USPTO-WIPO agreement on resolution of SEP disputes won't truly 'enhance the efficiency of licensing of standard[-]essential patents'--institutional self-importance meets Big Tech's SEP devaluation agenda

Normally, neither the World Intellectual Property Organization (WIPO) nor the United States Patent & Trademark Office (USPTO) should advance a patent devaluation agenda. It's plainly inconsistent with those institutions' mandates. But yesterday the USPTO and WIPO issued a press release on an agreement "to partner on dispute resolution efforts related to standard[-]essential patents" that I don't view favorably at this stage.

When President Biden appointed Kathi Vidal, a patent litigator known for her Big Tech ties, to head the USPTO, there was widespread concern in the IP community that she might take initiatives that benefit infringers rather than innovators. With respect to PTAB inter partes reviews, it's too early to tell. With the stroke of a pen she undid some of her predecessor's PTAB rules favoring discretionary denials. We'll see what comes out of the current decision-making process, and it's important that stakeholders on both sides of the debate accept her invitation to submit amicus briefs.

With respect to standard-essential patents (SEPs), three of the Biden Administration's agencies (DOJ, USPTO, NIST) refrained from adopting a policy statement that was heavily criticized by SEP holders (or reinstating an older policy position of that kind). The question is now what the USPTO's partnership with WIPO means.

It could be that in the end it's just bureaucratic activism: governmental agencies like to draw attention to their work on a hot-button issue regardless of whether such work will actually have much of an effect. But there is also the possibility that Director Vidal is indeed pursuing a SEP devaluation agenda, while WIPO just has a "business development" objective with respect to its alternative dispute resolution (ADR) services. As I'll discuss in a moment, it looks like WIPO's SEP ADR initiative isn't going too well.

The press release quotes Director Vidal as saying that "SEP policy is an international issue of international importance." That is correct: SEP licenses are typically global portfolio licenses.

Given that WIPO and the USPTO agree on the international dimension of SEP policy, antisuit injunctions and antisuit damages motions should actually be the number one item on their list. Instead, they leave the heavy lifting to the courts. Case in point, later today (Thursday) Judge Rodney Gilstrap of the United States District Court for the Eastern District of Texas will hold an Ericsson v. Apple motion hearing on Apple's request for an antisuit damages order as the iPhone maker is currently unable to sell 5G devices in Colombia due to a SEP injunction obtained by Ericsson.

There is nothing in the USPTO-WIPO announcement to specificially suggest that WIPO and the USPTO seek to "enhance the efficiency of licensing of standard essential patents" (a quote from Director Vidal's statement) in a balanced fashion. To increase the efficiency of SEP licensing, one needs to tackle the problem of hold-out, which is widespread, and of outlier cases of hold-up. But this is all that the announcement says about the scope of the five-year agreement:

• Cooperate on activities that will lend efficiency and effectiveness to the resolution of disputed standard essential patent matters by leveraging existing WIPO Arbitration and Mediation Center and USPTO resources, and

• Engage in stakeholder outreach to raise awareness of the services provided by the WIPO Arbitration and Mediation Center through joint USPTO-WIPO programs.

The second bullet point is laughable: the stakeholders on both sides of the SEP licensing negotiation table are sufficiently sophisticated to know that WIPO offers arbitration and mediation services. This is not like teaching traffic rules to children.

Toward the end of the press release, WIPO Director General Daren Tang promotes WIPO's ADR services. On WIPO's website I found the following information:

"In recent years, the WIPO Arbitration and Mediation Center (the 'WIPO Center') has administered some 55 WIPO mediation cases relating to FRAND licensing negotiations."

Interestingly, they're not saying anything about SEP arbitration proceedings. The key difference is that arbitration will result in a decision, while mediation is just an attempt to bring parties together. The "Summary of WIPO FRAND ADR case examples" is also just about mediation, and WIPO can't even claim that its mediation efforts actually resolved a single dispute. The first example just "prompted renewed licensing negotiations" between a patent pool and implementers, half of which were Asian companies. The second one is that "IP courts in China have referred ten ICT patent infringement cases to WIPO Mediation. Seven of those cases involved claimants from Europe." And then "a large Asian manufacturer submitted a unilateral request to WIPO Mediation concerning its SEP infringement litigation against a large European SEP holder"

If this was the track record of a private mediator, he or she would find it hard to be hired again.

There are reasons to suspect here that it's not really SEP holders who expect WIPO's ADR services to be of any help to them. It's more like some players on the implementer side hope to be deemed willing licensees based on their requests for WIPO ADR.

Hopefully I'm just being too skeptical and this is more than a scheme to facilitate hold-out and devalue SEPs. In the short term, I actually think an initiative like LIFT--which was announced this week-- is more likely to enhance the efficiency of SEP licensing. Gustav Brismark and Bowman Heiden discussed it in an IAM article, Building incentives to overcome the SEP licensing prisoner’s dilemma (paywalled).

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Ericsson-Apple mediation effort in Eastern District of Texas unsuccessful, multi-jurisdictional 5G patent litigation continues

While Ericsson and Apple easily agreed upon David Folsom, former Chief Judge of the United States District Court for the Eastern District of Texas, as their mediator, the dispute isn't ripe for settlement. Retired Judge Folsom informed his successor Chief Judge Rodney Gilstrap, who is presiding over two Ericsson v. Apple cases, of the failure of efforts to reach an agreement (this post continues below the document):

22-06-07 EDTX Mediation Uns... by Florian Mueller

As a result, they will continue to litigate in three U.S. venues (E.D. Tex., USITC, and W.D. Tex., though the Western District cases have been stayed pending the ITC investigations involving the same patents) and at least four other jurisdictions (Germany, Netherlands, Brazil, and Colombia).

My most popular write-up in recent months has been my blog post of last Saturday on Qualcomm saying Apple coerced "low-ball agreements" with standard-essential patent (SEP) holders, and Qualcomm, Nokia, and Ericsson taking aim at Apple's SEP devaluation efforts (Qualcomm and Nokia through submissions to the European Commission in a policy-making context, and Ericsson by way of a motion to compel Apple to identify fact witnesses, with Apple appearing uneasy to answer questions about its SEP devaluation campaign as well as its highly controversial App Store policies and strategies). In that post I mentioned Apple's reputation for squeezing suppliers, with licensors technically also being suppliers (in a non-material sense, though patent licensing is a purchasing function form any corporation's perspective). There are signs that some of the companies who got squeezed in the past are not prepared to underprice their assets now, much less in light of how much Apple is paying Qualcomm, which has great patents but whose portfolio isn't stronger than Ericsson's.

At present, there's only one other major SEP infringement dispute involving Apple: the one brought by Optis, which resulted in a jury verdict in the hundreds of millions and the UK part of which is about to proceed to a FRAND trial in London. Others also find it hard to agree with Apple. There are industry rumors of Apple having narrowly avoided last year what would have been a major litigation campaign at a level with Ericsson's, but no renewals of Apple's soon-to-expire license agreements with Nokia and InterDigital are known. I predicted last August, in light of a major Ericsson win in the Fifth Circuit, that SEP royalties were set to rise. The trend reversal has occurred, and Apple can't stop it, but it obviously keeps trying to slow it down and minimize its impact.

Patent counts: not the perfect metric, yet more reliable than unempirical opinion pieces

On Friday I commented on certain patent filing statistics by the European Patent Office and the German Patent and Trademark Office. Huawei and Ericsson were ahead of everyone else in the digital communications category, and Apple not in the top 10 (unlike smartphone makers Samsung, OPPO, and Vivo). There is no legal obligation--though perhaps a moral one--for Apple as the company that makes far more money from smartphones than anyone else to contribute substantially to wireless standards, and not only with respect to handset-side functionality but also the technology that powers the (costly) infrastructure. But one legal obligation is beyond doubt: to pay fair, reasonable, and non-discriminatory royalties. Paying more to Qualcomm than to all other SEP holders combined is neither fair nor reasonable, and from the perspective of other SEP holders it's discriminatory (against them).

My post triggered a reaction from an economist--whose business it is to testify as an expert witness in patent trials, which is a very important task, of course--because he published a paper that essentially says (in many words, but without serious substance) that patent filings by Chinese companies have increased in recent years, so the only explanation is that average per-patent quality is low). If he had reached that conclusion based on the analysis of how Chinese companies' patents perform in litigation, it would be worth taking a look. If technical experts had analyzed a representative sample of such patents, as did Amplified and GreyB (who found Huawei had a super-high essentiality rate), we could also have an interesting discussion. But everything that is just based on input (R&D relative to GDP) vs. output is simply circular logic as it's possible that Chinese companies could already have filed more patents in the past.

To argue that the ratio of grants versus rejections isn't meaningful is not just circular logic but downright illogical: there is a certain threshold for the inventive step, so if a given company or group of companies filed patents of fundamentally lower value, they'd inevitably fail to surmount that hurdle far more often than filers with higher-quality patent applications. The unempirical argument that economist makes is that if you have five time more patent filings on the same level of R&D spend, the average quality is one fifth. But that wouldn't mean five times more rejections: it could even mean a disproportionately higher rejection rate. Think of a bell curve and a horizontal line representing the hurdle, with the line potentially being near the peak of the curve if the average quality of a portfolio really was low. Rejection rates would be detached from quality only if one assumed that the hurdle for patentability is next to nil, in which case one would wonder what all those patent examiners are doing all day long...

There can be reasons for which a smaller patent portfolio is more valuable than a larger one, but whoever makes that claim has the burden of proof, and--let's face it--it's an extremely onerous one. It is not met by an economist essentially substituting his own opinion for hard facts, and obfuscating the bankruptcy of his argument. And it is particularly not met by such an economist who doesn't even look at one patent when at least one serious effort (the one by Amplified and GreyB that I mentioned) has been undertaken to perform essentiality checks on large numbers of patents.

What I mean to say here is that the limited reliability of patent counts is old news, but the only reliable alternative is when the rubber hits the road, when push comes to shove, and that is when patents are actually getting litigated--such as in Ericsson v. Apple. That's perfectly empirical--the opposite of an economist filling many pages without even analyzing a single patent.

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Ericsson, Apple agree on former Eastern District of Texas Chief Judge David Folsom for mediation of 5G patent licensing dispute

This may be one of my shortest blog posts ever, but I have two pieces of news to share regarding the Ericsson v. Apple 5G patent licensing dispute:

• I'm not aware of what exactly Chief Judge Rodney Gilstrap said at the Wednesday case management conference, but a docket entry states that he has decided to consolidate Apple's and Ericsson's dueling FRAND cases for the purpose of pretrial proceedings. The cases are scheduled to go to trial in June and July 2023. Either party still wants at least parts of the other party's complaint dismissed, and Apple is still fighting hard to give the Federal Circuit--not the Fifth Circuit--appellate jurisdiction.

• Judge Gilstrap gave the parties a few days to agree on a mediator. Otherwise he'd have appointed one, but no need for that: Apple and Ericsson almost promptly agreed to appoint a predecessor of Judge Gilstrap as Chief Judge of the Eastern District of Texas, David Folsom, as their mediator. Judge Folsom retired from the bench in 2012 and is now a Jackson Walker partner and based in Texarkana (the one on the Texan side of the state border).

  Court-ordered mediation rarely results in settlements of such high-stakes global disputes. Those cases do get settled, but what drives settlements of that kind is usually not that a judge referred the parties to mediation. That's why no one should expect a miracle from former Chief Judge Folsom. Maybe he can get them to agree at least on how to structure their two overlapping actions in the Eastern District.

Last week I published an overview of the key deadlines in the three Ericsson v. Apple ITC cases, the first one of which is presently scheduled to go to trial (called "evidentiary hearing") in the first half of November. I previously listed various German Ericsson-Apple hearing and trial dates. I haven't yet found out about when certain courts in Brazil and the Netherlands will hear Ericsson's preliminary injunction motions.

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Continental says Nokia impedes innovation and sustainability in automotive industry and IoT by refusing to license component makers

While Nokia has always been outspoken about the automotive industry's antitrust complaints over its refusal to grant exhaustive component-level licenses to suppliers, I gave up at some point on the complainants' willingness to provide any information or share their views. It just didn't seem to be in their DNA. All the more surprising to me was the fact that Continental issued a statement today on the definitive failure of mediation efforts with Nokia.

The Mannheim Regional Court had originally scheduled two Nokia v. Daimler trials today, which were canceled in part because of the coronavirus situation. Continental is an intervenor in all those German SEP infringement actions against one of its largest customers, Daimler. Tires made Continental a household name, but it's a lesser-known fact that they are also a huge supplier of electronics components to car manufacturers. They and their competitors depend on exhaustive SEP licenses in order to be able to invest in further progress in this field. Today's statement refers to "connected, autonomous and sustainable mobility." I interpret "sustainable" in the sense of increasing energy efficiency at the component level as well as technologies that help reduce fuel consumption. In other words, Continental wants Nokia to make its contribution to the fight against climate change--an extremely high priority for the von der Leyen Commission--by enabling innovation a the component level.

Nokia refuses to grant exhaustive licenses to component makers. Instead, it seeks to force end-product makers such as Daimler into licenses, and in discussions involving component makers proposes alternative structures that fail to address the most important competition and innovation concerns.

Here's the full text of Continental's unprecedented statement:

The mediation between Continental and Nokia in the context of Continental's EU complaint against Nokia's licencing practice for Standard Essential Patents (SEPs) has now taken place. Continental still has no direct license for Nokia's SEPs for mobile telecommunications standards such as 3G and 4G. This is unsatisfactory for Continental.

Continental will therefore continue to seek licenses under the commitments from Nokia and other SEP-owners to grant licenses on 'fair, reasonable and non-discriminatory' (FRAND) terms and continue pursuing its complaint with the EU Commission.

Only being granted its own SEP-licenses under FRAND terms will allow Continental to realize its full potential as one of the market leaders and driving forces of innovation in connected, autonomous and sustainable mobility. Without access to the respective licenses Continental and other suppliers are not able to develop, manufacture or sell important technology for future automotive and non-automotive applications.

Nokia's refusal to license its SEPs to Continental and other car parts suppliers, wanting to just license car manufacturers is blocking innovation in the field of connectivity for a more intelligent, safer, and more sustainable mobility. Likewise, this practice is damaging emerging European markets in the automotive industry and the Internet of Things more generally.

Continental will continue to pursue its civil litigation seeking a FRAND patent license from Nokia and others in the U.S. District Court for the Northern District of Texas where Continental has submitted to an independent rate setting by that court. Continental will continue to support its customers against assertions of standard essential patents by SEP-owners applying coercive pressure and injunction claims to obtain supra-FRAND rates.

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Nokia's choice of software patents asserted against Daimler exposes pretext for refusing to license automotive suppliers

PaRR's EU antitrust reporter Khushita Vasant received information from two sources according to which a third round of mediation talks--after the first two, held in January and February, failed--might take place between Nokia and Daimler as well as many (though not all) of its suppliers of telematics control units (TCUs). Knowing how these things work, I guess the situation is now simply one in which the European Commission remains hesitant, for purely political reasons, to take action, and is playing for time, as is Nokia, whose patent portfolio is going down the tubes with every month that passes.

Commissioner Margrethe Vestager is even way tougher than her famous predecessor in office "Steelie Neelie" was when it comes to enforcement against U.S. companies, but (so far, so bad) soft as a jellyfish on Nokia. She and Nokia might just hope that the patent infringement ruling scheduled by the Munich I Regional Court for April 9, 2020 would scare Daimler into a settlement. It's hardly a coincidence that the rumored new round of mediation talks has the same target date...

Regardless of that latest disgraceful development, I was taking a closer look at Nokia's ten patents-in-suit against Daimler from the perspective of whether there is a scintilla of doubt about Nokia acting abusively by refusing to license Daimler's TCU suppliers. There is not.

As Daimler's lead counsel in the German infringement cases accurately noted last fall, cellular standard-essential patents (SEPs) cover techniques that are essentially embodied in the baseband chip. From a car maker's vantage point at the bottom of the supply chain, that's a tier 3 product, which gets incorporated into a (tier 2) network access device (NAD; one might also call this a connectivity module, which in turn resides in a TCU (tier 1). In other words, TCUs already contain a whole lot more hardware than is actually needed to exhaust the patentee's rights by licensing the upstream.

The European Commission employs an elite of public servants. There's no way the Commission's experts wouldn't have figured out during all of that time since Daimler's 2018 (!) complaint that Nokia's allegation of a TCU not actually practicing the standard is, euphemistically so as to avoid an analogy to bovine excrements, a pretext.

The Golden Rule of patent law: the name of the game is the claim. "Claim" in the sense of a patent claim, not a claim in terms of a (mis)representation.

The patent claims determine the scope of protection a patent enjoys. When looking at the claims of Nokia's patents-in-suit, and even when looking at the specifications (whose sole purpose in litigation is to help interpret the claims), it becomes clear that Nokia's patents don't cover end products such as a car (quite often, the Nokia-Daimler dispute is misleadingly referred to as a "connected vehicle" dispute, though none of Nokia's wireless SEPs have anything to do with what sets cars apart from phones).

In fact, seven (70%) out of Nokia's ten patents-in-suit against Daimler are even officially declared to be software patents (which the remaining three are as well, as I'll explain in a moment). That is so because they come with computer program claims--patent claims covering software without any hardware being required to infringe. As a former anti-software-patent campaigner, I'm particularly sensitive to this, and I believe the European Patent Office granted those claims in violation of the European Patent Convention, but they do come in handy now as they belie Nokia's anti-antitrust-enforcement narrative. You can find the claims toward the end of each patent specification, and I'll give an example of one program (in terms of software) claim per patent:

• claim 5 of EP2797239 on "a method and a telecommunication device for selecting a number of code channels and an associated spreading factor for a CDMA transmission"

• claim 15 of EP2087626 on "additional modulation information signaling for high speed downlink packet access"

• claim 15 of EP2981103 on an "allocation of preamble sequences"

• claim 7 of EP2286629 on a "method and apparatus to link modulating and coding scheme to amount of resources"

• claim 8 ("computer-readable storage medium comprising software instructions" is a computer program by any other name) of EP2145404 on a "method and apparatus for providing control chanels for broadcast and paging services"

• claim 31 of EP1929826 on an "apparatus, method and computer program product to request data rate increase based on ability to transmit at least one more selected data unit"

• claim 22 of EP2087629 on "a method of transmitting data within a telecommunications system"

The software that controls data transfers over a cellular model resides in a baseband chip. That's the mastermind of the whole operation. It determines what is sent out via the antenna, and it interprets what is received.

All ten of Nokia's patents-in-suit against Daimler could also be called "protocol patents": they describe how two ends of a wireless connection communicate--what A has to tell B to cause B to do something, or vice versa. It's like I say "hello, how are you?" and you respond "fine, how are you?"

That kind of communication is, of course, implemented in software (it already has been for a very long time).

There's nothing in those Nokia's patents that has to do with superior hardware. I ran full-text searches over the patent specifications, and looked closely at the device (or "apparatus") claims to identify any references to the types of hardware components that Nokia claims aren't part of TCUs:

• Eight (80%) out of the ten patents-in-suit contain not a single occurrence of at least one the following words: antenna, microphone, loudspeaker, power.

• EP'626 refers to "antenna weights" and mentions the presence of an electrical power source (without claiming to invent anything new relating to electrical power supply). The patent covers bits (zeroes or ones) that are sent and received, and the apparatus claims don't require any specific hardware but merely refer to "means for interpreting ... bit[s]" and "means for coding." That, too, is a typical software patent.

• DE'446 (the German equivalent of EP'234) only mentions "power" in the sense of "power control" as a numerical parameter. Here, again, it's instructive to look at the apparatus claims, which as opposed to claiming specific hardware relate to a "medium access control layer configured to encapsulate packets."

• The means-plus-function structure found in EP'626 and EP'234/DE'446 is also found in the other patents. Nokia's patent attorneys obviously optimized those claims for scope, and that's why they don't claim specific hardware elements such as an antenna, but instead focus on functionality. However, as long as there isn't a need for some very specific (and inventive!) hardware, but it merely suffices that something be around to do a certain job, the baseband chip as the controller of the data transfer operation is where the claimed inventive steps are implemented.

Those ten patents are the ones Nokia's litigators--among the very, very best in the industry--selected from the company's huge portfolio because they thought they'd be their strongest weapons. We could look at dozens or even at hundreds of additional cellular SEPs owned by Nokia or other companies, and the findings would be materially consistent with this sample of ten Nokia "star" patents.

It's time to get real. There's no justification for not licensing automotive suppliers, especially not under the CJEU's Huawei v. ZTE case law.

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Mediation between Nokia and Daimler as well as its suppliers fails definitively: European Commission must act swiftly and forcefully

This afternoon I broke the news on Twitter that the mediation process between Nokia and Daimler as well as various of its suppliers failed definitively:

BREAKING NEWS: Today the #antitrust mediation process between #Nokia and #Daimler as well as its suppliers has ended without an agreement. The issues were the same ones that made the first series of talks (in January) fail, see https://t.co/VT4DWvtI8T #frand #patents @vestager

— Florian Mueller (@FOSSpatents) February 14, 2020

A first round of talks had failed in January for the reasons I mentioned then. The fact that the supposedly super-secretive mediation process was pretty transparent to me--thanks to certain sources--even sparked a peripheral controversy at last week's Nokia v. Daimler trial in Munich.

A second round of talks was held this week, and went nowhere--for the very same reasons that the first round had failed. Nokia simply wouldn't consider extending an exhaustive component-level license to Daimler's suppliers, and Nokia continued to refuse to put highly relevant SEP license agreements with smartphone makers on the table.

Let's give the mediator the benefit of the doubt: he gave this another try just because he was unrealistic, not because it helped produce billable hours.

The European Commission's request that the parties engage in mediation--instead of doing the job European citizens pay them for--was a bad idea in the first place. It set a terrible precedent and made Mrs. Vestager, who earned herself a reputation as a determined competition enforcer during the first time, appear very weak.

Interestingly, the fact that last week's Munich trial went very well for Nokia didn't bring the parties closer to a deal. Maybe no one believes that the Munich court will seriously interpret a key sentence in the Court of Justice of the EU's Huawei v. ZTE ruling as if "and" meant "or." It's also possible that Nokia's piecemeal injunction strategy--with an explicit carve-out for Samsung subsidiary Harman Becker for the time being--means even a ruling in Nokia's favor on April 9 wouldn't give the failed handset maker much leverage.

Whatever the reasons may be, if the European Commission respects itself, it just can't let Nokia obtain an injunction on a highly illegal basis--refusing to license Daimler's suppliers is a clear violation of EU antitrust law. In December 2012, the Commission pressured Samsung into dropping any pending requests for SEP injunctions against Apple. If the Commission doesn't put the same pressure on Nokia with a view to the Munich ruling scheduled for April 9, it will lose much of its credibility as an antitrust watchdog.

This has been a bad week for Nokia. On Tuesday, it lost a case against Daimler in Mannheim. On Thursday, one of its privateers, Conversant, lost a case against LG in Munich (over a Nokia patent). Plus, it failed to bully Daimler and its suppliers into a deal.

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FOSS Patents' publication of leaked information on status of mediation effort gave rise to peripheral controversy in Nokia v. Daimler trial

Almost all of the time, this blog merely reports and comments on key issues facing the technology industry, but doesn't create or constitute an issue in and of itself. FOSS Patents has been mentioned in some U.S. court filings over the years, and judges (mostly in Germany, but from what I hear also in other parts of the world) have sometimes made reference to FOSS Patents without naming it. But today was the first situation in which two parties (a plaintiff and an intervenor) traded accusations involving FOSS Patents in different ways.

Various suppliers are intervening on Daimler's behalf in today's Nokia v. Daimler standard-essential patent infringement trial in Munich (continuing in a sealed courtroom as I write these lines). One of them is Peiker Acustic (yes, without an "o" before the "u"), a subsidairy of French automotive supplier Valeo. Just like in an October 2019 early first hearing in another Nokia v. Daimler case pending before the Munich I Regional Court, Dr. Benjamin Schroeer ("Schröer" in German) of the Hogan Lovells firm made an impassioned argument for his client's entitlement to an exhaustive component-level SEP license.

One of Dr. Schroeer's points was that the suppliers intervening in this case were specifically targeted by Nokia, whose complaint names certain suppliers and seeks an injunction and other remedies only with respect to Daimler cars incorporating telematics control units (TCUs) from those particular suppliers. Peiker's counsel noted that Nokia not only excluded Harman (a Samsung subsidiary) from that list but even explicitly stated that Daimler cars incorporating TCUs made by Harman were not being targeted at this stage.

Dr. Schroeer took Nokia to task over this selective, discriminatory targeting of particular Daimler suppliers (as opposed to all of them). While Harman's exclusion would simply be legally required if Harman had an exhaustive component-level license to Nokia's SEPs, he said that Harman quite apparently doesn't have such a license. In this context, he pointed to the fact that a FOSS Patents report on ongoing EU antitrust mediation between Nokia and Daimler as well as various Daimler suppliers mentioned Harman as one of the suppliers negotiating with Nokia. It's true that I listed all participants in mediation that I was able to find out about, and Harman was one of them.

A few minutes later, Nokia's lead counsel, Arnold &amp, Ruess's Cordula Schumacher, accused Dr. Schroeer of having violated the non-disclosure agreement covering the mediation process by confirming in open court the accuracy of a fact leaked to this blog.

One of the limitations concerning German court proceedings is that there are no transcripts. Otherwise one could verify what exactly Dr. Schroeer said. I don't remember him affirmatively confirming the accuracy of anything I wrote. It might be that the way he expressed himself was ambiguous and could be interpreted as either just referencing what I had written or making it sound like the fact I reported on it deprived the information of protection under the NDA.

In any event, Dr. Schumacher asked the court to add a sentence about this to the official minutes. In that same situation, Nokia's director of European dispute resolution, Dr. Clemens-August Heusch, made a remark to the effect of accusing Dr. Schroeer of having been FOSS Patents' source on the mediation status in the first place. Dr. Schroeer demanded a retraction and an apology (and also asked for something being included in the official minutes). He firmly denied having been my source. Nokia's Dr. Heusch declined the court's invitation to comment.

I don't disclose my confidential sources, which is also why I don't deny that anyone has been a source (or validate or contradict denials). What I did indicate in the Nokia mediation context is that I obtained information from more than one source.

The fact that Harman participated in mediation while not being an intervenor in the Nokia v. Daimler infringement proceedings was interesting for sure, but the blog post in question contained far more sensitive information than that one. It appears overreaching to try to keep the names of the parties to an antitrust mediation (requested by the European Commission) confidential.

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BREAKING NEWS: Nokia makes antitrust mediation with Daimler and automotive suppliers over standard-essential patent licensing fail

[HAPPY NEW YEAR -- AND BREAKING NEWS]

Nokia wanted to keep its EU antitrust mediation with Daimler and various automotive suppliers strictly confidential. Nice try, but I've been able to obtain reliable and mutually-corroborating information from more than one source. (I obviously protect my sources.)

On Friday (January 10) and Saturday (January 11), Nokia--represented by Bird & Bird's Richard Vary (formerly head of litigation at Nokia) and Roschier's Niklas Östman--met with Daimler and various suppliers (Bosch, BURY Technologies, Continental, Harman, Peiker, and TomTom) at a recently-opened Munich hotel. But nothing came out of a whole series of meetings moderated by a British mediator and two British lawyers appointed by the International Chamber of Commerce. The mediator will communicate with the parties by telephone in the days ahead and make a procedural decision. Theoretically, there could be another series of meetings on the 22nd and the 23rd. However, based on how these past two days went, it would be a total waste of time to reconvene.

In practical terms, it's already clear that mediation is pointless for two reasons that made the Munich meetings fail, neither of which comes as a surprise:

• Mediation would only have made sense if Nokia had departed from its dogged refusal to extend a true and exhaustive standard-essential patent (SEP) license to Daimler's tier 1 (= direct) suppliers. Continental had made Nokia a binding offer to take such a license before mediation began, but Nokia remains unwilling to grant any such thing as a true license to component makers. It proposes a "have made" right, which is just an extended-workbench type of arrangement as opposed to a component-level license.

• Furthermore, the meetings inevitably proved unproductive because Nokia refused to make it existing cellular SEP licensing agreements (such as the one with Huawei) available to the other parties. Nokia's excuse was that those agreements allegedly weren't relevant (not only U.S. courts but even some--if not all--German courts would disagree). Therefore, Nokia's counterparts would have had to negotiate without having the slightest idea of what Nokia's existing licensees actually pay for those SEPs.

  At best, Nokia is willing to disclose an obscure and highly atypical license agreement with a car maker who apparently accepted--but only for a transitional period and with the right to terminate as per the end of 2019--a "have made" right. That same car maker is likely to sign an Avanci pool license in the near term based on what I heard.

The information I've obtained suggests that Nokia has not been constructive, neither structurally (exhaustive license vs. "have made" right) nor procedurally (disclosure of existing SEP license agreements). If Nokia had agreed to grant component-level licenses (real licenses, not "have made" rights), and if it had then presented its existing SEP licensing agreements, mediation could have worked in theory. But no one could seriously have expected it to happen, which is why I predicted the failure of this mediation effort before. By now it's failed for all practical purposes, whether or not the mediator will order another series of meetings later this month.

EU competition chief Margrethe Vestager said last month that she expected an update on mediation by mid-February. She's not going to get any good news out of mediation, that's for sure.

What I've found out about the way the talks were structured is that the first day consisted of bilateral talks between Nokia and each of Daimler's suppliers. The suppliers invited to mediation included the ones intervening in the German infringement cases, plus Samsung subsidiary Harman, but not Huawei, which wanted to join but Nokia wasn't willing.

On the second day, Nokia might have hoped to drive a wedge between Daimler and its suppliers. Daimler met separately with each supplier (for antitrust reasons, they couldn't just all sit at the same table and discuss numbers), but neither Daimler nor the suppliers were prepared to agree with Nokia that the problem could simply be solved by Daimler reaching an agreement with each supplier on how to split the outrageous, supra-FRAND royalties Nokia demands.

The European Commission's Directorate-General for Competition (DG COMP) will have to make a decision. They hoped to avoid it, but it was clear that there's a binary, structural question at issue. Either the suppliers get a license and can make components they are free to sell not only to Daimler but also to others (in case they end up sitting on some excess quantities, for instance), or it's not a license.

The next Nokia v. Daimler SEP infringement trial is scheduled for January 21 and will take place in Mannheim unless the court decides to push the trial date back. Another Mannheim trial, originally scheduled for December, was postponed on short notice, but I heard from more than one source that the patent-in-suit in that one was so ridiculously weak that the court likely wouldn't have reached the FRAND defense anyway...

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Nokia stresses confidentiality of EU antitrust mediation with Daimler and suppliers

I asked Nokia, which has recently issued a couple of public statements on its EU antitrust row with Daimler and four of its suppliers, for comment on Continental's new licensing offer. Nokia declined to comment, and stressed that they "respect confidentiality, including that of the mediation process, which will itself be confidential."

This means we're unlikely to hear anything for some more time. EU competition commissioner Vestager said she was going to wait until mid-February.

So if you don't read about the case here in the months ahead, don't be surprised. Should I later decide not to follow the matter at all, I will announce it on this blog, but at a minimum I'll always remain interested in any legal overlaps with Huawei's antitrust lawsuit against Nokia (a case that has the potential to go up to the Court of Justice of the EU, as Huawei v. ZTE did years ago) and anything that appears relevant in connection with German patent reform (proportionality of injunctive relief; bifurcation).

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BREAKING: Continental makes Nokia binding patent licensing offer ahead of EU antitrust mediation with Daimler, other suppliers

BREAKING NEWS

FOSS Patents has found out from unnamed but reliable sources that, just this week, German automotive supplier Continental has made a legally binding offer to Nokia for taking a license to its cellular standard-essential patent (SEP) portfolio. The offer forces the Finnish former mobile device maker to come clean on whether it genuinely intends to address and alleviate the competition concerns raised under EU antitrust law (Art. 102 TFEU) by Daimler and four of its suppliers (Continental, Valeo, Gemalto, BURY Technologies).

Nokia announced yesterday that Daimler and its tier 1 (= direct) suppliers agreed to mediation, which theoretically could put the highest-profile EU antitrust matter pending at the moment to rest. EU antitrust chief Margrethe Vestager, usually not one to shy away from decisive action, is oddly going to hold off until the outcome of the mediation effort will be reported to the European Commission's Directorate-General for Competition (DG COMP) by mid-February.

Under Continental's offer, if and when accepted by Nokia,

• Nokia would receive a per-unit patent royalty. Nokia would be free to choose between

  • accepting the (unknown) amount offered by Continental or

  • demanding more money, in which event a court of law would have to resolve this purely quantitative (as opposed to structural) dispute by setting a fair, reasonable and non-discriminatory (FRAND) rate.

• Continental would receive a component-level SEP license, which would be exhaustive (i.e., the downstream, such as Daimler, would fully benefit in terms of being licensed with respect to the implementation (= use) of the covered patents by Continental's telematics control units (TCUs). The proposed structure would also provide Continental with the operational freedom necessary to safeguard a functioning, competitive market for TCUs and the freedom of movement of goods (famously, one of the "Four Freedoms" of the bloc's Single Market).

Hypothetically, if Nokia offered the same deal structure to the other suppliers among the complainants, or if Nokia accepted offers of the same nature from other suppliers, the EU antitrust row would be resolved. Daimler, Continental, Valeo, Gemalto, and BURY Technologies could all withdraw their complaints, and Nokia's ten pending patent infringement cases in Germany against Daimler would be instantly mooted with respect to Daimler cars that don't come with cellular connectivity components from other suppliers. The aforementioned companies, and Nokia, could all mind their respective businesses again.

Should Nokia reject the proposed structure without simultaneously proposing a reasonably acceptable alternative capable of enabling competition and free movement of goods, its mediation offer would be exposed as a transparent attempt at stalling. While they probably won't listen to me, I would recommend to Daimler's suppliers to walk out in that scenario. Every second spent at the mediation table would be a waste of time.

As far as Daimler is concerned, the question is not whether they should walk out. It's why they participate in mediation in the first place. The dispute is not about whether Daimler can get a license. They can. Even Nokia doesn't dispute that. It's the suppliers, stupid.

Yesterday, Nokia won two court decisions unrelated to the merits of Continental's request for a license: Continental's U.S. FRAND/ antitrust case, which likewise aims to secure an exhaustive component-level license on FRAND terms, will be transferred from the Northern District of California to the Northern District of Texas, and Continental's ability to obtain a U.S. antisuit injunction against Nokia's German patent lawsuits against Daimler will be severely restricted to say the least, as the Munich appeals court affirmed an anti-antisuit injunction.

But neither a venue transfer nor an anti-antisuit injunction (no matter how spectacular the latter actually is) have the potential to answer the underlying question of access to component-level licenses. Earlier this decade, when some SEP holders abusively sought and enforced injunctive relief over SEPs, they argued that unwilling licensees were engaging in "holdout." Now there is a totally willing licensee--Continental--who has made every effort, up to the point of bringing a U.S. antitrust lawsuit, lodging an EU complaint, and now making Nokia an offer even though it's a SEP holder's obligation to make a first offer when requested. And there's a company that now risks being fined for an EU antitrust violation by being an unwilling licensor, unless Nokia departs from its prior refusal to grant the type of license requested.

The mediation effort will be farcical if Nokia continues to offer only insufficient (from a competition perspective) types of arrangements, such as "have made" rights that come down to extending a true license only to the car maker while hobbling component makers (who under such structure could not simply sell their components to any customer of their choosing).

Before mediation has even begun (the parties have just agreed to it), Nokia is already cornered. This week's offer is the best decision I've seen from Continental in this context to date. I've criticized some of their moves, I've disagreed with some of their arguments (in the U.S. litigation), but this is brilliant, provided that the European Commission is determined to protect innovation and competition.

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250 million consumers v. Qualcomm: trial in 2019 no longer realistic

Only two things worked out well for Qualcomm on the litigation front this year: the Lasinski cross-examination and the fact that the United States Court of Appeals for the Ninth Circuit allowed Qualcomm's interlocutory appeal of Judge Lucy H. Koh's certification of a class of up to 250 million consumers suing Qualcomm for a partial refund of what those people paid for their smartphones (seeking $5 billion in total, or roughly $20 on average per person who bought a smartphone in the U.S. during the relevant period, which started in March 2011).

Other than that, the first month and a half of this year have been a near-total disaster for Qualcomm, especially since its Chinese and German injunctions appear to have been worked around and some of Qualcomm's offensive cases have recently failed.

The Ninth Circuit has set the following schedule for the interlocutory appeal of class certification:

• Mediation Questionnaire due on 02/06/2019.

• Transcript ordered by 02/22/2019. Transcript due 03/25/2019.

• Appellant Qualcomm Incorporated opening brief due 05/03/2019.

• Appellees' answering brief due 06/03/2019.

• Appellant's optional reply brief is due 21 days after service of the answering brief.

If the related trial, originally scheduled for June, ever takes place, it won't happen this year, realistically. Judge Koh put the related pretrial proceedings on hold in January. After briefing, the Ninth Circuit will have to schedule a hearing, and then make a decision. This is all going to take time.

Theoretically, if both parties wanted to accelerate things, they could save time, but in the current situation that's not foreseeable. What they need more than anything else so they can even determine their preferred pace is (i) Judge Koh's ruling on the FTC's complaint (which the consumer class action is directly related to) and (ii) the Supreme Court's Apple v. Pepper (App Store commission case) opinion. I believe the FTC is going to score at least a partial victory over Qualcomm and that Apple is going to lose the App Store case (not referring to the case as a whole, just to the question before the Supreme Court), and then it will depend on the reasoning (the Supreme Court may decide Apple v. Pepper in consumers' favor with or without overruling the Illinois Brick doctrine).

For Qualcomm, the class action is a pain in the neck for at least four reasons:

• With so many people being potentially entitled to a partial refund of what they paid for their phones, even a seemingly small per-class-member amount would still result in a sizable total payout.

• Any payout, unless the amount was just laughable relative to the size of the class, would stigmatize Qualcomm forever as a company that owed consumers money for indirectly overcharging them.

• As long as there's a class action connected to the FTC case, a settlement would have to be run by Judge Koh. And at this stage there is no indication that Qualcomm can even settle with the FTC on the terms it wants.

• The consumer class can bring all sorts of motions that Qualcomm doesn't like, such as the antisuit motion that Judge Koh dismissed without prejudice only for timing reasons last year (timing was, by the way, described by this blog as the relatively most interesting argument Qualcomm had raised against that motion).

The problem with the schedule for mediation is that it will take place at a time when Judge Koh may still be working on her FTC v. Qualcomm opinion, and even though the Supreme Court held the Apple v. Pepper hearing in November, it may also need more time, especially since different justices appear to have different preferences for how to achieve the result that all of them but the Chief Justice appear to consider to be the right one.

All things considered, I'd be surprised if mediation succeeded under these circumstances.

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Apple, Samsung trying to put patent dispute behind them through mediation

After last week's Apple v. Samsung damages verdict (largely over design patents) in the Northern District of California, counsel for both parties told Judge Koh that they were both willing to put an end to their long-running dispute, which started with a complaint filed by Apple in April 2011 and quickly escalated into a global dispute with filings in ten countries.

Late on Thursday, Samsung filed an administrative motion asking Judge Koh to keep a joint notice regarding alternative dispute resolution out of the public eye (this post continues below the document):

18-05-31 Samsung Motion to File Under Seal ADR Notice by Florian Mueller on Scribd

All that one can learn from the public filing is that there is a "forthcoming mediation." It's unclear whether a judge or a private mediator will try to work out a settlement.

What's furthermore unclear (and no one may know at this stage) is whether the parties will try to resolve both California cases (the one that went to re-retrial in May, and a second one that turned into a roller coaster) or just the first one.

High-profile smartphone disputes between handset and platform makers (unlike litigation brought by non-practicing entities or increasingly-"trollified" former phone makers such as Nokia and Ericsson) haven't recently resulted in license agreements. Instead, parties just dropped pending cases but reserved all options for bringing new complaints anytime, with some license agreements--or covenants not to sue--of extremely limited scope possibly having been part of some of those confidential deals. I would expect the same if Apple and Samsung finally called a truce. Apple obviously isn't going to extend a design patent license to Samsung; the result might involve a license (or a convenant not to sue with the practical effect of a license) to a few software patents, though some have expired and others have been worked around. But by and large the question is just whether Apple will withdraw any pending claims. And, even if this works out now at long last, no one knows when hostilities might flare up again.

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Judge sends Apple, Samsung to mediation with Nov. 15 deadline -- #1 problem: Apple's self-righteousness

On Monday, Judge Lucy Koh of the United States District Court for the Northern District of California received a joint ADR (Alternative Dispute Resolution) statement from Apple and Samsung, which is not publicly accessible. Further to that statement, Judge Koh referred the parties to mediation before Magistrate Judge Spero, which was the common ground of the positions they stated on ADR earlier this month. As per the parties' suggestion, that settlement effort will have a November 15 deadline.

More than a year after Apple and Samsung dropped all lawsuits against each other in jurisdictions outside the U.S. (i.e., numerous neutral jurisdictions as well as Samsung's country, Korea), it's time they also put aside the U.S. part of their dispute. I've always said that Apple should get something, but the longer this dispute has taken, the clearer it has become that Apple's leverage is limited, and let's not forget that Apple at some point needs a license, on FRAND terms obviously, to Samsung's standard-essential patents. Apple's iPhone patents are not nearly as great as its products, and even though Apple also has far better lawyers than patents, Apple's litigation would have gone nowhere if not for certain peculiarities of the U.S. patent system such as jury trials, which are statistically biased in favor of domestic companies suing foreign rivals (see Xenophobia in American Courts).

There isn't really much to gain for Apple. At this stage, if Apple wanted to really make a strong statement about its iPhone-related intellectual property, it would have to sue major Chinese companies such as Huawei, ZTE, and Xiaomi. But as far as I know, while Apple is paying standard-essential patent royalties to Chinese patent holders, no Chinese company is paying Apple anything for building iPhone-like Android-based smartphones.

A settlement on undisclosed terms, no matter what speculation it might trigger, would be a face-saving exit strategy for both Apple and Samsung, especially since they've had a commercial relationship for a long time and could somehow mix the patent settlement with some new commercial agreement (a structure that I've seen in connection with a couple of Microsoft patent cases).

As I've already said this month, a settlement at this stage would make Apple look stronger than it could have expected at any time since the spring 2014 trial. While I could see reasons for Samsung and its allies (such as Google) to push for Supreme Court clarification of one or more key issues, there's no reason why Samsung couldn't or shouldn't simply do a deal with Apple that makes business sense.

My primary concern about the prospects for a settlement at this stage is that, in my observation, Apple has become self-righteous beyond imagination and potentially even a bit too emotional about this matter.

Any reasonable person in the civilized world has a simple definition for theft: you take something you don't rightfully own. And if you take money by collecting a damages award over half a dozen patents, even though the most valuable software patent of them is a zombie patent by now and a key design patent has also been deemed invalid (for lack of inventiveness) by the very patent office that once granted it, then you are not a thief in a legal sense because you merely take advantage of a broken patent system, but in moral terms, you still take what's not rightfully yours.

I've been thinking a lot in recent weeks about why Apple, a company normally much more concerned about its reputation, is doing this. In a recent court filing, I found what might be a clue in this regard. Apple's lawyers mentioned that after last year's trial (in the second California Apple v. Samsung case), Samsung's lead counsel, John B. Quinn of Quinn Emanuel, said in public that after years of litigation, Apple still hadn't collected a penny.

My unsolicited advice to Apple would be: don't compromise your moral standards just because of what Samsung's trial counsel told the press.

I've tried to put myself in the shoes of Apple's lawyers. Such major trials are an enormous logistical effort for everyone involved. The lawyers get little sleep, yet have to concentrate on each and every detail and fight very hard day and night. Apple's lawyers did that in 2012 and got a billion-dollar award. They did it again for a 2013 limited damages retrial. And then again in early 2014 for that trial in the second case, which ended with a major disappointment for them because even a jury picked from Apple's backyard only awarded a small fraction of what Apple had demanded. After all this effort, it hurts to have nothing to show yet, and then Mr. Quinn put his fingers into that wound. It must have hurt.

No matter what Apple's lawyers may or may not do now, Steve Jobs's "thermonuclear war" on Android will always be remembered as an abject failure. Mr. Jobs simply overestimated the strength of his company's patents, as did so many other people.

The question is now: how can Apple at least lose like a winner? By trying to win like a loser (on an ethically problematic basis), it only makes things worse.

Apple appears very self-righteous. Only because Apple has believed all along that Samsung owes huge payments, Apple's patents aren't any more valid. At last year's trial, Apple's lead counsel argued that Apple just couldn't (for logistical reasons) assert 50 patents against Samsung in one case, it picked only a few. But Apple obviously picked the ones that its lawyers thought were going to be the strongest ones, and in the aggregate of two California cases and an ITC complaint, Apple has already asserted dozens of patents against Samsung, though not all of them until the bitter end. Maybe some people at Apple believe that since certain inefficiencies of the law (such as limits on how many patents a U.S. judge will let you take to a jury trial) can also affect a right holder, they can now seek to capitalize on a loophole for the monetization of zombie patents.

In Europe, it appears that not even one of all the patent claims Apple asserted against Android will stand. Slide-to-unlock, for example, has been deemed invalid by 15 different judges in three countries. Apple should realize that its complete failure in neutral jurisdictions is a major credibility and legitimacy issue. Taking advantage of structural flaws of the U.S. patent system, and protectionist tendencies of juries and possibly even certain "fanboy" judges, is not the answer.

If not for the emotional self-righteousness Apple has recently displayed, I would be very optimistic about a settlement.

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Apple and Samsung will try to avoid fourth California patent trial: court-moderated settlement talks

A little over a year ago, Apple and Samsung withdrew their pending claims against each other everywhere but in the United States. Now there is more hope than ever that even the U.S. part of their dispute may come to an amicable end. In a joint case management statement filed in the Northern District of California late on Friday by local time, both parties have responded favorably to Judge Koh's recent inquiry about their willingness to engage in yet another mediation effort.

Here's the document, from which I'll then quote the relevant statements on alternative dispute resolution:

15-09-11 Apple-Samsung Joint Case Management Statement by Florian Mueller

"Apple's Statement: The remaining issues to be tried to a jury are limited to the amount of damages that Samsung owes for its sales of five infringing products. Thus, as an alternative to a fourth trial, Apple would be willing to participate in binding, final, and non-appealable arbitration to calculate the final amounts owed to Apple for those five products, provided that such arbitration take place on a schedule that would conclude no later than December 31, 2015 and the Court's prior 'Groundhog Rules' apply to the arbitration. To the extent supplemental damages are not resolved by motion, Apple would be prepared to include those issues in the arbitration. Multiple prior efforts at private mediation have been unsuccessful. However in advance of and in addition to arbitration, Apple would also be willing to mediate again with Magistrate Judge Spero as ordered earlier in the case. If Samsung is unwilling to agree to this procedure, Apple requests that the Court schedule a trial for March pursuant to Apple's proposal above.

Samsung's Statement: Samsung is willing to engage in a mediation with the private mediator previously used by the parties or another mutually agreed upon private mediator. While Samsung suggests a mediation before a private mediator to avoid burdening the Court, Samsung is also willing to mediate with Magistrate Judge Spero. Samsung proposes that the mediation be completed by November 15, 2015."

The passages quoted above show different approaches. Apple talks about arbitration; Samsung doesn't. Samsung would have a preference for private mediation; Apple only mentions court-moderated mediation. But court-moderated mediation--in front of U.S. Magistrate Judge Joseph C. Spero, as in 2012--is the common ground between those two statements, and in that case, the court will set the rules, so Apple can't impose any conditio sine qua non of the kind it proposes for arbitration.

While arbitration would also have been just limited to a certain damages question, mediation can address anything that remains to be resolved between the parties. If mediation succeeds entirely, the whole dispute will go away. If it succeeds in part, it will at least be narrowed.

More than anything else, both parties need a face-saving exit strategy now. It would really be nice to avoid a situation in which Apple would behave like a sore loser (not a loser in legalistic terms, but in practical terms, given that its "thermonuclear war" on Android went nowhere) and kept trying to collect money over invalid patents, which could also set a terrible precedent (well, Apple's lawyers obviously argue this would just affirm the law as it stands) with a view to future cases in which patent trolls will do the same against operating companies including, but not limited to, Apple. It just wouldn't look good if Apple collected money on an ethically questionable basis, under circumstances that make it so needless and pointless given that Samsung had posted a billion-dollar bond anyway and Apple would get paid later with interest if it ultimately prevailed. Maybe this common ground in terms of court-moderated mediation will help avoid all of this. I'd be very, very happy for both parties if it worked out.

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Second Oracle v. Google trial most likely to take place between March and September 2016

Judge William H. Alsup of the United States District Court for the Northern District of California has just entered a case management and mediation order in the high-profile copyright litigation between Oracle, the Java right holder, and Google, which has been using Java in Android for about eight years without a license.

The trial date will be set at a later time and most likely be March 28, 2016 or September 12, 2016, but it could also be anytime in between. The parties had proposed dates in the spring of 2016.

The court would still like to avoid the need for a trial, which is understandable, and Judge Alsup has referred the parties to mediation before Magistrate Judge Paul S. Grewal, who already tried unsuccessfully (because of the circumstances) in 2011 to broker a settlement but concluded that this was one of those cases that just had to go to trial. I have seen media reports according to which both parties' counsel expressed skepticism about the fruitfulness of another near-term mediation effort, which didn't dissuade Judge Alsup from ordering the parties to meet at any rate. He can order them to meet, but he cannot order them to agree on any particular terms. It would be the biggest surprise for me in more than five years of smartphone patent litigation blogging if this mediation succeeded, and someone should propose Judge Grewal for the Nobel Peace Prize in that event (he'd deserve it more than some other winners in recent decades).

Oracle is allowed to bring a motion to supplement its complaint. Even Google doesn't deny that Oracle has the right to supplement its complaint so as to reflect what happened in all those years since the first trial. There is a disagreement, however, on what constitutes a supplemental complaint and on what would be an amended complaint. So we'll see some argument in the weeks ahead.

A motions process will also start now with respect to Google's position that Oracle should not be allowed to make a willfulness argument before the jury.

It's predictable that motion practice will soon also be needed with respect to the damages expert witness from the first trial, Dr. Kearl. Oracle says (and I think it's very obvious) that someone who took on work as an expert witness for a Google Android partner has a conflict of interests. Court-appointed expert witnesses must be absolutely neutral, so this should be a no-brainer. In all likelihood Dr. Kearl won't appear again, and while this is absolutely speculative (I have no information on anyone's plans other than what the public filing says), I believe a decision to let Dr. Kearl appear again, despite a conflict of interest that is beyond all doubt, might trigger an interlocutory appeal.

For now, however, Dr. Kearl still appears in the case management order in paragraph 8, which refers to the expert report on damages being furnished within 21 calender days of the last party expert report on damages.

Finally, the court tentatively (the order says "likely") plans to allow Google to still raise its equitable defenses at the trial. This could help Google and harm Oracle because the jury might confuse some of the argument and testimony relating to equitable defenses as having a bearing, even if only psychologically, on "fair use."

On another note, The Recorder reports (for subscribers only) that lawyers from Morrison & Foerster and Boies, Schiller & Flexner are still working for Oracle on this matter, but Orrick, Herrington & Sutcliffe, whose appellate team (led by Joshua Rosenkranz) had achieved the reversal of the non-copyrightable ruling as well as favorable guidance on what is or is not fair use, now has the lead. The two most recent filings by Oracle had been signed by Orrick's Annette Hurst, a top-notch copyright expert. The Recorder also says she has a key role but mentions (in the first place) Peter Bicks, a commercial litigation attorney who has apparently had spectacular successes at jury trials in many different parts of the United States. Based on Mr. Bicks's background I now venture to guess that he will probably be the lead trial counsel.

Here's the case management order:

15-07-31 Oracle v. Google Case Management and Mediation Order by Florian Mueller

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Apple, Samsung lawyers blame each other for failure to settle patent dispute: court filing

On Monday, the Korea Times, citing unnamed sources "directly involved with the matter", reported that "Samsung has recently resumed working-level discussions with Apple and the key issue is how to dismiss all lawsuits". The sources also recognized that "[s]ome more time will be needed to fix terms of details such as royalty payments in return for using patents owned by each before reaching a full agreement". But the goal is apparently to agree on a ceasefire comparable to the truce Apple and Google (Motorola) announced on Friday, which does not shield Google's hardware partners, such as Samsung, from Apple's patent assertions (and does not even shield Google itself from the Rockstar lawsuits).

Later on Monday, a joint court filing by Apple and Samsung informed Judge Lucy Koh of the status of the parties' Alternative Dispute Resolution (ADR, i.e., mediation) efforts. After the recent verdict, Judge Koh had asked the parties to make another attempt to settle their patent spat and requested information on the status of those efforts.

It's key to bear in mind that the parties' court filing, including the attached correspondence between counsel that was apparently written for no other purpose than the blame game that is now taking place in front of the judge, relates only to ADR with the help of a mediator (which the parties tried before, more than once in fact). This is separate from the working-level discussions the Korea Times reported on. Working-level discussions can take place anytime, but the parties wouldn't tell the judge about those informal talks. Judge Koh wants them to make another formal mediation effort. And so far they can't agree on that one. But they are probably talking nonetheless, just not in a formal ADR setting. They can settle without ADR.

Apple wants assurances that its participation in an ADR effort wouldn't be held against it in court (as evidence of its willingness to license), while Samsung would be available for ADR "without seeking to impose any comparable conditions upon Apple". Samsung notes that "Apple has repeatedly used its prelitigation meetings with Samsung during trial to support its arguments".

Samsung's letter exudes confidence. In response to claims by Apple that Samsung "has now lost three jury trials and an ITC proceeding", Samsung's counsel highlights that Apple has also been found to infringe a Samsung patent, that "each verdict was far less than the amounts sought by Apple", and sums it all up by saying that "Apple has nothing to show for its years of litigation and hundreds of millions of dollars spent on attorneys' fees" -- which is true if you consider that the only feature (that end users would recognize and define as a feature) Apple has proved to own is rubberbanding.

Apple points to statements by Samsung's lead counsel in the recent trial, John Quinn, to the media. I quoted some of those statements in a recent post in which I outlined three possible ways forward for Apple ("the good, the bad and the ugly"). I'm sure Apple is genuinely outraged because Mr. Quinn brought up a painful subject: remedies. Apple hasn't been able to enforce any remedies against Samsung yet in connection with the trials that have been held in the U.S., and while Samsung exaggerates when it claims that Apple will get nothing at all in the end, I think it is realistic to expect significant reductions of those damages awards on appeal (and the award from the first case probably won't be able to stand because yet another trial will be needed if any key liability finding falls, which the one over the '915 pinch-to-zoom API patent very probably will). I do, however, agree with Apple that the "jihadist" statement was over the top.

Apple's part of the joint submission repeats the usual allegation of Samsung being unrepentant infringers, interpreting Mr. Quinn's statements to the media as an indication that "Samsung has no interest in stopping its use of Apple's patents or compensating Apple for past infringement" and alleging that "Samsung has adopted a business model that prohibits early or even timely resolution of any dispute involving intellectual property infringement".

I have said before that Apple is entitled to compensation for past design patent infringement. But as far as Apple's utility (i.e., technical) patents are concerned, it's increasingly unlikely that Samsung will ever pay any noteworthy amount of money for those. Further above I quoted Apple's statement that Samsung had "lost [...] an ITC proceeding". That is true only in formal terms, but from a business point of view, Samsung won the ITC case over Apple's complaint because the ITC cleared Samsung's workarounds. The import ban has been in force since October without any business impact (most people just don't know because there was lots of media coverage when the ruling came down, but no follow-up on the fact that end users don't even notice any change as a result of Samsung's ITC-approved workaround). If even the so-called "Steve Jobs patent" doesn't have impact, isn't it about time that Apple looked for an exit strategy from a war it apparently can't win?

For a long time I believed that Apple's primary problem was that the process (including appeals) is slow. Until August or September of last year, there were reasons to believe that Apple would get some decisive leverage. An appellate hearing on injunctive relief appeared to have gone well for Apple, the U.S. import ban had been ordered (and its impactlessness wasn't clear until it took effect in a legal sense but had no commercial effect), a German court appeared inclined to support Apple's "copying" allegation. But none of that worked out for Apple later. And while the patents Apple is asserting in the case that went to trial this year appeared stronger than the ones at issue in the first case, the patent claims Apple ultimately took to trial weren't frightening: Apple did not even claim to practice three of those five claims in its current products, which shows that one can deliver certain features without infringing on those patent claims. Apple's out-of-this-world damages claim in the second trial was a sign of despair more than anything else.

I still believe, as I told the Korea Times on Monday, that an Apple-Samsung settlement is now more likely than ever, and I would be surprised if this pointless litigation continued beyond the summer. "Boy have we patented it" was probably the biggest error, by far and away, of Steve Jobs's second tenure as CEO of Apple. If his successor hadn't realized it, he wouldn't have agreed on a ceasefire with Google.

Here's the joint Apple-Samsung court filing on ADR:

14-05-19 Apple-Samsung Joint Submission on ADR by Florian Mueller

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