ITC staff advocates dismissal of Apple's allegations against HTC and (with respect to one remaining patent) Nokia

Bloomberg's patent expert Susan Decker went to today's beginning of the hearing in ITC investigation no. 337-TA-710 (Apple vs. HTC and, concerning one of the patents, Nokia) and found out that the Office of Unfair Import Investigations (OUII), an ITC department that acts on behalf of the public as a third party in most ITC cases, believes HTC and Nokia "shouldn't be found liable of infringing [Apple]'s [asserted] patents."

Let me put this into perspective:

• The staff opinion is not a decision. It's a recommendation that bears some weight -- nothing more, nothing less. I already explained this in November when it became known that the ITC staff also issued a negative recommendation concerning four patents Apple asserted against Nokia (and not simultaneously against HTC).

• Generally speaking, ITC investigations are sometimes like roller coaster rides. The staff opinion isn't binding on the administrative law judge (ALJ) to whom a case is assigned, and the ALJ's "final initial determination" can be reviewed and overturned by the Commission, i.e., the six officials at the top of the ITC. I explained this recently (after an ALJ issued a final initial determination against Nokia's claims against Apple, and after the Commission decided to review a final initial determination against Kodak's claims against Apple and RIM).

• Even though nothing is final until the Commission decides, there's a consistent pattern so far in Apple's disputes with Nokia and HTC: at this stage, none of the complaints is on the winning track. This may make other smartphone players think twice before filing ITC complaints. While the ITC is considered a fast track to an injunction-like decision (an import ban), it looks like a tough place in which to assert smartphone patents. Companies may now incresaingly expect more favorable outcomes if they sue only in US district courts (and in European courts, which is the case in the Apple/Nokia dispute).

• Apple's ITC complaint against HTC (accusing its Android-based phones of infringement) initially related to 10 patents. In October, Apple dropped 4 of those; in October, it dropped another. The staff recommendation that became known today relates to the 5 remaining patents-in-suit (U.S. Patents 5,481,721; 6,275,983; 5,566,337; 5,946,647; 6,343,263).

• One of those 5 patents is also asserted against Nokia. There is also a separate investigation (no. 337-TA-704) in which Apple asserts other patents against Nokia; I mentioned before that the ITC staff also viewed those claims negatively. As far as Nokia is concerned, today's recommendation relates only to U.S. Patent No. 6,343,263 on a "real-time signal processing system for serially transmitted data".

• Last month Nokia filed a second ITC complaint against Apple over 7 patents.

• Next month there will be a hearing on HTC's complaint against Apple. I would be surprised if HTC succeeded. The patents-in-suit didn't look particularly strong to me. Even if Apple infringed them, they look like patents one can engineer around with limited effort.

• Apple is also asserting 12 patents against HTC in the US District Court for the District of Delaware. For details see my visualization and reference lists (contained in this PDF document). Those 12 patents are different from the ones Apple asserted against HTC in its ITC complaint.

The bottom line: Apple's fight against Android continues, and so does the huge dispute between Apple and Nokia. The ITC looks ever less likely to agree with the related complaints, but things can still change. If there's no trend reversal, the focus will shift to certain US district courts and European courts...

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Korean search engines Naver and Daum file antitrust complaint over restrictions Google imposes on Android device makers

According to Dow Jones Newswires, NHN Corp. -- the owner of Naver, the market-leading Korean search engine by revenue -- and Daum Communications Corp. (the number two) lodged an antitrust complaint today with South Korea's Fair Trade Commission (FTC) against Google. The two complainants believe Google violates South Korean competition rules by "restricting local mobile service providers and Android smartphone manufacturers from pre-loading some mobile search portals, including the two Korean search portals, on smartphones."

According to the Dow Jones report, a Google spokesperson claimed that "Android is an open platform and carrier partners are free to decide which applications and services to include on their Android phones." But in my opinion it's perfectly clear that Android is not open, and Google's partners are not free to choose applications and services. Today's antitrust complaint in Korea is just the latest indication of many for Android's non-openness. Here are the most important examples (in no particular order):

• I previously reported on Skyhook's two lawsuits against Google. One of them is about Google's restrictive practices. When Motorola and Samsung wanted to ship Skyhook's location-positioning software with their Android devices, Google explained to them that its Android licensing rules don't allow them to do that. Xconomy recently interviewed Skyhook's CEO. The Dow Jones report on today's Korean antitrust complaint also mentions the Skyhook case.

• In its litigation with Google, Oracle told the court about how Google limits the choice of Android device makers.

• The Register's Cade Metz discovered an interesting article in the IEEE's Computing Now magazine, in which two Google engineering directors affirmatively say that Android and Chrome "are both open and closed depending on business needs at any given time."

• Google decided not to publish the source code of Android version 3.0, codenamed Honeycomb, for the time being. Only select device makers are allowed to ship Honeycomb-based products now.

• Yesterday Google held its quarterly earnings call, and as ZDNet's Larry Dignan reports, Google CFO Patrick Pichette told investors that "everybody that uses Chrome is a guaranteed locked-in user for [Google's search engine and other services]." That's also the case with Android. It's practically impossible for the average user to set another default search engine than Google on an Android-based device. Interestingly, Google always argues in antitrust contexts that its competition is just one click away. That claim is debatable for various reasons, but with Android and Chrome there can't even be a debate: it's just wrong in those contexts.

I don't know much about the South Korean market and nothing about South Korean competition law. Therefore I can't say whether today's antitrust complaint is likely to succeed. Also, the Korea Herald reported on this initiative two days ago (when the exact timing of the complaint was not yet known) and mentions that NHN (Naver) and Daum have both been accused by smaller local competitors of engaging in anticompetitive practices.

That said, there can be no doubt that Google controls Android in a way that runs counter to its claims of openness, and that Google's business model is all about lock-in, just like the business models of other dominant companies. It would be naïve to believe otherwise.

In terms of pursuing a lock-in, they aren't better than others. There are two respects in which Google's pursuit of a monopoly is different from that of comparable companies:

• Google disregards other companies' intellectual property rights to an unprecedented extent. This week, the 40th Android-related patent infringement suit was filed (one of the Walker Digital suits accuses Android among other platforms) in only about 14 months.

• Google exploits open source software like no other company ever did in pursuit of a lock-in. There are some hypocrites whose core businesses are also about lock-in but they use open source as a pretext in political debates, such as for demanding royalty-free access to intellectual property. Their core businesses are, however, based on proprietary technologies, while Google develops "open source" software for the purpose of locking users in.

This week a data privacy blogger asked whether Google is "cruising towards a legal meltdown." That metaphor sounds dramatic, but there's no doubt that Google faces a number of problems in connection with intellectual property rights, competition rules, and data privacy.

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RIM's PlayBook tablet raises Android IP questions

Tomorrow (Thursday, April 14), Research In Motion ("RIM") will demo its PlayBook tablet computer to select journalists. The media reports I saw in the build up to its launch mostly express skepticism concerning the market share the PlayBook will be able to attain, but it may nevertheless be bought by a few million BlackBerry loyalists. The aspect of the PlayBook I'm most interested in is its ability to execute Android applications. That feature raises some intellectual property questions that transcend the BlackBerry PlayBook.

In a press release quoted by BusinessInsider and other media, RIM said the following about the PlayBook:

"RIM will launch two optional 'app players' that provide an application run-time environment for BlackBerry Java® apps and Android v2.3 apps. These new app players will allow users to download BlackBerry Java apps and Android apps from BlackBerry App World and run them on their BlackBerry PlayBook."

A marketing-driven decision that won't pay off for RIM

Note that the emulation of Android on the PlayBook will only relate to Android version 2.3 (Gingerbread). However, those apps are typically optimized only for smartphones, not tablets -- for tablet apps, developers would write for Android version 3.0 (Honeycomb, the one that became known for Google's blatant non-compliance with open source principles). At this stage there aren't many Honeycomb apps, but if Android developers want to optimize for tablets, they'll likely create Honeycomb versions of their software.

So this is going to be of very limited practical use to its customers because the apps they get were developed for a completely different form factor. This is the kind of decision that some marketing-oriented executives tend to take when they just look for a shortcut that allows them to respond to an objection that something is lacking. Speaking from a quarter century of experience in this industry, those decisions are a sign of desperation and almost always fail to produce the desired results. Most of the time, those measures are actually counterproductive and serve to accelerate a company's decline.

In this case, BlackBerry's decision-makers know that their biggest strategic issue -- thus the #1 objection they face from journalists, carriers and retailers -- is that this industry is now all about ecosystems. RIM boasts relationships with 500 carriers or so around the globe -- but that's a result of a glorious past and not an assurance of a bright future because many of those partners have already placed significant bets on other platforms. As a platform for apps, BlackBerry is hopelessly behind Apple's iOS and Google's Android, and at this stage the most promising platform coming from behind is Windows Phone 7. This article -- published about a month ago -- offers the following prediction:

"However if Microsoft's app store continues to grow at its current momentum of 3,000 new apps every month, we could witness Windows Phone 7 stealing the bronze away from Blackberry in about 6 months (if not sooner)."

I guess that trend is due to the combination of the Nokia-Microsoft partnership, Microsoft's huge developer base (even if most of those programmers didn't develop for Windows Phone in the past, ever more of them are looking at WP7), and the fact that Microsoft is always a force to be reckoned with (its Xbox game console also took time to succeed but is now outselling its competitors in key markets).

By contrast, there's now a serious risk that going forward RIM will basically just serve the most loyal part of its customer base, which will erode by the day. The launch of the PlayBook may be RIM's last chance to counter that trend, and since it is such a critical mission for that company, its leadership apparently thought it was a very smart move to provide some kind of compatibility with (pre-Honeycomb) Android apps. They can now claim that their product is capable of running a vast number of different apps, which is theoretically true although pointless and misguided in practical terms.

Those marketing tricks rarely worked out in the past, and in today's environment, in which word-of-mouth is a more powerful force than ever, this just won't work. They can run their company that way -- it's the only North American company I've ever seen to have two CEOs, so maybe they also need two app run-time environments. They just can't deliver a superior user experience without native and tablet-optimized apps. Nevertheless the intellectual property questions this approach raises are interesting and important. They will likely also come up, in one way or another, in connection with other devices than the PlayBook.

Does RIM have a license to run Android apps -- and from whom?

On March 30, 2011, I sent RIM's PR agency several questions about the licensing situation concerning Android apps on the PlayBook. I didn't get any answer. Oher companies (including MPEGLA) have in the past responded to my inquiries, so I believe they just didn't want to comment on the licensing situation. Under the circumstances I'll just share my views on what I consider to be likely possibilities.

It's pretty certain that RIM doesn't have any deal in place for this with Google. RIM doesn't use the Google or Android trademarks in a way for which it would need a license. It will offer apps through its own app store (as the press released quote further above indicated), not the official Android Market. And even if the platform was 100% compatible with Android (which it probably isn't anyway, considering that developers must recompile their Android apps for the PlayBook), I guess Google wouldn't certify the PlayBook as an Android device since it's essentially a different system, even if it can run Android apps.

If Google owned any patents that it could assert against RIM, it might decide not to do so until emulators like the one provided by the PlayBook materially adversely affect Android's market share. But I doubt Google even owns any such IP since Android's app platform is much more of a rip-off than a result of original innovation. If anyone owns patents that RIM would have to fear, it's probably Oracle, which is suing Google over seven virtual machine patents allegedly infringed by Android's Dalvik component, and possibly Gemalto, which is suing Google, Samsung, Motorola and HTC over closely related patents.

RIM has a Java license deal in place with Oracle for the BlackBerry platform. Java is the primary programming language for native BlackBerry apps.

I have no doubt that RIM is already paying Oracle a license fee for each BlackBerry device, including the upcoming PlayBook. However, a Java license doesn't mean that a company is free to use any of Oracle's virtual machine patents any way it pleases. Those licenses come with clear field-of-use restrictions and compatibility requirements. I strongly doubt that a standard Java license would allow BlackBerry to sell on the same device, besides its certified Java app platform for native BlackBerry apps, an Android emulator that infringes any of Oracle's patents.

RIM's Java license deal with Oracle

I wish RIM's PR agency had responded to my questions so I wouldn't have to speculate here. Without their answers, I can imagine different approaches taken by Oracle. One possibility is that RIM contacted Oracle beforehand and received permission to do this, with or without having to pay a premium royalty for each PlayBook unit. This kind of arrangement would make sense if Oracle considered RIM a valued customer (in terms of a Java licensee) and determined that the emulation of Android apps on the PlayBook isn't going to pose a serious threat to Oracle's control over Java.

Oracle would not want to create a precedent that Google can use against it in their litigation, but it might have structured its agreement with RIM in a way that prevents such negative effects. For example, it's fairly possible that RIM promised to Oracle to respect its control over Java and make any technical changes to its app platform that a possible settlement between Oracle and Google may also impose on Google. Such a promise wouldn't hurt RIM because all they want to be is Android-compatible, so if Android itself has to change, RIM's Android emulator will have to change accordingly at any rate.

I doubt that RIM did this without discussing it with Oracle at least on an informal basis. RIM knows what it's like to be sued for patent infringement and face an impending shutdown of its system. RIM also needs to continue to work with Oracle because of its Java license for native BlackBerry apps. Therefore, I don't think RIM takes any chances of being sued by Oracle over this: if things came to worst, RIM could lose its Java license.

RIM may, however, take its chances in connnection with third-party claims, such as by Gemalto. The BlackBerry company may ultimately find that emulating Android gets more expensive than anticipated. Since RIM presumably views its Android emulator only as a temporary crutch, it's possible that RIM doesn't care today about whether it may lose a lawsuit a few years down the road. By then RIM probably hopes to have enough native PlayBook apps to no longer need its Android emulation. And given market dynamics, it's also possible that RIM will no longer be an independent company at that stage.

Whatever the licensing situation is, it's really absurd that a company like RIM that makes Android apps run on its platform doesn't have to worry about intellectual property rights held by the maker of Android, Google, but must clear those rights with third parties like Oracle and Gemalto. It's yet another indication of intellectual property being Google's number one strategic weakness.

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Microsoft gets another Motorola suit transferred from Wisconsin to Washington

In March I reported that the US District Court for the Western District of Wisconsin granted a Microsoft motion to transfer a Motorola lawsuit to the Western District of Washington. Microsoft has meanwhile also won the transfer of another Motorola lawsuit, in which each of the two companies asserts five patents against its rival.

Following Microsoft's initial lawsuits in Washington (and its ITC complaint), Motorola had filed (besides an ITC complaint of its own) three suits in Wisconsin and one in Florida. At this point, two of those Wisconsin suits have been transferred to Microsoft's home state of Washington, and the only one remaining in Wisconsin is stayed for the duration of an ITC investigation of the Xbox 360 and may very well also be transferred to Washington whenever it is resumed. The Southern Florida litigation is a separate story.

The current battlemap looks like this:

On Scribd you can find a PDF document containing that visualization, 12 more slides that show how the conflict has escalated step by step, and 7 pages of reference lists (all the lawsuits, all the parties, all the patents, all the products). If you are interested in always finding the latest versions of my smartphone patent battlemaps, I recommend that you follow me on Scribd (it has a Twitter-like following system) or at least bookmark my Scribd.com smartphone patents folder. I usually announce updates to that folder on my blog, but you can also go there directly whenever you need such reference material.

If you wish to share this latest Microsoft vs. Motorola visualization via Twitter, you can find it on Twitpic.

In my post on the previous transfer I mentioned that Motorola opposed the transfer of the case that was now transferred and based one of its arguments on the claim that its Android-based smartphones increasingly compete with Microsoft's Xbox game console. The judge did not seem to be impressed by that claim. In her decision she also stated that Motorola's "assertion that Xbox Live is 'implicated' in its claims is too tenuous and undeveloped to support finding any direct competition in relation with this lawsuit."

Competitive relationships can play a role in determining the proper venue for such a lawsuit since patent infringement cases are particularly urgent between drect competitors: an infringer might gain market share at the expense of the right holder. In this particular lawsuit, Motorola attacks the Xbox but can't successfully claim a competitive relationship with Microsoft's game consoles. So the court considered the delay possibly caused by the transfer acceptable, and ordered the transfer.

What we might see at some point is a motion to consolidate some of the Microsoft vs. Motorola lawsuits in Washington.

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Analysis of new Novell patent deal structure according to OSI statement

Having just read the Open Source Initiative's latest statement on the sale of 882 Novell patents to CPTN Holdings LLC, I see a probability of 90% that the consummation of the transaction is now imminent. There's a deadline on Tuesday, April 12, and most likely the deal will close by then. It seems to me that the regulatory agencies have obtained very significant concessions from Microsoft and EMC, and I can't see what else the antitrust authorities could realistically do to address concerns by competitors and open source organizations.

[Update on Apr 14, 2011] A new SEC filing by Novell shows that the US Department of Justice decided to let the April 12 deadline expire, which means that while the DoJ could theoretically still challenge the transaction, it apparently doesn't have any more objections at this stage. In all likelihood closing is now a mere formality. [/Update]

OSI still declares itself unhappy, but I believe they must realize that competition law has its limits. I doubt that the regulators could have imposed the changes that apparently occcurred to the transaction if they had ever had to defend those in court. To me this looks like a deal that the companies agreed upon in order to avoid further delays, not because of a firm legal obligation.

The Bundeskartellamt (the German Federal Cartel Office) gave the OSI permission to publish its latest submission to the regulators and a "non-expert summary" of how the deal has changed since the original announcement. I previously blogged about that late November announcement, was first to publish the names of the four companies who jointly own CPTN Holdings LLC (Apple, EMC, Microsoft, Oracle), and commented on a statement by EU competition chief Joaquín Almunia, who said the transaction didn't require EU-level notification.

Changes to the deal structure (according to OSI)

The original deal envisioned that CPTN Holdings LLC would become a long-term owner of the 882 patents to be sold under the deal. Now it appears that CPTN Holdings LLC will be dissolved shortly after the transaction. Each of the four owners will

• be granted a perpetual license to 100% of the acquired patents, and

• get to own 25% of the acquired patents,

but

• Microsoft will sell its entire 25% allocation right away to Attachmate, i.e., Novell's acquirer, and

• the parties appear to have promised that EMC's allocation won't include any of 31 patents previously identified by EMC as virtualization-related patents.

The OSI also states that "[a]ll patents will still be subject to all existing licenses, covenants not to sue and similar restrictions." However, I am not sure whether this is any "change". If the license grants made by Novell in the past were already worded in a way that made them survive changes of ownership, then this part is merely declaratory and doesn't signify any modification of existing agreements.

Let me clear up the confusion that may arise from a non-trivial deal structure having changed. Under the deal structure described above, CPTN Holdings LLC will end up like a non-returnable patent bottle, bound to be forgotten, and the lasting net effects will apparently be that

• Novell sells 882 of its patents, but it will retain hundreds of patents and its new parent company, Attachmate, will own 25% of the 882 patents sold (see further below),

• Apple, EMC, Microsoft and Oracle will never have to defend themselves against any Novell patents (not just the 882 that are sold but all others as well),

• Apple buys whichever 25% of those 882 Novell patents,

• Oracle buys whichever 25% of those 882 Novell patents,

• EMC buys 25% of those 882 Novell patents, which can also be any of those 882 patents except that 31 patents identified as virtualization-related (the core business of EMC subsidiary VMware) won't be among them,

• Microsoft's patent portfolio will be the same after all of this as it was before because

• Attachmate, Novell's new parent company, will own the 25% of those patents that Microsoft could otherwise have received as a result of the dissolution of CPTN Holdings LLC.

The resulting relative growth of the patent portfolios of Apple, EMC and Oracle is fairly limited, given that those companies already own large numbers of patents and file for new ones on a daily basis, so if each of them gets to own approximately 220 more patents, it doesn't make much of a difference.

Competition logic

As I stated in a previous post on this subject, I didn't see any deal-specific theory of harm. I certainly support significant parts of OSI's criticism of software patents and would actually like to see them and their member companies communicate those concerns more effectively to policymakers. But I thought the concerns were generic -- relating in principle to all software patents and to all owners of such patents -- as opposed to particular reasons for which the sale of 882 Novell patents to CPTN Holdings LLC would have had to be blocked by antitrust regulators.

There's a vibrant secondary market for patents, and so far I'm not aware of any antitrust intervention against any such transaction. By the way, just to show how much is going on in terms of patent transfers, Google's $900 million bid for thousands of Nortel patents was made public earlier this week. I haven't blogged about that bidding process yet, but I commented on Google's aggressive pre-auction bid on Twitter (as reported by The Guardian's Technology Blog) and I answered questions I received from the Financial Times, the Los Angeles Times, BBC News, and law.com.

I have done a fair amount of work in connection with competition enforcement, and I believe that no one can blame the regulators for having achieved too little in connection with the Novell deal. Realistically, the regulatory agencies would have had a very hard time defending a blocking decision in court. I, personally, doubt very strongly that they could have won such a case. But there is always some leverage in the ability of a competition authority to delay a transaction by additional reviews and requests for information. There are companies that elect, under those circumstances, to make concessions in order to accelerate the process. The changes on which Attachmate, Apple, EMC, Microsoft and Oracle agreed look like what a regulator would usually consider sufficient remedies. And that's why I guess we're only days away from the closing of the deal, which according to earlier reports is scheduled for next Tuesday (April 12, 2011).

While I don't think there was a legally defensible case against the deal even in its originally contemplated form, it's easy to see that the concessions made by the companies reflect the idea that the acquisition of additional patents in a certain field by a company dominant in that field could, theoretically, raise concerns.

Microsoft was found dominant in certain markets by regulators a while ago. While many (probably most) of Novell's patents relate to markets in which Microsoft isn't dominant, my best guess from the outside is that it would have been too time-consuming to sort out exactly which patents relate to Microsoft's core business and which ones don't, so they apparently accepted not to get to buy any of them at all. A recent SEC filing already indicated such a concession.

EMC's VMware subsidiary is a major force in virtualization. I haven't examined that market, but I guess the regulators believed they could perhaps make a dominance case here, which is why VMware accepted to exclude virtualization-related patents from the deal.

Apple and Oracle are free to buy any of those patents because

• at this stage it would be very difficult to claim that Apple is dominant in the market for mobile communications devices as a whole (its market share isn't high enough for a simple, straightforward dominance case), and

• while Oracle may or may not be dominant in the database management systems market at this point, I doubt that any of the patents in question would change Oracle's position in that market in any non-negligible way.

OSI's remaining demands are legal nonsense

In its latest statement, the OSI still makes demands concerning remedies it wants the regulators to impose. I have looked at those and, frankly, those are just a political statement that doesn't make any legal sense whatsoever.

OSI basically claims that even after the changes I outlined above, they still think Novell was a great open source-friendly patent owner and companies like Apple and Oracle, and to some degree even EMC, aren't similarly open source-friendly in OSI's opinion. Therefore, they want commitments that none of those patents will ever be asserted against software published under an OSI-approved license.

There's no way that a regulatory agency anywhere in the free world could put open source software above the law. If you don't want patents to be asserted against open source software, you must abolish software patents altogether (I would love that). But if those patents exist, the use of particular kinds of licenses cannot constitute a carte blanche to infringe patents. Open source must abide by the law, including intellectual property law, and considering how widely adopted open source software has become under the legal framework as it stands, there can be no doubt that open source and software patents cannot only coexist but open source can even thrive despite the existence and enforceability of such patents.

If the OSI had come up with any remedy proposal that would make legal sense, maybe the regulators would have given it some thought and held up the deal. But with demands of the just-wishful-thinking kind, OSI effectively admits that the regulators have done whatever they could, and it's time to move on.

OSI's theories include, among others, the fear that "Oracle [could] take Android down based on legal assertions of Middleware and Virtualization patents [and] would [thereby] significantly weaken [OSI's] efforts in promoting open source to mobile developers." OSI claims Oracle is "dominant" with Java. I think this is just propaganda. I'm sure that Google can work out a deal with Oracle anytime if Google recognizes the rights Oracle asserts and accepts reasonable terms. Android's intellectual property issues are unprecedented, and some of those issues will have very significant impact on the market, but that doesn't mean that companies enforcing their rights in connection with Android are no longer allowed to acquire patents.

Two days ago, the Linux Foundation's Executive Director, Jim Zemlin, said that patent and copyright concerns related to Linux (and Linux-based Android) are just "FUD". I don't agree with Zemlin's unsubstantiated and desperate attempt to brush aside legitimate concerns, and the fact that he feels compelled to make such statements is interesting in and of itself, but by making up unrealistic doomsday theories for Android, the OSI clearly contradicts the LinuxFoundation and exposes itself to accusations of "FUDding" whenever Zemlin gives his next speech.

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Updated Apple vs. Nokia battlemap

After Nokia's two latest complaints against Apple (filed with the ITC and the US District Court for the District of Delaware) I had to update my Apple vs. Nokia "battlemap" again. You can see a preview above. The entire 41-page document, which shows the escalation of the dispute and contains detailed reference list, is available on Scribd.

This conflict is just huge, and I guess Apple will now respond to Nokia's latest actions in kind, so I will likely have to update this again soon -- and may have to do so several more times before this gets settled.

If you'd like to show this visualization to friends and colleagues, you can also share it via Twitpic.

Also, there are more such visualizations in this Scribd folder.

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At least 9 Apple patents asserted against Nokia in UK and Germany are European software patents

It's a common misconception that software patents are an exclusively American phenomenon and don't exist in Europe. There are different definitions of what constitutes a software patent. My definition of software patents certainly includes the following nine European patents asserted by Apple in its lawsuits against Nokia in the UK and in Düsseldorf, Germany:

• EP0664021: menu state system

• EP0760131: method and apparatus for distributing events in an operating system

• EP0760126: pattern and color abstraction in a graphical user interface

• EP0760122: switching between appearance/behavior themes in graphical user interfaces

• EP0769172: method and apparatus for handling I/O requests

• EP0727076: object-oriented graphic system

• EP0664027: program modeling system

• EP0719487: object-oriented telephony system

• EP1964022: unlocking a device by performing gestures on an unlock image

All of those patents make reference to hardware components -- the "object-oriented telephony system" patent and the unlock patent do so very extensively. But the hardware components aren't novel. All the difference is made by software-related ideas.

The fact that Apple holds those patents and is suing Nokia over them doesn't mean that they are indeed enforceable. In fact, Nokia disputes the validity of those patents, and the German manifestations of those European patents (note that European patents are bundles of national patents) will be reviewed by the Federal Patent Court of Germany next year. But German courts tend to uphold software patents.

Last May I blogged about a landmark case in which the highest German court in patent (and many other) matters, the Bundesgerichtshof, upheld a Siemens patent on an XML document generator and explained that software inventions taking into account the characteristics of a computer on which they are running (such as memory and CPU speed constraints) are potentially patentable.

Nokia and Apple are embroiled in a huge, world-spanning patent dispute that may take years but could also be settled anytime. The Federal Patent Court of Germany has scheduled its first hearing in the nullity proceedings instituted by Nokia for February 9, 2012, so if the case isn't settled before, this conflict could also lead to some further clarity concerning the status of software patents in the largest European market.

How the information came to light

It's much easier to obtain information on lawsuits in US federal courts (via PACER) than on their European counterparts. Usually, complaints filed with European courts are not published. But Apple's Düsseldorf complaint against Nokia was published on the website of the European Patent Office in connection with a reexamination request.

Besides the list of patents it also contains the interesting information that Apple moved to set the value in dispute (the amount relative to which the court determines its fees) to 5 million euros for each of the nine patents, or 45 million euros in total. And that's just for Germany -- not for the entire European market.

Last week Nokia published its annual report for its fiscal year 2010. Its pages 166 and 167 talk about Nokia's ongoing litigation with Apple, and make it clear that the 9 patents asserted by Apple in Düsseldorf and the 9 patents asserted in London (before the High Court of England and Wales) are identical sets:

"On September 27, 2010, Apple commenced proceedings against Nokia in the Düsseldorf District Court in Germany. Apple alleges infringement of the same nine patents asserted in the UK action."

That's the fragmented European patent system: at this stage there isn't any way to litigate over a European patent in one court; instead, patent holders have to enforce the local manifestations of those European patents in different markets. In this case, Apple made the UK and Germany its strategic priorities. Nokia counterclaimed in those countries and additionally filed a lawsuit in the Netherlands.

Different outcomes even over the same issues are possible. For example, the German manifestation of a European patent could be upheld while the UK equivalent is thrown out. Similarly, Nokia or Apple could be found to infringe a valid patent in the UK but not in Germany.

Nokia's European patent assertions

I haven't been able to obtain any of Nokia's European complaints. All the information I have about the asserted patents is this Nokia press release issued on December 16. It describes the European patents asserted against Apple as being related to "touch user interface, on-device app stores, signal noise suppression and modulator structures", "antenna structures, messaging functionality and chipsets", "on-device app stores, caller ID, display illumination and the integration of multiple radios", and "data card functionality".

Some of those patents are probably also patents of the kind I refer to as software patents, but at least several of those patents will be hardware patents. Nokia has always been careful to describe the claimed inventions for which it seeks patent protection in Europe as "computer-implemented inventions". By contrast, Apple's patent applications appear to have been drafted with the requirements of the US Patent and Trademark Office in mind, and the USPTO generally considers software inventions patentable. In other words, Apple jumped high enough for the hurdle that exists in the US but possibly not high enough for the European requirements.

This could give Nokia a strategic advantage in Europe because Article 52 of the European Patent Convention doesn't allow patents on "programs for computers [...] as such". While that exclusion hasn't prevented tens of thousands (or by some counts, even hundreds of thousands) of software patents from being granted in Europe, it's key for patentees to draft their patents carefully around that formal exclusion. Comparing Apple's patents-in-suit to the general descriptions of Nokia's patents-in-suit, I believe Apple faces a considerably higher risk than Nokia that some of those patents could be declared invalid in Europe. Nokia probably did a better job at positioning its innovations as "technical" inventions that just happen to have a software component, as opposed to software being the essence of the claimed inventions, which is rather obvious in the case of most (if not all) of Apple's nine patents-in-suit listed above.

What I just explained could play a very important role in the further process. Since both Apple and Nokia haven't been too successful with their ITC complaints against each other so far, it's possible that the first actually enforceable court decision in that dispute will be handed in Europe, not in the US (where it all started in 2009). And the first one to hold an injunction against his rival in his hands will be in a strong position to negotiate a favorable settlement in exchange for lifting the blockade.

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