lesson to be learned, and it resembles an integral part of the Miranda warning: anything you say may be used against you in a court of law.

The Munich court explained at the start of the hearing that it would apply the same standard to alleged antisuit injunction threats as it would to threats in other fields of law: it's not about what was actually the recipient's interpretation, but the objective standard of what a reasonable person placed in the same situation would have thought. Here, between SEP licensing execs working for organizations that know this stuff, the court's inclination is to conclude that a reference to an antisuit injunction case will be understood as such even without the word "antisuit" having been uttered--unless the defendant can explain away the alleged overtone.

There are some relevant facts in this case that Huawei's counsel, Hoyng Rokh Monegier's Dr. Tobias Hessel, pointed to. The Chinese rate-setting action brought by Huawei is only about Chinese SEPs, and is meant to inform the England & Wales High Court's global rate-setting decision in a case brought by IP Bridge. As I announced further above, antisuit injunctions really must be seen as part of a wider extraterritorial-overreach issue, and this is a good example: it makes a lot of sense that Huawei did what the UK judiciary explicitly suggested, which is to seek a rate-setting decision in another jurisdiction such as China (the key jurisdiction in the Unwired Planet v. Huawei/Conversant v. ZTE pair of UK cases) and provide the results to the UK court, which may consider it as part of its global portfolio rate determination. Here, China makes even more sense considering where Huawei sells most of its smartphones.

Judge Dr. Zigann appears inclined (and rightly so, as far as I can see) to give Huawei the benefit of the doubt for the inclusive language of its Chinese motion ("including, but not limited to, royalty rate for Chinese SEPs"). Instead of interpreting this as meaning that the Chinese court may end up setting a rate including German patents, the court will take Huawei's word for it. But that's not enough for Huawei to avoid the A2SI/A4SI.

In my opinion, an implementer deserves the benefit of the doubt to an even greater extent. If it were up to me (as it obviously isn't), I would accept every plausible and reasonably convincing explanation as to why the relevant case (here, Huawei v. Conversant) was mentioned. There are multiple policy reasons for which I think so:

1. Patent licensing negotiations involve, to some extent, also a simulation of what might happen in threatened or pending litigation. In that context, negotiators shouldn't have to be Mirandized by someone else in their own company each and every time they're about to reference another case. The alternative would be cumbersome, and might dissuade parties from oral communication, which would result in slower negotiations and a lower rate of success of those efforts.

   In this case, a plausible showing of a connection between IP Bridge's UK lawsuit (which was of its own making and not Huawei's idea) and the Chinese rate-setting action on the one hand and the Huawei-Conversant history on the other hand might be exculpatory.

2. Under Germany's "loser pays" principle, the defendant would have to pay a significant amount of money after losing an A2SI/A4SI case (court and legal fees). There is also a possibility for German courts to hold that the plaintiff was entitled to the decision, but that the defendant's pre-litigation behavior didn't reasonably necessitate the action, in which case the plaintiff may prevail on the merits, but end up paying. However, in order to avoid the fee award, the defendant would have to accept the decision immediately and focus exclusively on costs, arguing that their conduct didn't warrant litigation.

3. When a "threat" of an antisuit injunction is identified on a basis that--to use U.S. evidentiary standards--is at best a substantial evidence or maybe preponderance finding but far from clear and convincing and definitely nowhere near beyond reasonable doubt, I don't think it's a sufficient basis for declaring the defendant an unwilling licensee.

Part of Huawei's problem in this case is that a sworn declaration by its IP chief Jason Ding (whom this blog mentioned last month as he announced Huawei's 5G SEP license fee) contained a passage according to which Huawei didn't rule out filing for an antisuit injunction at a later stage. The Munich court appears inclined to consider this another indicium of Huawei having meant "antisuit" when they said "Huawei v. Conversant." Were this a U.S. case, I could download at least a public redacted version of the affidavit from PACER and see the context. In Germany, I only know what I hear in the courtroom, and in this case that is just not enough to form an opinion, other than that this is another tale of caution for SEP implementers. "Anything you say..."

The IP Bridge v. Huawei case may or may not be a vehicle for a further evolution of Munich's anti-antisuit case law, depending on what the appeals court will make of it. My concern is that SEP litigations anywhere in the world (provided that the implementer might be susceptible to enforcement action in Munich) may become a very slippery slope. It's not unheard of in the technology sector for licensing negotiators to have more a business and/or technical background. One of them (working for one of the largest U.S. companies at the time) used to quip that his company didn't let him go anywhere without being accompanied by lawyers. And even those with formal legal training may increasingly prefer to just write letters rather than talk via Zoom or Microsoft Teams...

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Fortress Investment and subsidiaries seek dismissal of Apple and Intel's second amended antitrust complaint over patent aggregation

Not every long story is neverending: this summer we're finally going to know whether Apple and Intel's antitrust complaint against Fortress Investment in the Norther District of California over abusive patent aggregation will be taken to trial--or whether the plaintiffs have to appeal a dismissal with prejudice. Last night, Fortress and various non-practicing entities (NPEs) it funded brought their motion to dismiss and strike the Second Amended Complaint (a 161-page "book" that is technically already the fourth complaint, as Intel originally brought one, which it withdrew in order to refile with Apple).

Just last week, Intel defended itself against Fortress-funded VLSI Technology's second patent infringement complaint in the Western District of Texas, as a jury held neither of the patents-in-suit to be infringed. VLSI had won a $2.175 billion verdict in the first case in early March. More recently, I found out about a bunch of VoiceAge v. Apple cases pending in Munich, though the trial dates in those have been vacated due to the pandemic. VoiceAge EVS is another Fortress-funded NPE.

At this stage, the case is about patent aggregation: Apple and Intel allege Fortress made targeted purchases for the purpose of amassing a portfolio outside of which one can't find alternative technologies. The complaint has come a long way from a diversity of partly very broad and general assertions to its current degree of specificity. But, guess what, Fortress is basically telling Apple and Intel that their best isn't good enough. Allegedly the Second Amended Complaint "repeats the same errors" as the two prior vesions.

This is the motion to dismiss and strike (this post continues below the document):

21-04-26 Fortress VLSI Moti... by Florian Mueller

INVT and Inventergy filed a supplemental memorandum (this post continues below the document):

21-04-26 INVT Supplemental ... by Florian Mueller

As always in antitrust litigation, market definition is key. Fortress says Apple and Intel's new definitions aren't better: the patents are the same, and it's still about "technical fields" (not "specific functions"). Fortress furthermore argues some of the patents "do not fit [Apple and Intel's] new market definitions."

The next step is to establish market power in a given market. Here, Fortress criticizes that the complaint "does not identify a single price—much less a 'supracompetitive' one—that anyone has ever paid to license any of Defendants’ patents" (just damages demands). Fortress furthermore says the complaint doesn't plead aggregation in the sense of having acquired "all or even most of the 'substitutes' in the alleged markets, or that Defendants have aggregated the most important substitutes—i.e., the 'crown jewels'—in any of the markets." And Fortress argues that makret power alone wouldn't suffice: reduced output is allegedly an indispensable additional requirement in the Ninth Circuit.

With respect to antitrust injury, Fortress notes that Apple and Intel "still do not allege that they ever paid for a single license" to the patents at issue.

A conspiracy across those entities (Sherman Act Section 1) is denied because "every allegedly improper transaction is only between Fortress or Fortress Credit and a single other Defendant" but not among the group of companies as a whole.

In the headline of my report on the Second Amended Complaint, I mentioned the alleged Generating Alerts Based on Blood Oxygen Level Market. The motion to dismiss argues that some of the patents Apple and Intel listed in that context "have nothing to do with measuring blood oxygen." At first sight, a couple of examples Fortress provides may indeed be unrelated, such as U.S. Patent No. 7,690,556 on a "step counter accounting for incline": in the patent document, I couldn't find the word "oxygen" once, and the sole occurrence of "blood" relates to other eHealth functionality than the one covered by the patent. While I did get the impression that the Second Amended Complaint defined reasonably narrow markets, it may very well be that a few patents have been miscategorized.

Fortress's arguments get more technical with respect whether certain patents are in the same market. If they were, Fortress argues, a pice change for one would have to cause a change in demand for another. I guess Apple and Intel will argue that the aggregation of a set of patents may simply mean there are no substitutes left, which Fortress obviously denies.

Maybe you wondered why it's a "motion to dismiss and strike": Fortress asks the court to strike an Unfair Competition Law claim under California's anti-SLAPP statute, as this would entitled Fortress to a fee award.

Some of the points Fortress makes in its motion may not serve as a basis for dismissal, but go to the merits. I guess that's what Apple and Intel are going to argue in their opposition brief on June 14.

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VLSI Technology v. Intel: patents from a portfolio valued at $7 million allegedly created $3 billion in value--will the jury buy that?

Another post, another dispute involving a non-practicing entity (NPE) financed by Fortress Investment. The previous post was about a couple of additional VoiceAge EVS v. Apple cases I just learned about. While Munich is the world's #1 patent injunction venue, at least for the tech sector, the Western District of Texas is where parties go to seek Texas-size damage awards, such as in the second VLSI Technology v. Intel trial in Waco before Judge Alan Albright. That trial will continue on Monday.

It seems to me that many technology industry and patent professionals have sympathy for Intel because it already suffered so much last month when the first VLSI trial ended in a $2.2 billion damages award. At the same time, hardly anyone expects that first VLSI award to be upheld, simply because appeals courts typically reverse such decisions (sometimes reducing damages to zero by finding no infringement or holding the asserted patents invalid). For example, just yesterday Apple--Intel's ally against Fortress Investment--convinced a Texas judge (Eastern District in that case) to order a retrial, setting aside a $506 million jury verdict. The only thing that is unusual about that decision in Optis Wireless v. Apple is that a judge from a plaintiff-friendly federal district in Texas did so. Most of the time, those decisions are made by the United States Court of Appeals for the Federal Circuit.

On Monday, the parties' lawyers delivered their opening arguments. In the meantime I have occasionally dialed in to listen to the proceedings. What I found very helpful and informative is a series of podcasts by Winston & Strawn's WacoWatch blog.

I learned from the podcast that VLSI and Intel both act similarly to their previous courtroom clash, but obviously a number of facts are specific to this case. Different patents, different issues, and an even larger damages claim: $3 billion.

Jury trials are extremely hard to predict. A lot depends on whom (whose lawyers, whose witnesses) jurors trust. Patent cases are tough for juries though they are fun for some judges. Judge Albright is so eager to attract patent cases to Waco that he makes it very hard for companies like Intel to defend themselves. On Twitter, Mike Masnick (who also comments on tech law) pointed out that Judge Albright brags about the many patent cases he gets to preside over:

He now *brags* in his bio that more than 20% of all patent cases in the country go to him. pic.twitter.com/qMewsRLIpr

— Mike Masnick (@mmasnick) April 13, 2021

Mike Masnick doesn#t mince words. On Tuesday, he published an article about Judge Albright with the following title: Patent Loving Judge Keeps Pissing Off Patent Appeals Court, But Doesn't Seem To Care Very Much (I'm just quoting--not endorsing--that language)

Jury duty is anything but rewarding, and jurors are really out of luck when they are selected for a patent case. Every time Judge Albright has fun, jurors lose precious time, for which they get paid so little it's not even worth mentioning. A waste of time for jurors, whether or not their verdicts get overturned, but Judge Albright thoroughly enjoys those trials...

Intel has non-infringement as well as invalidity arguments, and VLSI can't even count on the inventors of the patents-in-suit. The fact that the claimed inventions were originally made for an entirely different purpose may make jurors skeptical of the allegation that Intel started infringing those patents a decade later.

Not because I would predict it to happen, but because it might, the jury may have to think about the damages figure should it find one or both of these patents to be valid and infringed. VLSI's damages expert arrived at a $3 billion amount. He basically concluded that the infringing products generated $4 billion, and then apportioned less than a quarter of that total value to Intel's own work. Intel has tried--and will continue to try on Monday--to convince the jury that its own engineers created the products in question. If I were on the jury, I definitely wouldn't conclude that almost 80% of the value is in those patents. Intel pointed out that one of the temporary owners of those patents valued that entire Freescale portfolio (which includes the two patents VLSI is asserting now, but also many others) at $7 million.

Just like in the previous VLSI trial, the plaintiff's damages expert arrived at a huge claim based on what is called hedonic regression. Intel's lead counsel, WilmerHale's Bill Lee, asked VLSI's damages expert a number of questions relating to the Georgia-Pacific factors, a framework for reasonable royalty-type patent damages determinations that isn't absolutely mandatory, but it's the safest approach with a view to appeals. It's possible that the jury itself will attach importance to certain Georgia-Pacific factors. If not, the Federal Circuit might hold that Intel's Daubert motion had merit.

Having watched how some other U.S. district courts handle patent infringement cases, I have serious doubt that VLSI would have been cleared by a judge to present its $3 billion claim to a jury in, for example, the Northern District of California.

For Intel, failure is not an option. For VLSI, this here is a gamble where the cost of suing Intel is a tiny fraction of the potential reward. I don't mean to doubt that Fortress is very good at what it does, and my commentary here on VoiceAge EVS's cases shows that I don't generally discount anything Fortress does--one has to look at the issues dispute by dispute, case by case. But the prior owners of the VLSI v. Intel patents-in-suit were also very sophisticated organizations who were prepared to enforce their intellectual property rights through litigation. They didn't sue Intel, much less did they believe Intel owed them billions.

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Fortress-funded VoiceAge suing Apple, Lenovo, Motorola Mobility, HMD in Munich over standard-essential patents: next hearing scheduled for April 28 (Apple)

Intel is currently defending itself against another case brought by a Fortress-funded non-practicing entity (NPE) in the Western District of Texas, and last month the chipset maker filed a second amended antitrust complaint against Fortress in the Northern District of California. There's one particular Fortress entity that brought (literally) dozens of patent infringement complaints against Apple: Uniloc, whose former CEO is now running WSOU (doing business as Brazos), an entity that brought about 200 patent lawsuits last year in the U.S. alone (plus an unknown but likely staggering number in other jurisdictions). Whatever policy positions I've expressed on the NPE business model doesn't prevent me from recognizing that Fortress Investment has financed a number of different NPEs, and they aren't all like Uniloc.

I've done some research on NPE activity in Germany, and found out that VoiceAge EVS--which has offices in Newport Beach as well as Ratingen (near Dusseldorf)--is a big fan of the Munich I Regional Court (Landgericht München I). Munich has become the best forum choice for patent plaintiffs seeking injunctions.

The patents VoiceAge is asserting in Munich are

• EP2102619 on a "method and device for coding transition frames in speech signals" and

• EP3132443 on "methods, encoder and decoder for predictive encoding and decoding of sound signals upon transition between frames having different sampling rates."

Both have been declared essential to 3GPP TS (technical specification) 26.445, Codec for Enhanced Voice Services (EVS) (thus the "EVS" at the end of VoiceAge's company name).

Last June, the Munich court held an early first hearing in two cases (case nos. 7 O 14091/19 and 7 O 15350/19) against HMD, a company that makes phones with a Nokia trademark license (but is otherwise independent from Nokia). Rumor in the German patent litigation community has it that it went pretty well for VoiceAge. The second hearing--the actual trial--will be held on June 24. HMD has raised a FRAND defense.

On the same day, the court's 7th Civil Chamber (Presiding Judge: Dr. Matthias Zigann) will also hear VoiceAge's cases over the same patents against Apple, Lenovo, and Motorola Mobility (which Lenovo acquired from Google). The case numbers are 7 O 8369/20, 7 O 11111/20, 7 O 7366/20, 7 O 8367/20, 7 O 10318/20, and 7 O 8368/20).

The court's 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier) scheduled an early first hearing in a VoiceAge v. Apple case (case no. 21 O 13503/20). It remains to be seen whether that hearing can be held. The Munich court postponed at least one other case scheduled for the week before that VoiceAge hearing (as you might have guessed, due to the pandemic). Whether it is responsible to go forward with patent hearings and trials depends on a number of factors. I'm far more concerned about automotive patent cases like Nokia v. Daimler, as they typically involve numerous suppliers and really have the potential to become superspreader events. If the room is large enough, ventilation is ensured, and people have to wear N95 masks, a hearing like VoiceAge EVS v. Apple might be possible.

Wildanger represents VoiceAge in Germany (see Juve Patent). I heard that Freshfields Bruckhaus Deringer represents Apple (Freshfields is Apple's go-to patent litigation firm in Germany).

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Intel emphasizes its independent research and development in second VLSI Technology v. Intel patent trial in Western District of Texas

As I reported on Saturday, Waco-based Judge Alan Albright of the United States District Court for the Western District of Texas denied an Intel motion to transfer or postpone the second VLSI v. Intel patent trial. Intel understandably expressed concern over the possibility of jurors having learned in the local media about the very recent $2.175 billion verdict in another case involving the same parties but unrelated patents. That verdict would be the first of that magnitude to be upheld by the appeals court. Normally, those damages awards don't stand. The final damages award is zero if the patent turns out on appeal never to have been infringed, or to be invalid; and even if the decision on the merits stands, the amount very often turns out to be excessive. But jurors may take that earlier verdict at face value--and may not fully understand that the outcome of one case over different patents doesn't mean anything for the case before them, just like the outcome of a hockey game between a team from New York and one from L.A. doesn't predetermine the result of a football game between teams from the same two cities.

Today I was one of more than 60 people to dial in and listen to opening arguments. In an order, Judge Albright had stated an incorrect meeting code, but friendly court staff provided the correct one when I contacted them about it. I missed VLSI's opening statement for that reason, but was just about in time for Intel's response.

The patents-in-suit are U.S. Patent No. 6,633,318 on a "method and apparatus for enabling a stand[-]alone inegrated circuit" and U.S. Patent No. 6,366,522 on a "method and apparatus for controlling power consumption of an integrated circuit." Those patents were originally filed in 2000 by a company named SigmaTel and ultimately acquired by VLSI, a non-practicing entity (NPE) set up specifically for the purpose of buying those patents as Intel noted. One of them has already expired, and the other will expire next month.

VLSI is again seeking a billion-dollar verdict. Rather than go into full detail on technical arguments as to why those patents are neither infringed nor valid, Intel's attorney placed the emphasis on Intel being a true innovator that has been making successful products for more than 50 years, setting his client apart from the current patent holder, who never built or sold a product.

Here are some examples of what Intel's lawyer said:

• "These Intel engineers operated indepenently, did their work independently."

• They "spent years developing [the accused products] without ever having known these patents."

• Intel agrees with VLSI's counsel that intellectual property matters, but "does not infringe the other side's patents."

• Prior owners included companies like NXP, who do enforce their patents when they have to, but none of them accused Intel of infringement until VSLI bought these patents a few years ago.

• "Intel has not used--not today, not before--either patent."

• "Ideas developed in 2000 don't make sense for the modern microprocessor." He got back to this point later and said: "Each of you, you know how much life has changed over 20 years."

• Intel's products are "the result of engineers working together, had work, team work."

• "Our microprocessor industry in America is one of the greatest industries in our country." It's "a critical part of our economy, critical for our national security."

• Intel was started in 1986 by two engineeers. Intel's lawyer then explained Moore's Law and said it "still drives the computer industry today."

• Intel is "headquartered in America" and its "research and development is centered here."

• "Intel microprocessors power laptops, desktops, servers, [and other products]." In this context he also specificially mentioned military applications and again referenced national security.

• Intel's lawyer was very respectful. He stressed that he was "not criticizing VLSI" and sharing his perspective "just to give you a sense, you're drawing your own conclusion." But "they don't make any products, VLSI doesn't sell any products, doesn't conduct any research, doesn't conduct any development." It has never filed for a patent itself.

• "VLSI purchased those patents nearly 13 years after they had issued along with hundreds of other patents," then filed this lawsuit though prior owners never sued Intel.

• According to the lawyer, "VLSI never called Intel or sent a letter or email before filing this lawsuit--nothing--filed a lawsuit with no notice at all."

None of what Intel says VLSI did is illegal. Patents are tradable assets. The acquirer can sue. There's no formal requirement to notify an alleged infringer prior to filing suit. And there's obviously no requirement to practice one's patents by making products that incorporate those claimed inventions. But Intel's lawyer encouraged the jury to "bring [their] collective wisdom and common sense." A lot will depend on whether the jury gets Intel's message about the difference between a company that makes products and one that doesn't; between a company that employs large numbers of engineers and one that doesn't.

For VLSI, this trial is a second bite at the apple. It also has a third trial coming up in the summer. With another billion-dollar win, it would shock the technology industry at large. Many companies might have to think hard about whether they want to have a presence in the Austin area at all as it exposes them to patent infringement litigation in a court that makes it easier for patent holders to prevail than almost any other in the United States.

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