BREAKING: Fifth Circuit panel modifies Continental v. Avanci et al. decision but once again dismisses Conti's patent-related antitrust claims

BREAKING NEWS

At the beginning of last week, the Fifth Circuit panel that threw out Continental's appeal of the dismissal of its antitrust complaint against Avanci and some of its licensors (Nokia, Sharp, Optis) reacted to Conti's petition for rehearing en banc by taking charge of the case again, and announced a revised opinion. The new version of the decision just appeared on the docket, and the basic outcome is the same--Conti's case is still thrown out, just on a different basis as I'll discuss further below:

The original (February 2022) panel opinion held that Conti lacked basic Article III standing for lack of injury (as its customers--the automakers--have access to an Avanci license). That line of reasoning was supported by two of the three panel judges (former Chief Judge Stewart, and Judge Engelhardt), while Judge Ho would have affirmed the district court ruling, according to which Conti had Article III standing, but no antitrust standing and no Sherman Act claims (neither under Section 1 nor Section 2). However, Judge Ho didn't "dissent-dissent" but contented himself with a footnote voicing his different preference.

The new consensus--and now it's a truly unanimous panel decision--is that Conti fails at the third hurdle: it failed to state Section 1 or Section 2 Sherman Act claims. In that regard, the panel now affirms the district court. The revised opinion doesn't explain this further, so the district court's reasons are affirmed as they stand.

What the panel decision 2.0 does not address specifically is whether the district court rightly found that Conti lacked antitrust standing. It would have been better to have not only a castle, but a castle with a moat around it, by explicitly affirming both parts of the district court's judgment.

The panel has designated the opinion as unpublished and non-precedential, meaning that this particular litigation has been resolved (again), but others won't be able to really get mileage out of it. This ups the ante for any attempt by Conti--which I guess the automotive supplier is going to make nonetheless--to have the decision reviewed by the full court or by the Supreme Court. It's a means of minimizing the decision's impact on the development of SEP case law. Conti's amici would find it extremely hard to argue that an unpublished, non-precedential decision is of transcendental importance and absolutely needs to be reviewed by ever more judges, all the way up to the Supreme Court.

Fifth Circuit rule 47.5.4 says that unpublished opinions such as this one "are not precedent, except under the doctrine of res judicata, collateral estoppel or law of the case (or similarly to show double jeopardy, notice, sanctionable conduct, entitlement to attorney’s fees, or the like)." In other words, only under narrow circumstances--all of which are closely related to the case, or to any attempt to relitigate the issues between the same parties--is the decision of any relevance.

While it may be cited, the revised opinion itself doesn't contain anything worth citing: all of the substance is now in the judgment by Judge Barbara M. Lynn of the United States District Court for the Northern District of Texas.

Given that the Fifth Circuit has downgraded the importance of the decision, it's conceivable that the panel just agreed on whatever it was able to build a quick unanimous consensus around. The finding of no Article III standing was a 2-1 decision even though there was no formal dissent. Knowing from Judge Ho's footnote that he'd have affirmed the district court's finding of no antitrust standing, it appears more likely than not that one of the other two panel judges would have joined him, but they didn't have to address that part.

The problem with Conti's case is that there are multiple bases on which it can be tossed even prior to any discovery--and if discovery had been conducted, I can't imagine the case would have survived summary judgment. The Fifth Circuit panel had three grounds of pre-discovery dismissal to choose from: Article III standing (the basis of the original panel opinion), antitrust standing (not explicitly addressed today, but clearly doubtful), and Sherman Act claims (it would have been enough for Conti to have either a Section 1 or a Section 2 claim, but according to the affirmed part of the district court's judgment, it has neither).

While I suspect Conti of being hell-bent to keep pushing until all appeals have been exhausted, I would encourage Conti to think really hard about the risk-opportunity ratio. The chances of getting any further review are unbelievably slim, while the risk of annoying one of the most important appeals courts in the United States and potentially the Supreme Court--by seeking a review of an unpublished, non-precedential opinion--is real. This isn't the first U.S. case to which Conti is party, and it won't be the last. Seeking review after review after review when a case has such glaring deficencies is disrespectful to the judiciary.

Psychologists say there are five stages of grief: denial, anger, bargaining, depression, acceptance. It seems Conti never got past the first three stages. It should leapfrog the fourth stage and finally reach the point of acceptance. Those legal fees are a sunk cost.

As a litigation watcher with a focus on U.S. cases, I can sense that all judges so far have been underwhelmed. Judge Lucy H. Koh (then in the Northern District of California, now on the Ninth Circuit) denied Conti a temporary restraining order and granted a motion to transfer the case to Texas. Judge Lynn in the Northern District of Texas disposed of the case at the earliest possible stage and on two independent grounds, though either one of them would have been enough. And now the Fifth Circuit panel has issued a revised opinion of the lowest profile (unpublished and non-precedential). Conti should face a simple fact: no judge really thinks this case deserves to go forward. Different judges may have different perspectives on the legal basis of a dismissal, but they all concur that Conti's complaint isn't deserving of discovery, much less of proceeding to trial.

Conti is still suing Nokia in the Delaware Chancery court, a state court of equity. That case hasn't made any progress. It was removed from the state court to federal court, and then remanded to the state court. It's another Conti case that isn't going to make an impact, and the only question is how--not whether--it will be tossed.

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Antitrust investigation of Google Maps licensing terms for connected vehicles, other fields of use by Federal Cartel Office of Germany

There was a time when major Big Tech antitrust investigations were announced once every few years; then maybe a couple of times a year; and now it feels like hardly a week goes by without something popping up somewhere.

Today's news comes from the Bundeskartellamt (BKartA, Federal Cartel Office of Germany), which announced a "proceeding against Google for possible anti-competitive restrictions of map services (Google Maps Platform)."

The FCO will examine various aspects of Google's business practices relating to Google Maps. The preliminary assessment is that "Google may be restricting the combination of its own map services with third-party map services, for example when it comes to embedding Google Maps location data, the search function or Google Street View into maps not provided by Google." Andreas Mundt, the FCO's president, says his agency "will also look into the licencing terms and conditions for the use of Google’s map services in vehicles." I have no knowledge of automotive industry complaints, but would not be surprised in the slightest if German car makers had provided input to the FCO to instigate this investigation. Car makers are sometimes accused of, and even fined for, violations of cartel law, so they prefer to keep a low profile when complaining about others.

The FCO's press release says "Google makes the use of its services in vehicle infotainment systems subject to very strict terms of use applicable to its "Google Automotive Services" and suggests that this could raise particular concerns over restraints on competition. I have no doubt that the automotive aspect of the FCO's Google Maps investigation will be particularly key. There can be no connected vehicles without maps, and there can be no competitive market for location-based and other map-related services related to connected vehicles if the dominant map services provider abuses its power.

Just like the investigation of Apple's app tracking rules ("ATT") that the FCO announced last week, the Google Maps investigation is based on Section 19a GWB. The German legislature amended the country's competition law (GWB, Act Against Restraints of Competition) with special rules addressing gatekeepers (Section 19a) entering into force at the beginning of last year.

Arguably, Section 19a is a bit of a precursor to the rules that gatekeepers will have to respect under the European Union's Digital Markets Act (DMA) in the future. EU Council diplomats held an informal vote on the DMA last month. The bill will be adopted by the European Parliament before the summer (the plenary debate will take place on July 4--Independence Day), and then (formally) by the EU Council, where the outcome is clear given last month's legally non-binding, but politically decisive vote.

Once the DMA enters into force and effect, the FCO will no longer have a unique statutory lever to tackle abuse of gatekeeper powers. We may see gatekeeper cases spring up like mushrooms all across Europe, though the FCO has clearly waited and done its homework before bringing cases under Section 19a GWB against Google, Apple, Amazon, and Meta/Facebook. The FCO appears to strike a good balance between regulatory humility and forcefulness in the interest of competition.

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Mannheim court grants Nokia patent injunction against OPPO and OnePlus over WiFi-related but non-standard-essential patent; Nokia mentions withdrawal of Russian cases

Nokia has obtained a first patent injunction against OPPO and its OnePlus premium brand. At 10:30 AM local time, the Mannheim Regional Court's Second Civil Chamber (Presiding Judge: Dr. Holger Kircher) announced its decision in case no. 2 O 74/21. I haven't received confirmation from the court, but Nokia has kept with its long-standing tradition of issuing rapid-response statements on court rulings and announced that the court has found for Nokia and ordered an injunction. A Nokia spokesperson said the following:

"We welcome the Court’s decision. The judgment confirms the strength of Nokia’s leading patent portfolio. We have conducted our negotiations in a fair way and hope that OPPO will now accept its obligations and, like its competitors, renew their license on fair terms, rather than continue to operate without one. It would be better for both parties to spend their time and money on innovating rather than fighting in court."

While I don't doubt that Nokia's patent portfolio as a whole is strong, this particular patent--EP1704731 on a "method and apparatus for indicating service set identifiers to probe for"-- comes down to saying that if a WiFi network broadcasts messages to indicate its presence, a device shouldn't send messages asking the network whether it's available, and suggests the only obvious solution, which is to keep a list of networks and a flag (or whatever other data point) for whether network proactively makes its presence felt. I'm sure only a minuscule part of the tens of billions of dollars spent on wireless R&D since the time the claimed "invention" was made relates to that particular "innovation."

What OPPO and OnePlus can request now is an emergency stay of the injunction, in which case the Germany-wide injunction wouldn't get enforced until at least the end of the appellate proceedings. OPPO and OnePlus can--and I venture to guess will--appeal today's decision to the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court). The Sixth Civil Senate under Presiding Judge Andreas Voss ("Voß" in German) will then base its decision on a motion for an immediate stay on a preliminary assessment of the likelihood of a successful appeal. If OPPO and OnePlus can present prior art that clearly anticipated the claimed invention, the injunction might be stayed before it is enforced. The first decision for the appeals court to make is whether to stay enforcement while it will be weighing a stay during the entire appellate proceedings.

This was a clear bet on the German "injunction gap." However, I've repeatedly seen German patent injuncions stayed by the appeals courts based on strong invalidity contentions.

If the injunction can be enforced during the appeal, the security to be provided by Nokia (a bond or a deposit) will amount to €300K (approximately $315K) with respect to OnePlus and €580K (approximately $610K) for OPPO.

It should be possible to work around that patent. What I don't know is what the logistical implications of a workaround would be (changing the software should be easy, but if any hardware change was needed, it would be more costly).

As for Nokia's position on fairness, the patent underlying today's injunction is not standard-essential. Therefore, it is not subject to a FRAND (fair, reasonable, and non-discriminatory) licensing commitment. But other patents-in-suit are standard-essential patents (SEPs), with another Nokia v. OPPO Mannheim case involving a SEP and coming to judgment in two weeks from today. Should Nokia prevail on the technical merits of that 4G SEP, the court will have to address OPPO's FRAND defense. Whether proportionality played a role in today's decision isn't known, but more than a year since the German parliament enacted a "reform" bill with a modified patent injunction statute, there hasn't been a single case in which an injunction was denied as disproportionate, and I doubt we'll see such a case anytime soon.

What makes the FRAND aspect of Nokia v. OPPO particularly interesting is that OPPO itself is a major patent holder (which even filed more patent applications with the European Patent Office in the field of digital communications last year than its adversary) and has brought some countersuits such as a 5G SEP case that the Munich I Regional Court recently heard. So it's a two-way dispute, though OPPO's unit volumes with its handsets are obviously far larger than those of Nokia's base stations.

It became known today that Nokia withdrew its Russian case against OPPO due to the Ukraine situation, but as this blog reported, Nokia recently filed new cases in Finland and Sweden. In China, there is a FRAND rate-setting case pending, and (as the post I just linked to mentions) China's antitrust authority has sent a questionnaire to major SEP holders including--but not limited to--Nokia.

So at this stage, the complete list of jurisdictions in which Nokia is currently asserting patents against OPPO is the following: Germany, UK, Spain, France, China, India, Indonesia, the Netherlands, Finland, and Sweden. That's a total of ten countries--four more than at this stage of the Ericsson v. Apple dispute, the enforcement part of which started more than six months later (the parties previously filed FRAND--but not infringement--cases).

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Further escalation in Ericsson v. Apple 5G dispute: UK patent infringement complaints filed by Ericsson on June 6

UK court records show a couple of Ericsson v. Apple filings: on June 6, Ericsson--represented by the law firm of Taylor Wessing, which has offices in numerous European countries (and beyond Europe)--filed with the High Court of Justice for England & Wales (still frequently referred to as the "EWHC")

• case no. HP-2022-000013 (defendant: Apple Retail UK Limited) and

• case no. HP-2022-000014 (defendants: Apple Retail UK Limited, Apple Distribution International Limited, and Apple Inc.).

Both cases are identifiable as "Part 7" claims (patents and registered designs) and have been assigned to the Patents Court. The patents-in-suit are not known, so I don't know yet whether we're talking about standard-essential patents. Probably that's the case, but don't know yet.

The UK filings apparently came on the heels of the recent failure of a mediation effort in the Eastern District of Texas. While parties are free to make additional filings during mediation talks, they don't want to be seen as making hostile moves at a time when everyone should be constructive.

This month, the Optis v. Apple FRAND trial started in London. By coincidence, some of the patents-in-suit originally belonged to Ericsson. As I noted in the Optis context, there's considerable risk for Apple that additional UK FRAND case law--resulting from Apple's failure to strike a deal with the Optis/Unwired group--could complicate its defenses against much larger patent holders. With Ericsson's filings, that risk is clearer than before. Also, Apple is not known to have agreed on renewals yet with Nokia and InterDigital, two other major patent holders with a track record of enforcing their rights in the UK.

Apple also has to deal with a regulatory inquiry into its App Store-related terms, policies, and practicies in the UK. I mentioned the Competition & Market Authority's (CMA) market investigation (scope: mobile browsers and cloud gaming) in two recent posts (toward the end of this one, and then again in the middle of a post on a new German investigation).

There actually is a connection between apps and SEPs that ever more people have figured out: Apple claims to hold IP that is essential to making iOS apps, and wants 27% of in-app purchasing revenues (with exceptions relating to only a minuscule part of the relevant royalty base) even if it doesn't process payments (in which case it wants another 3%, which is roughly what third-party payment processors charge). In the Ericsson v. Apple FRAND litigation in the Eastern District of Texas, Apple doesn't want Ericsson to conduct discovery of certain App Store issues. Ericsson has already brought two motions to compel, and with respect to the first one, Judge Gilstrap scheduled a motion hearing for early July.

In parallel to the Texas FRAND case, Ericsson is pursuing U.S. import bans, and made some reasonably meaningful progress in that regard.

So far, Ericsson is known to have brought patent infringement complaints against Apple in (at least) a half-dozen jurisdictions: United States (ITC and district court), Germany, the Netherlands, Brazil, Colombia, and now the UK, where Ericsson would firstly have to prevail on the technical merits of at least one SEP before a FRAND injunction trial would be held. It's rather likely that the dispute will actually reach a settlement point because of earlier developments in other places, such as the USITC or Germany. But Ericsson's filings demonstrate to Apple that the noose is tightening in multiple jurisdictions. At some point, the patent injunction hammer will come down somewhere.

Unless there are any unknown filings, the half-dozen of countries I listed before is still a few jurisdictions short of the nine countries in which Nokia is suing OPPO (plus OPPO is countersuing in a tenth, China). Comparing Nokia's and Ericsson's jurisdictional choices, I actually think Spain--and there, particularly the Barcelona trade court (Juzgado de lo mercantil no. 5)--would be an interesting one to consider. I've recently looked at various Spanish patent rulings, and it's a jurisdiction with greater potential for obtaining patent injunctions than most litigants appear to be aware of--an underexploited opportunity, but that's another story.

Apple and Ericsson are not only negotiating (with no result yet, but sooner or later they'll work out a renewal and back royalties) and litigating, but also rivals in the patent policy arena. While Ericsson, Nokia, and Qualcomm are the three most important players seeking to dissuade the European Commission's Directorate-General for the Internal Market (DG GROW) from weakening SEP enforcement in the EU, Apple is the key player constantly pursuing the devaluation of SEPs, now also with an IoT argument that is parroted by Apple-funded astroturfers. IoT is an important growth area, but as Huawei's brand new agreement with Nordic Semiconductor and a previous agreement between Nokia and Nordic show, this is not the time for regulatory intervention--especially given that there's hardly any SEP litigation over IoT end products--as the market may find more and more solutions all by itself.

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Quinn Emanuel scores huge EU win as German managing partner gets mixed press: Daimler's defeats hurt firm's reputation in standard-essential patent litigation in Germany

The most important court ruling of the week--at least for the tech sector, if not beyond--was Qualcomm's successful appeal of a European Commission antitrust decision. The San Diego chipmaker was represented by Quinn Emanuel's Brussel's office, a couple of whose partners already had a very good reputation before that landmark victory, but now they're really a go-to firm for appealing DG COMP decisions. It's a highly specialized field in which Jean-François Bellis is arguably still the number one (I heard that the European Commission's lawyers fear him more than anybody, and they'll meet him again in the ECJ in the International Skating Union case on July 11).

QE is now undoubtedly playing in that league, the European Champions League, and was right to celebrate its enormous achievement--it's not just that they won, but also how--on social media with this banner:

There's not only light but also shadow when it comes to QE's German offices. They just opened another one in Berlin, which suggests they're still growing in Germany. However, next time a major business publication wants to write about them or their managing partner, they should seek out advice from professional public relations consultants...

On June 10, Wirtschaftswoche, the German equivalent of Bloomberg Businessweek (previously BusinessWeek), published a fair but thoroughly-researched article on Dr. Marcus Grosch, who built and still chairs QE's German offices. The headline, With Maybach and Karate, refers to his car (an upgraded S-Class that is basically Mercedes's answer to Rolls-Royce), in which he has a chauffeur drive him to courthouses, and his favorite sport, in which he won a regional championship in his youth.

Marcus Grosch has often been mentioned on this blog--in the early 2010s for his very effective work on Googlorola's behalf (Google and Motorola, the latter of which temporarily belonged to the former), but in less positive contexts in recent years: two serious cases raising the question of wrongful enforcement (one of them targeting Apple, the other one against a cigarette paper manufacturer), and because Daimler--relying on QE Germany to defend it--was slapped with four German patent injunctions within only 11 weeks (ultimately, Daimler took an Avanci license, so in retrospect it would have been way smarter for the Mercedes maker never to spend a single cent on litigation with Avanci licensors).

The Wirtschaftswoche article, too, mentions the four injunctions against Daimler in 11 weeks. As I revealed information from the highly secretive Nokia-Daimler mediation talks in 2020 (which drove the mediator crazy), it's obvious that I had sources--more sources than Nokia thought at the time--among the joint defense group. Never once during the Nokia v. Daimler dispute did I hear that any member of the joint defense group was enthusiastic about the work QE was doing. Instead, some members of that group were questioning Daimler's choice, given that QE Germany previously had a track record only in enforcing--not defending against--SEPs. At least two members of the joint defense group were constantly concerned that there was a conflict of interest, not so much because of QE having worked for Nokia in the U.S. on some occasions, but due to some of QE Germany's recent clients like Qualcomm and BlackBerry being interested in strong SEP enforcement.

Even when it comes to SEP enforcement, QE needs to excel in order to justify premium prices. The Wirtschaftswoche article says Dr. Grosch charges €1,200 (US$1,250) per hour, while even senior partners of large and reputable firms practicing patent law in Germany bill less than $1k. Talking about results, the champions of SEP enforcement campaigns in Germany have recently been certain Wildanger partners, with Arnold Ruess also having impressed me a great deal. And a "hidden champion" in that field is Dr. Christof Augenstein of Kather Augenstein--one of the largest and most sophisticated net licensors, Ericsson, relies on him and his team again and again, but as they typically win settlements early on, there haven't recently been any German patent injunctions involving Ericsson patents. Bird & Bird's Christian Harmsen consistently delivers results for Nokia as well as Huawei. I could name others, but wanted to just focus on the most prominent players in cellular SEP enforcement.

If QE's clients feel they get their money's worth, that's OK, but what I consider incompetent--even downright stupid--is when in-house litigators fail to insist on QE bringing patent attorneys along. QE is free to recommend whatever QE believes--in good faith, I'm sure--works best. In-house counsel, however, shouldn't take unnecessary risks. Samsung was smart; for them it was non-negotiable (and while they use QE in the U.S. all the time, they've actually relied on other firms in Germany, apart from a couple of Apple cases about a decade ago).

The Wirtschaftswoche article also mentions QE Germany's principle of not teaming up with patent attorneys. Dr. Grosch told the reporter that attorneys at law are just as capable of explaining technology to a court as patent attorneys. An unnamed lawyer told Wirtschaftswoche, rather diplomatically, that "there is the risk of failing to identify an argument." I don't even want to get into what else the article says, but let me just explain it from my vantage point as a litigation watcher:

• In German patent infringement proceedings, patent attorneys are usually just listening--not delivering oral argument--when it comes to the infringement contentions. They typically come into play only when validity (with a view to a requested stay pending a parallel nullity or opposition proceeding) is discussed. One may indeed be led to believe that patent attorneys aren't critically needed if one looks at the infringement proceedings. But patent attorneys have certain advantages in the nullity or opposition proceedings. That's where some (nullity) or all (opposition) decision-makers have a technical background. It's where technical considerations such as whether an alternative solution might result in degradations or improvements--or whether it would work at all--gain importance (while the infringement courts are usually just interested in cases of clear non-novelty, not in the inventive step). Patent attorneys--identifiable by their partly blue robes--have the psychological advantage of sharing an engineering background with technical judges and patent examiners.

• Dr. Grosch told Wirtschaftswoche that a plaintiff's or defendant's own engineers are in the best position to explain the technology at issue to litigation counsel. In some cases that's simply not true: for example, if a downstream customer gets sued (such as Daimler over cellular SEPs), only the suppliers have the relevant technical knowledge. But even in cases where it is true that engineers can better explain the technology at issue, patent attorneys have the advantage of understanding both the technology at issue and patent law. They look at the question from both angles, not just one--and they, too, get briefed by a client's engineers.

• Top-notch patent attorneys involved in German patent litigation are all highly specialized. If a party or its litigation counsel asked an expert in telecommunications whether he or she would help them in a case over a medical device, he or she would refer them to a colleague in order to stay in his or her lane. They wouldn't claim to be generalists. It's simply not realistic to assume that highly specialized patent attorneys with a full engineering background (often a Ph.D. in a technical field) couldn't make contributions.

• I heard about something that further illustrates why patent attorneys are not just dispensable in patent litigation. I know about one Munich-based patent attorney--who often helps Samsung with its German cases--who was advising a company that had sold some of its patents without retaining the right to practice those inventions. He then teamed up for a significant period with that company's engineers, and they jointly developed a workaround that ultimately even represented an improvement over the patented invention. Another example is that an in-house counsel I know very well once visited a patent attorney firm in Munich and noticed that there were LEDs on the wall of a storage room, shining extremely bright. The patent attorney then explained that they had set up that installation because of a photovoltaics patent infringement case and needed to conduct an experiment. I strongly doubt that QE Germany has ever done anything remotely similar.

When I see QE appear in a German patent case and they don't bring patent attorneys along, I know that their clients have simply elected to put themselves at a disadvantage. QE is to the best of my knowledge the only firm not to bring patent attorneys along to German patent infringement trials--and not even to nullity and opposition hearings. Their clients accept this and have to live with the results. They should ask themselves one question:

If that is the right approach, why has no other German patent litigation firm adopted it in all those years? It must give anyone in his right mind pause that after more than a decade of QE Germany doing this, no one else has even concluded that this is worth trying.

Samsung insisted on the involvement of Zimmermann & Partner, and QE accepted it--maybe begrudgingly, but still. Daimler didn't insist, but then they also wasted tens of millions on litigation instead of taking an Avanci license right away. Qualcomm didn't insist either, but I attribute it to the fact that they rarely ever have to litigate as most licensees also buy their chips. A long time ago, Qualcomm was represented by Bardehle against Nokia, and Bardehle is the leading German firm with both attorneys at law and patent attorneys on board. But Bardehle would have been conflicted against Apple. Qualcomm doesn't need my help to compare how things went in those disputes.

What about Google? They have an in-house litigator who was a QE associate. He also contributed his ideas to proposed legislation that didn't really move the needle for German patent injunctions. I would also encourage Google to think very hard about why no other German patent litigation firm than QE deems the involvement of patent attorneys unnecessary.

If clients decided to pay QE's premium rates and have patent attorneys involved in addition, it would have obvious implications for litigation economics, and some in-house counsel might find it harder to internally justify the total cost of being represented by QE Germany. But as Dr. Grosch rightly told Wirtschaftswoche, clients are well advised to focus on quality rather than price.

He should, however, have given himself that same advice when it comes to public relations. The former PR chief of his (current or former) client Daimler founded one of the leading firms specializing in crisis communications, litigation PR, and also advised executives such as a former Daimler CEO with respect to their personal PR needs. Presumably, a firm of that kind would have told Dr. Grosch a couple of things:

• Don't show up for an interview with two watches--an Audemars Piguet (which may have cost as much as, if not more than, a German patent judge earns in a year) plus a smartwatch.

• Given QE's hourly rates and per-partner profits, it must have made sense for him to hire a chauffeur to drive him to the courts. This way he doesn't waste a minute. But PR professionals would have cautioned him against the risk of how that would be perceived should it ever be reported in the media.

The only client heaping praise on Dr. Grosch in the Wirtschaftswoche article is IPCom founder Bernhard "Bernie" Frohwitter, whose own law firm earned an estimated ten million euros in fees per year while IPCom never got leverage over Nokia during all those years. Mr. Frohwitter describes Dr. Grosch as a bird of paradise, meaning a dazzling personality, who delivers--and says he loves that combination. Wirtschaftswoche also quotes the heiress to the cigarette paper company I mentioned further above. QE even sued her and her husband personally, trying to hold them responsible for patent infringement and hoping to scare them into a settlement. She now says she would recommend Dr. Grosch, which may be attributable to the Stockholm syndrome as well as to her desire to criticize the German patent enforcement framework.

I'm not surprised that a QE client like Daimler wouldn't speak out, as they tend to be very low-key (and it remains to be seen whether they will use QE Germany next time). However, the key point here is that QE Germany should have obtained professional PR advice, and PR pros would have tried very hard to find at least one client (other than Mr. Frohwitter) who would have volunteered to speak with Wirtschaftswoche and say complimentary things.

Then, PR consultants may be just as superfluous as patent attorneys in the world according to Dr. Grosch.

Toward the end, the Wirtschaftswoche article raises the question of where things will go from here. Ten years on I'm still impressed by his great work on Motorola's behalf, and how he snatched victory from the jaws of defeat when a German injunction against Google Maps was imminent. He's extremely smart, and he fights hard. At the same time, QE Germany has grown, and he may have to act as lead counsel in far more cases than back in the Motorola days.

While this is about boxing and not karate, I believe he's facing a Rocky III type of situation. Without a doubt, he has the potential to become the undisputed champion again, but such outcomes as the four injunctions against Daimler during the course of 11 weeks must give him pause. If he finally decided to involve patent attorneys, that would be a good sign.

I don't want to mention specific patent attorney firms now, but the firms that companies like Apple, Samsung, Huawei, Nokia, and Ericsson rely on in their German patent cases are an excellent pool to begin with.

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Huawei grants IoT chipmaker Nordic Semiconductor component-level patent license covering low-power cellular (LTE-M, NB-IoT) products: industry players finding solutions

IAM was first to report (paywalled) on an announcement I've now found on Nordic Semiconductor's website, according to which Huawei has extended to Nordic Semiconductor a component-level license to Huawei's standard-essential patents (SEPs) on what both companies consider fair, reasonably, and non-discriminatory (FRAND) terms. As a result, Nordic's customers are covered ("automatically licensed and protected" according to the announcement).

Just last week, the breadth and depth of Huawei's patent portfolio was on full display at a corporate event with distinguished guest speakers. Huawei clearly positioned itself not only as an innovation powerhouse but also as a company with a very balanced perspective, knowing the perspective of licensors as well as what it's like when the shoe is on the other foot.

In today's Huawei-Nordic announcement, the first sentence of the first quote is instructive:

"'Huawei owns a leading portfolio of LPWA SEPs for LTE-M and NB-IoT, a subset of the 4G standard, which creates great value for IoT,' says Huawei’s Head of European IPR Department, Zhang Xiaowu."

LPWA means low-power wide area cellular technology. They're not talking about baseband chips for smartphones or telematics control units (TCUs) built into cars. Note in the quote above that this is merely "a subset of the 4G standard." Obviously the royalty rates are lower in such scenarios, though the announcement doesn't state any specific amounts. It would be discriminatory to apply equal terms to unequal conditions, meaning that products making use of only a subset of a cellular standard--and making limited use even of that subset, such as by sending only small quantities of data--had to pay the same license fees as, for example, Apple.

About five months ago, Nordic announced another SEP-related agreement with Nokia. This makes Nordic a bit of a pioneer--perhaps even thought leader--in its market segment. While the terms of either deal weren't disclosed other than what one can deduce from the announcements, it's clear that Nordic's agreements with Huawei and Nokia couldn't structurally be more different:

• The headline of the announcement on Nordic's website specifically talks about "component-level licensing." Nordic itself is the licensee; its customers are indirect beneficiaries. There is no indication of any need on the part of Nordic's customers to reach out to Huawei in order to obtain those benefits.

• The Nokia deal essentially makes Nordic an intermediary that obtained from Nokia an offer that Nordic's customers can elect to take. If they don't take it, they have to seek a bilateral license, and if they did neither, they'd obviously expose themselves to potential infringement litigation.

So there's a diversity of licensing models, and Nordic's two publicly-known deals with major cellular SEP holders are heterogeneous. That's why I'm not buying the part of their headline where they call this "a big step towards industry-wide component-level licensing." The accurate way to assess the situation is that some SEP holders--here, Huawei--are prepared to grant component-level SEP licenses, but others--such as Nokia--are not. The announcement notes that "Huawei and Nordic were able to conclude the agreement through a transparent and amicable discussion within a short period of time." If anyone ever were to claim that Nordic was an unwilling licensee, or that Huawei wasn't a constructive licensor, this would be one of the transactions they could point to as an example of their willingness to make things work. That said, Nordic has validated not only one licensing model--but two different ones. It has a clear preference for the one it announced today, but the Nokia deal is and remains in full force and effect. If they persuaded Nokia to switch from end-product licensing to component-level licensing, then they would be in a stronger position to claim that the industry was going in that direction.

Where I definitely agree with Marianne Frydenlund--Nordic's senior vice president Legal & Compliance--is that "[l]icensing in cellular IoT is a comparably new practice in the industry, calling for flexible solutions." Flexibility, of course, is never a one-way street.

Talking about flexibility, the aforementioned two models--Huawei/Nordic and Nokia/Nordic--are not the only ones. For example, last year Huawei announced a license agreement with a Volkswagen supplier (in that case, about all of Huawei's 4G SEPs, not just a subset of the standard) under which the supplier is licensed, but specifically with respect to Volkswagen cars--while Nordic today announced that all of its customers, not just one, are licensed.

Then there are license agreements that involve "have-made" rights. That is a way for end-product makers to provide a certain degree of legal protection to their suppliers. While patent exhaustion works in the other direction, a similar effect can be achieved contractually.

I'm a pluralist: if it works, it works.

The IoT licensing landscape is in its infancy--but, as we see, it's evolving pretty fast. That's why now is not the time for massive regulatory or legislative intervention. It's all too easy to see that some (particularly Apple and its traditional allies, as well as Continental, which prefers litigation that is going nowhere, and combative speeches at conferences, over pragmatic licensing-focused solutions) would like to use IoT for a pretext to urge governments to put a thumb on the scales of SEP licensing. The U.S. government ultimately decided not to support those organizations' SEP devaluation campaign.

In light of today's announcement, I recommend the following:

• Policy-makers and regulators should give the market a breathing space to work things out. There is progress, and as Conti's own submission to the EU Commission notes, there's virtually no SEP infringement litigation at this stage targeting IoT end products. "If it ain't broke, don't fix it." IAM's Joff Wild wrote on LinkedIn this morning (in the specific context of this license agreement) that "others in [Nordic's] position may well be able to secure similarly interesting opportunities, without any threat of litigation hanging over negotiations. That, in turn, may be something that European regulators could reflect on as they ponder the future of SEP licensing on the continent."

• Licensors should keep it that way and refrain from litigation unless they really encounter an intolerably unwilling licensee. Otherwise there could be unintended consequences, such as regulatory action or legislative measures.

• Implementers should follow the example of Nordic's agreements with Nokia and Huawei, and act constructively. SEP holders can't wait forever to get paid: they need licensing income to finance the next innovations.

Today's announcement is a very important one, and hopefully the IoT industry won't have to wait another five months until the next one of this kind.

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Will Apple's 'Sherlocking' practice draw antitrust scrutiny? Alternative app stores would not solve--but in many cases alleviate--the problem.

There's nothing wrong with Apple making the iPhone and the iPad so attractive that customers will pay those premium prices. I'd still prefer Android even if I wouldn't save a cent, but that's subjective. The real issue is that Apple, like any company, wants to grow as fast and as big as possible. The path of least resistance and maximum profitability is to leverage its market power as long as judges, lawmakers, and regulators let them get away with it. "To leverage its market power" is the non-judgmental way to put it. Unfortunately, in some contexts it is appropriate to accuse Apple of monopoly abuse, or at least to raise the question of whether that's what's happening.

Even where there is no antitrust violation, reasonable people may wonder whether Apple--almost a decade after its "thermonuclear war" on Android subsided--is now strategically interested in weakening intellectual property rights. "Might makes right" is so much more convenient and profitable when you're as powerful as Apple. Three of the most important wireless innovators--Ericsson (which is continuously making headway in its 5G patent dispute with Apple), Qualcomm, and Nokia--call out Apple on its standard-essential patent (SEP) devaluation crusade. In order to devalue patents, Apple even purports to advocate the interests of small IoT device makers.

At this year's Apple Worldwide Developer Conference (WWDC), Apple shocked the developer community by "Sherlocking"--obliterating--an unusually large number of reasonably popular apps made by small companies:

So many startups got Sherlocked by Apple’s #WWDC22 this time

— Rizwan Ahmed  (@rizwanasifahmed) June 7, 2022

For an explanation of how the term Sherlocking was coined, and for various examples of apps that were Sherlocked at WWDC 2022, let me refer you to this article by TechCrunch's Ivan Metha. TechCrunch is particularly concerned with the risks facing startups.

As the article recalls, an Apple offering named Sherlock replaced a third-party app named Watson. Considering that Sherlock (Holmes) and (Dr.) Watson are famous fictional friends and coworkers. It shows Apple's utter contempt for app developers that it chose "Sherlock" as the name of a substitute for a third-party app named "Watson." It's an example of adding insult to injury. And it may be in Apple's DNA, as Steve Jobs himself admitted they "have always been shameless about stealing great ideas" (in reference to Picasso saying that "good artists copy, great artists steal").

Before Apple runs roughshod over large parts of the tech industry, intervention by courts, lawmakers, and regulators--with major new antitrust investigations that may curb only a couple of Apple's practices having been announced just this week in the UK and Germany.

Sherlocking must be looked at from two angles: in an aggregated form, which suggests structural remedies, and on a case-by-case basis.

The structural problem is that Apple's App Store monopoly allows it to keep track exactly of how well certain apps perform. By injecting itself into the relationship that developers have with the users of their products (as Horacio Gutierrez--then with Spotify, now Disney's chief lawyer--described it), Apple actually has more data than developers. And one of the two antitrust investigations I just mentioned raises the issue of self-preferencing in connection with app tracking, which is so hypocritical because Apple argued that its ATT policy was needed to ensure customers' privacy but actually meant "rules for thee, not for me." Self-preferencing also affects app distribution.

Alternative app stores wouldn't fully solve the problem, but at least developers who don't trust Apple would have the option to distribute their apps through channels where Apple can't collect data. It could still try to do that at the operating system level, but that would become a privacy issue.

There are politicians who believe a breakup of certain Big Techs is needed. Sen. Elizabeth Warren (D-Mass.) has been advocating that solution for a while. I'm not at the point yet at which I believe Apple's app business would have to be separated from its device business, though if Apple continues to become bolder and bolder even in the face of increasing antitrust scrutiny and legislative initiatives, even I may reach that point further down the road. For the time being, my position is that surgical intervention is insufficient and powerful remedies are key, but it should be a key objective to get there without the nuclear option. To be honest, I consider it "only" unlikely, but not entirely inconceivable, that I might join the Break Up Big Tech campaign during my professional life.

Even a hypothetical breakup wouldn't necessarily solve the Sherlocking problem in all respects. Apple would still have to be allowed to improve iOS and the basic set of default apps provided to customers. New features could still render existing third-party apps superfluous, though post-breakup Apple might have only one incentive: to make the iPhone and the iPad better products. In a hypothetical best-case scenario, the apps to get Sherlocked post-breakup would only be the ones that don't pass the test of "Is it a feature or a product?" That is, by the way, one of the questions venture investors ask themselves routinely when they evaluate opportunities. And it's the question that startup founders must ask themselves. In fact, before I embarked on my current project--which will be a productivity app--I spent weeks to really think this through, creating slide decks that were initially just for myself as I sought to get clarity on the question of whether what my app will do (and in an early implementation already is doing) would justify installing a separate app as opposed to a few features being added to existing apps that already have a large user base. And while I've answered the question, it makes me happy every time that I see and feel (when actually using the thing) how the underlying idea requires and justifies a stand-alone app. I never lose sight of the feature-or-product question.

The first example of this year's victims of Sherlocking in that TechCrunch article looks to me like something that was more of a feature than a product: an app named Camo already enabled the iPhone to serve as a webcam. That's a nice idea, but when you have a camera, it's not that hard to just utilize it for a webcam purpose. And Apple deserves credit for having announced a Camera Continuity API that will make it easy for all sorts of apps to integrate that feature--plus there's going to be a special mount as a result of a partnership between Apple and Belkin.

TechCrunch also explains why Camo is "not completely dead" as some uses cases remain, partly because Apple with its typical lock-in strategy doesn't support the use of the iPhone as a webcam for other desktop or laptop computers than a Mac. In fact, cross-platform availability and compatibility can sometimes make the difference between a feature and a product. So what Apple has only partially Sherlocked Camo. If the primary benefit that led many users download Camo was just what Apple now provides through the Camera Continuity API, then Camo may lose steam on iOS, but Apple's decision to provide Camera Continuity appears irreproachable, and its decision to provide the functionality to all apps is exactly the way it should be (otherwise there'd be a self-preferencing issue).

My angle here is really that of competition policy and enforcement, and TechCrunch also raises that point. But they're not saying there's a potential antitrust issue in each and every one of the examples they provide, and they may want that article to be a tale of caution for app developers who create features that don't justify standalone products.

The first major software patent damages case I remember was Stac v. Microsoft in the mid-1990s. It was the first of many similar achievements for Irell & Manella's Morgan Chu--who nowadays often represents clients against Apple, but also many other companies.

Stac had a patent on a hard-disk compression invention that promised to roughly double the effective storage capacity. It made a lot of sense for Microsoft to provide that feature, but it ultimately had to settle with the patent holder. It's hard to imagine that Camo could hold a valid patent on the idea of using an existing smartphone camera on a continuous basis, even more so post-Alice.

Many app developers despise software patents. But if you come up with a Camo-like idea that is more of a feature than a product, you really do want to talk to a patent attorney before you make anything public (or submit any app to Apple for TestFlight approval!) because only a patent (ideally, even more than one) will put you in a position to negotiate one final payment from Apple if your app gets Sherlocked. If all else fails, you can then talk to litigation funders--and maybe even to Morgan Chu. (To be fair, I could also think of other U.S. IP litigators, such as David Hecht, who's been successfully adverse to Apple on various occasions and likes the little guys.)

While Camo doesn't have me concerned unless I missed something, and Apple isn't actually creating another revenue stream through Camera Continuity, the very next example on TechCrunch's list does look like a potentially serious issue: Apple Pay Later. Just last month, the European Commission sent Apple a Statement of Objections (SO; a preliminary antitrust ruling) over certain practices regarding Apple Pay. The issue there is whether Apple limited access to standard technology for contactless payments (Near-Field Communication, NFC) to its own apps, disadvantaging other mobile wallets on iOS. That scope may even be too narrow, but they have to start someplace.

Apple's expansion into mobile payments--and now also with a pay-later service--will presumably continue to be debated, and the aforementioned SO is almost certainly not the last word. Apple Pay Later is of concern to the likes of Klarna.

The third example of WWDC 2022 Sherlocking that TechCrunch discusses is the Visual Lookup feature that lets users "pick up" an object from a photo or video and share it as a separate image (by removing the background). An app named Remove.bg had that capability. Unless that app developer has a patent and Apple's implementation infringes it, it's just another case of a feature that is not a sustainable product.

Medication Tracking (logging and reminders) looks like it's sooner or later going to raise concerns. Apps like MyTherapy and Pillbox already provided such functionality. Apple may not have incorporated inventory tracking yet, but likely will. The problem I see is that Apple will use the Power of Default and the fact that it doesn't depend on a revenue stream specific to that app, but it will then collect even more data about its users (so much for its privacy pretext) and may exploit all sorts of commercial opportunities, potentially competing with online pharmacies and companies like GoodRx.

Was it really necessary for Apple to provide medication tracking itself? I have my doubts. Competition between third-party apps would probably have been better for consumers, and ultimately those apps would either have been cheap to download (even cheaper if Apple's 30% app tax got eliminated) or, if ad-financed, competition would have forced app makers to ensure that users wouldn't be annoyed by ads.

Sleep tracking by WatchOS is also an eHealth feature, and that functionality may spell doom for third-party apps like Oura and Whoop. At first sight, it seems fundamentally less problematic than medication tracking, and it appears more reasonable to make it a standard feature.

TechCrunch also mentions Freeform, a new Apple app for collaboration on a digital whiteboard. According to TechCrunch, Figma's FigJam is just one of many apps that provide such functionality, of which it mentions GoodNotes and Explain Everything. This is an issue on which I don't know where I'd come down if I analyzed it in detail. It's not as clear to me as the Continuity Camera case on one end of the spectrum and Medication Tracking on the other. The truth may be somewhere in the middle.

TechCrunch's list of Sherlocked apps is presumably not exhaustive, and if you wish to draw my attention to other such problems (including past cases), feel free to use this blog's contact form.

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