First Ericsson v. Lenovo & Motorola Mobility patent infringement lawsuit found in North Carolina after standard-essential patent (SEP) licensing negotiations failed: multi-jurisdictional enforcement underway

I found out from a Light Reading article that "Ericsson has filed a number of lawsuits against Lenovo and its subsidiary Motorola Mobility for patent infringement in multiple jurisdictions." While I have subscribed to Ericsson's press release on its website, and received an earnings update two days ago, I didn't get that one.

I'll try to find out more about that new cross-jurisdictional patent dispute that appears to involve SEPs as well as non-SEPs. So far I've been able to download from an electronic court docket the following complaint that was filed with the United States District Court for the Western Division of the Eastern District of North Carolina:

Ericsson v. Lenovo & Motorola Mobility (case no. 5:32-cv-570, E.D. N.C.): October 11, 2023 complaint

These are the five patents-in-suit:

• U.S. Patent No. 7,151,430 on a "method of and inductor layout for reduced VCO coupling"; Erisson prevailed on this patent's claim construction in its enforcement effort against Apple last year

• U.S. Patent No. 9,313,178 on a "method and system for secure over-the-top live video delivery" (asserted against Samsung in 2021; that dispute was short-lived)

• U.S. Patent No. 9,509,273 on a "transformer filter arrangement" (Ericsson prevailed on claim construction against Apple and selected four of its claims for the final part of the ITC investigation, which got settled)

• U.S. Patent No. 10,972,654 on "controlling image capturing setting of camera based on direction objected is dragged along touch screen" (not previously asserted)

• U.S. Patent No. 11,122,313 on a "method and system for secure over-the-top live video delivery" (same family as the '178 patent discussed further above, but this particular family member has not previously been asserted)

As for the choice of venue, Ericsson's complaint points (inter alia) to a 2018 pleading in the Western District of Texas in which the Eastern District of North Caoflirna was described by those same defendants as a proper venue and forum conveniens:

"If, however, this Court chooses, in lieu of dismissal, to transfer this case, Lenovo and Motorola respectfully submit that the Eastern District of North Carolina (EDNC), and specifically the Raleigh Division, is both a proper forum for this dispute and the most convenient forum. . . . Under the patent venue statute, the Eastern District of North Carolina is a proper venue for both Lenovo and Motorola. See 28 U.S.C. § 1400.”

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Long-term patent cross-license announced by Ericsson and Huawei: emphasis on respect for IP, balance, and cooperation on standards

Ericsson and Huawei just announced that they "have renewed a multi-year global patent cross-licensing agreement that covers patents essential to standards relevant to the products of the parties, including 3G, 4G, and 5G cellular technologies." The agreement is a two-way street that gives both parties access to each other's standard-essential patent (SEP) portfolios with a view to "sales of network infrastructure and consumer devices." And it is the latest example of market-driven solutions that the contemplated EU SEP Regulation would complicate rather than facilitate.

Financial terms and the exact term of the agreement were not announced. While Ericsson's press release notes that its full-year 2023 intellectual property licensing revenues would amount to approximately SEK 11 billion (USD 1 billion), today's announcements don't say explicitly who will be the net payer. In fact, they may not even know yet how things will play out over the entire term of a multi-year agreement, how each other's product sales develop. A cross-license means that rights and payments are going in both directions. The net balance may be predetermined, but in a dynamic environment it may depend on future sales. I'm sure that Ericsson was the net licensor under past license agreements with Huawei, and the fact that Ericsson raised its licensing-revenue guidance suggests that this is still the case as we speak.

What does "long-term" (a term that is also found in a statement by Huawei's IP chief Alan Fan) presumably mean in this context? Apart from temporary standstill agreements, the shortest term of a license agreement that I have seen so far is the three-year term of the Nokia-OPPO agreement that expired in mid 2021. A pretty standard term is five years--a duration so common among patent license agreements that I wouldn't necessarily call it "long-term" in this context. Various major license agreements have been announced in the wireless industry with a known seven-year term. My guess is that "long-term" means at least seven years for the new Huawei-Ericsson deal, though presumably not more than a decade.

Let's look at what both parties say in their respective press releases:

Huawei:

"'We are delighted to reach a long-term global cross-licensing agreement with Ericsson,' said Alan Fan, Head of Huawei's Intellectual Property Department. 'As major contributors of standard essential patents (SEPs) for mobile communication, the companies recognize the value of each other's intellectual property, and this agreement creates a stronger patent environment. It demonstrates the commitment both parties have forged that intellectual property should be properly respected and protected.'"

Ericsson:

"'We are pleased to announce our renewal of our global cross-licensing agreement with Huawei,' said Christina Petersson, Chief Intellectual Property Officer at Ericsson. 'Both companies are major contributors to mobile communication standards and recognize the value of each other's intellectual property. This agreement demonstrates the commitment of both parties that intellectual property should be respected and rewarded, and that leading technological innovations should be shared across the industry. A balanced approach to licensing ensures that the interests of both patent holders and implementers are served fairly, driving healthy, sustainable industry development for the benefit of consumers and enterprises everywhere.'"

Those two statements reflect a meeting of the minds. There was no litigation (as I'm sure that any infringement actions would have been announced), and presumably not even alternative dispute resolution. It looks like both companies shared the vision that IP should be respected, innovation should be rewarded, and above all they wanted to ensure smooth cooperation on technology development. Both are major contributors to standards, such as the further evolution of 5G as well as its successors (there will not only be 6G but also something already referred to in some reports as 5.5G).

The fact that they compete on network infrastructure in some markets does not prevent them from approaching IP as a topic that is simply part of the ordinary course of business, and to collaborate on wireless development at the level of standards-development organizations like ETSI (a Europe-based organization of world repute that certain initiatives by the European Commission--not only but also the proposed EU SEP Regulation--threaten to marginalize).

Would the EU's envisioned, EUIPO-organized rate-setting process have been of assistance here, even though it indisputably wasn't needed to reach this agreement? There would have been no value-add because those companies, with their specialized departments, understand their own and each other's patent portfolios better than a single "conciliator" could after a nine-month process.

Today's announcement must be viewed in light of last month's innovation and intellectual property presentation by Huawei. The company does not view patent licensing as a strategic business area or profit center, but as a logical and necessary activity that helps finance the next round of innovations. Given the strength of Huawei's patent portfolio and a growing range of product categories that incorporate standardized technologies, the total amount of Huawei's licensing revenue ($560M in 2022) appears moderate or at least not excessive. It's also interesting to look at Huawei's differentiated, SME-friendly license terms for the IoT industry.

While there are significant differences between the two companies, today's announcement shows that both of them believe that if you use someone else's IP, you should pay a fair royalty for it, but that this goes both ways.

They are both among Avanci's 4G and 5G licensors (Ericsson was there from the beginning while Huawei's involvement became publicly known only this month).

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Optis v. Apple FRAND ruling could be delayed by Justice Marcus Smith's new merger case (Microsoft-ActivisionBlizzard); GenghisComm sues Toyota over SEPs; updates on Nokia-OPPO, KPN-Ericsson

This is a roundup post that discusses four different standard-essential patent (SEP) disputes and multiple jurisdictions. Quick links:

1. Optis v. Apple FRAND ruling could be delayed by Justice Marcus Smith's new merger case (Microsoft-ActivisionBlizzard)

2. GenghisComm (not an Avanci licensor) sues Avanci licensee Toyota over SEPs

3. Nokia invalidated OPPO patent-in-suit

4. KPN defended one of patents-in-suit against Ericsson earlier this month

1. Optis v. Apple FRAND ruling could be delayed by Justice Marcus Smith's new merger case (Microsoft-ActivisionBlizzard)

It's been almost a year since the Optis Wireless v. Apple trial in the High Court of Justice in London, but no decision has come down yet. In a similar case, InterDigital v. Lenovo, it took Justice Mellor similarly long as those FRAND (fair, reasonable, and non-discriminatory) rate-setting cases are incredibly labor-intensive for the courts adjudicating them.

The judge presiding over the FRAND part of the Optis v. Apple case is Mr Justice Marcus Smith, whose reputation extends not only to patent but also competition law: he is the President of the Competition Appeal Tribunal (CATribunal, or just CAT) of the United Kingdom.

It is not unusual for judges to divide their time between two courts. In fact, numerous European patent judges are doing so now between national courts and the Unified Patent Court (UPC). Since a few days ago, Mr Justice Smith is presiding over an antitrust case that is by far the biggest in the CAT's history, not only in terms of what's at stake (Microsoft's $68.7 billion purchase of Activision Blizzard) but also the enormous public and media attention--and on top of all of that, it's a matter that the UK's Prime Minister (who stressed the CMA's responsibility for growth and investment), Chancellor of the Exchequer, and its Parliament's Business and Trade Committee are concerned about.

Microsoft filed its appeal of a Competition & Markets Authority (CMA) merger-blocking decision on Wednesday evening UK time. Mr Justice Smith published the summary of the grounds of appeal (PDF) approximately 48 hours later and scheduled a case management conference for Tuesday (May 30). I already predicted at the beginning of this month that he would personally preside over that ultra-high-profile appeal. After yesterday's publication of the summary of the appeal, I commented on the grounds of appeal in a 40-part Twitter thread and added some further commentary on the comity part.

I'll live-tweet about the case management conference on Tuesday.

The deal has been cleared by the regulators who decided the matter for 38 countries (30 of them European Economic Area member states), with a collective population of 2.4 billion and aggregate GDP of $45 trillion, so if not for the CMA's absurd ruling, the deal could actually close now. But the CMA's leadership would like their agency--which the CAT has to overrule fairly often if one considers the deferential standard of review called Judicial Review--to be the world's policeman for major mergers, especially major tech mergers. There is profound concern in the UK over the CMA's eccentricities and regulatory overreach, and the CAT is now called upon to restore sanity and curb megalomania.

The CMA is now an outlier on the global stage. The only regulator to agree with them is the FTC, which under its current leadership opposes virtually any merger it gets to review and openly admits it doesn't care about losing in court all the time. The CMA decision is so clearly biased and incorrect that more and more people are wondering whether the reason is not just regulatory hubris or a lack of understanding of the technology markets involved, but whether it is even attributable (at least in part) to bad faith. My personal opinion is that a good-faith merger decision where the regulator looks at all of the evidence with an open mind and strives faithfully to apply the law to the facts definitely looks different.

There are mistakes that can be adequately explained with a lack of diligence (the CMA totally embarrassed not only itself but the UK and its government when the provisional findings--the equivalent of the Statement of Objections in the EU--subtracted only one year of costs from five years of benefits. The CMA corrected that mistake after Microsoft pointed it out, and revised the provisional findings. That was almost certainly just a lack of diligence. But the final decision just showed that before the merger review even started in earnest they must have been hellbent on blocking the merger. After they had to give up their primary theory of harm (vertical foreclosure affecting Sony in the videogame console market) and even prior to that realized they had to drop a "conglomerate" theory (involving Windows (an open platform), Azure (an easily substitutable commodity), the Xbox, and Activision Blizzard's games), they simply shoehorned those failed theories of harm into a "cloud gaming" theory of harm.

Weeks before Microsoft filed its appeal, the gamer community had already identified and discussed plenty of issues on Twitter and discussion boards. The decision is not just flawed or extremely wrong. It's a lot worse than that.

Against that background, gamers and other observers of the process can't be blamed for asking questions about the impartiality of the person who according to what a reporter from a major news agency told me "basically made the decision for the CMA": the agency's Senior Director of Mergers, Colin Raftery. Only because I wanted my many Twitter followers with an interest in that merger topic to understand that an unbalanced panel might respond to a historic speech by EU antitrust chief Magrethe Vestager on the same day, I mentioned--and proved based on a LinkedIn screenshot--that Mr. Rafferty started his career and spent seven years at Cleary Gottlieb Steen & Hamilton, a firm that has been consistently adverse to Microsoft for decades and is representing the most vocal critic of the Activision deal--Sony Interactive Entertainment--in its worldwide complaints, also in the UK. Cleary also advises Google, the other (and less vocal) complainant, but not in this context it seems. That factoid was picked up by Windows Central, and other media reported as well. On social media (Twitter, TikTok etc.) there was widespread outrage. My personal opinion is that none of us knows what Mr. Raftery's personal relationship with the Cleary lawyers opposing the deal on Sony's behalf--and with Sony's executives--is, so the truth could be anything from reassuring to mildly disconcerting to problematic.

It turned out that Mr. Raftery was previously instrumental to a merger-blocking decision that favored a former client. And it doesn't look good that the CMA takes an extreme position on a vertical merger now (Microsoft-ActivisionBlizzard) while it allowed Sony to make a horizontal acquisition of particular relevance to the UK market.

It now befalls Mr Justice Smith and his CATribunal to ensure a legally correct outcome and to restore the general public's confidence in the UK regulatory process. The fact that the first case management conference already takes place a few days later suggests that he wants to adjudicate the matter as swiftly as possible, which is in everyone's interest except Cleary and two of its clients, and CMA officials who may hope that the merger will be abandoned before their mistakes and their abuse of power won't be exposed.

People are already talking about a novelization or a documentary about that merger, given that some of what has happened here amounts to truth being stranger than fiction. I guess some of my blog posts and tweets about the case will come in handy if and when that happens. Those of you who have practiced law before Mr Justice Smith, or know him as a colleague, can already think about which Hollywood actor might play him.

2. GenghisComm (not an Avanci licensor) sues Avanci licensee Toyota over SEPs

There isn't much happening anymore in terms of automotive SEP litigation. Avanci has licensed the vast majority of car makers, Continental finally gave up its U.S. federal antitrust litigation against Avanci and some of its licensors (continuing only its Delaware state law action against Nokia), and Telit dropped a lawsuit that had been brought by Thales in Munich against Avanci and Nokia.

While the European Commission doesn't seem to appreciate the contribution of patent pools to the licensing process the way it used to do, Avanci's success has made it part of the solution. Recently even Samsung--one of the world's largest implementers of cellular standards--joined Avanci as a licensor at no extra cost to licensees.

A few SEP holders--some of which are non-practicing entities--still aren't Avanci licensors. One such company is GenghisComm Holdings, which on Wednesday filed a SEP infringement lawsuit in the Eastern District of Texas against Toyota:

When it comes to comparable licenses, Toyota will be able to point to the license it has taken from Avanci, paying $15 per car for the vast majority of 4G SEPs. GenghisComm is presumably suing for the purpose of extracting a substantially higher royalty rate relatieve to the strength of its portfolio. Maybe the plan is to benefit from the unpredictability of patent damages verdicts.

3. Nokia invalidated OPPO patent-in-suit

About two weeks ago I reported on the (appealable) revocation of two Nokia patents as a result of OPPO's challenges. For the sake of complete reporting, I'd like to add that this month a written decision (PDF) also came down in an opposition proceeding in which Nokia has achieved the (equally appealable) revocation of an OPPO patent-in-suit: EP3563600 on "separate configuration of numerology-associated resources." the oral hearing took place on March 23.

4. KPN defended one of its patents-in-suit against Ericsson earlier this month

Here's a follow-up to the post of a few days ago on Ericsson obtaining the invalidation (by the USPTO's PTAB) of one of KPN's patents-in-suit. I hadn't previously commented on that dispute, so now I'd like to provide a bit more context.

Of the three patents-in-suit from KPN's first case against Ericsson in the Eastern District of Texas,

• one (RE'089) was invalidated as I reported,

• one was never challenged through an IPR petition (U.S. Patent No. 8,881,235 on "service-based authentication to a network"), and

• a third one, U.S. Patent No. 9,253,637 on a "telecommunications network and method for time-based network access", was deemed valid by the PTAB in a May 12, 2023 decision (IPR2022-00069).

A second KPN v. Ericsson case is also pending in the same district (i.e., before Judge Rodney Gilstrap):

Koninklijke KPN N.V. v. Telefonaktiebolaget LM Ericsson and Ericsson Inc. (case no. 2:22-cv-282-JRG): July 25, 2022 complaint

According to the docket, the trial will begin on April 1, 2024 with jury selection.

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Ericsson strikes down patent underlying KPN's $32 million jury verdict from August 2022: PTAB invalidates all challenged claims

The patent infringement dispute between Dutch telecommunications carrier KPN and Swedish telecommunications equipment maker Ericsson is unusual because infrastructure makers typically sell products to telcos rather than getting sued by them over patents. What is not that unusual, though, is the fact that Ericsson is on the receiving end of that case. Ericsson and Nokia, while being net licensors, typically have multiple disputes pending at any given time in which someone else wants to collect patent royalties somewhere, most frequently in the United States. That's why those two companies don't take extreme positions when they are on the enforcing side: they know what it's like when the shoe is on the other food, and they know that whatever they say as a defendant may be held against them as a plaintiff (though inconsistencies could only undermine their credibility but in the end all that should matter is the law).

Last August, a jury in the Eastern District of Texas handed down a verdict in KPN's favor and relating to a package of three patents. The verdict form did not distinguish by patent or claim, but merely indicated whether "any" of the claims had been infringed and whether any of the patents were invalid (juries rarely ever invalidated patents, and here they also thought all patents-in-suit were valid):

Koninklijke KPN N.V. v. Telefonaktiebolaget LM Ericsson & Ericsson Inc. (case no. 2:21-cv-113-JRG, E.D. Tex.): Jury Verdict of August 26, 2022

KPN is apparently never going to get the $32 million payout.

One of the three patents-in-suit, U.S. Patent No. RE48,089 on a "method and system for automatic coverage assessment for cooperating wireless access networks", has now been invalidated by the PTAB. Ericsson--represented by the Baker Botts firm--challenged most claims, also including the ones asserted in the Texas infringement action, and prevailed across the board. The PTAB judgment came down yesterday:

Ericsson Inc. v. Koninklijke KPN N.V. (PTAB IPR2022-00079, Patent RE48,089): Judgment (of May 23, 2023) Determining All Challenged Claims Unpatentable

Maybe this decision will pave the way for a settlement between the parties. They should be commercial partners, not adversaries in patent litigation.

Earlier today I commented on USPTO Director Kathi Vidal's proposed PTAB IPR rulemaking reform. Then I saw this interesting PTAB decision.

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Telit drops antitrust lawsuit against Avanci and Nokia over component-level licensing of standard-essential patents started by Thales in Munich, also withdraws U.S. discovery requests

A few months ago, IoT module maker Telit consummated the acquisition of the cellular IoT products unit of French industrial conglomerate Thales. As a result of the transaction, Telit inherited the antitrust dispute Thales had started in 2021, accusing the Avanci patent pool firm and one of its licensors--Nokia--of violating EU antitrust law by declining to grant exhaustive component-level licenses covering cellular standard-essential patents (SEPs).

From the beginning I had--and expressed--my doubts about the prospects of that complaint, just like I never believed in Continental's U.S. litigation against Avanci, Nokia, and others, a case that indeed went nowhere. At some point a Thales v. Avanci & Nokia trial was scheduled for September 2022, but it didn't take place. There were delays, and with what is known now it's fairly possible that Thales knew Telit--which was in the process of acquiring that business unit--wasn't really interested in pursuing that litigation.

I noticed the withdrawal of the three related U.S. discovery motions earlier this month. Thales was seeking discovery (for use in the Munich proceedings) of Avanci (Northern District of Texas), Ericsson (Eastern District of Texas), and InterDigital (District of Delaware). For instance, on May 4 Thales gave notice that the Delaware action was "dismissed without prejudice, with each party to bear own costs, attorney’s fees, and expenses." The other dismissals were also without prejudice, and there is generally no indication of an agreement having been worked out between the parties along the lines of a license agreement. If anything, there was probably just a procedural agreement to terminate the litigation.

Yesterday afternoon the Munich I Regional Court was able to confirm to me that Thales (Telit) withdrew its antitrust complaint on May 4, 2023. The case was pending before the court's 21st Civil Chamber (Presiding Judge: Dr. Georg Werner).

While Continental was primarily seeking injunctive relief (and is still suing Nokia in Delaware state court, though nothing important has happened there so far), Thales brought a complaint for damages, which was unusual. Whatever the strategy may have been, the net effect is that those automotive supplier lawsuits over component-level SEP licensing are just a waste of resources.

The automotive sector has stepped up its lobbying efforts, which is reflected by the European Commission's proposed SEP Regulation. That bill does not require SEPs to be licensed at a specific level of the supply chain, but the EUIPO may in the end encourage component-level licensing through its recommendations further to the regulation. It is too early to tell whether that will happen, as the legislative proposal is likely to undergo lots of changes in the further process. Given that car-level licensing demonstrably works (by now most car makers have an Avanci license), the case for governmental intervention, even if merely in the form of an official recommendation, is increasingly hard to make. The failure of those lawsuits brought by Conti and Thales also doesn't suggest that there's an actual problem to be solved.

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Delhi High Court hands Ericsson appellate victory over Indian electronics maker Intex in standard-essential patent case: FRAND is not a one-way street; without injunctions, hold-out will occur

While the European Commission is contemplating measures that would complicate standard-essential patent (SEP) infringement lawsuits (see a first reaction to reports on an upcoming proposal and a table of contents and synopsis), the High Court of Delhi at New Delhi rendered an appellate opinion on Wednesday that reflects a pro-enforcement stance:

Ericsson v. Intex cross-appeal: Delhi High Court ruling

Intex Technologies is an electronics manufacturing services company. On LinkedIn, one of Ericsson's lawyers from the Singh and Singh firm welcomed the "much needed clarity on SEP jurisprudence in India" that the decision brings. The firm itself summarized the 10 key aspects of the decision as follows:

1. FRAND is not a one-way street and the same casts an obligation on both the SEP owner and implementor to negotiate and act in conformance with the FRAND protocol specified under the CJEU judgment in Huawei v. ZTE;

2. Parties’ conduct during negotiation of a FRAND license is a relevant factor for determining willingness;

3. Disclosure of third-party license agreements by an SEP owner during negotiations is not mandatory or a precursor for the implementor to revert with a FRAND counter-offer. The implementor can place reliance on its own licenses executed with third-parties and other SEP proprietors to formulate an appropriate counter-offer or to determine if the SEP proprietor’s offer is FRAND;

4. There is no embargo on grant of injunctions (both at the interim and final adjudication stage) against an implementor who is unwilling;

5. If the negotiations between parties fail, that does not mean that an implementor can continue to use the technology of the SEP proprietor for free, without making any payment for such use;

6. Implementors are mandated to make certain deposits/furnish security in favour of the SEP proprietor in case negotiations fail, in order to balance the right of the SEP owner;

7. Infringement is SEP cases can be established by using claim charts;

8. Portfolio licensing on a global basis is in conformance with commercial practices in the industry and is FRAND;

9. The finding of the Ld. Single Judge and four-factor test prescribed in paragraph 77 of the Nokia v. Oppo judgment is contrary to law;

10. Under the Patent Rules, 2022 courts can direct deposits of some kind of security even on the first date of hearing;

11. The peculiarities of the English system of conducting an SEP trial cannot be applied in the Indian context, as the realities of the Indian legal system should be considered.

Here are a couple of observations based on my reading of the decision:

• Nothing in the Indian ruling contrasts more nicely with the European Commission's draft SEP regulation than the holding that FRAND "is not a 'one[-]way street' where obligations are cast on the Essential Patent holder alone."

• The judges considered that India is short on judges (relative to population size) and cases take too long to resolve ("the judge-population ratio is extremely poor in this country and expeditious disposal of patent suits cannot be expected at the cost of other suits"). Therefore, it is key to give leverage reasonably early to SEP holders. This litigation here has apparently been going for many years, and "Ericsson filed the information/complaint before the CCI only after a prolonged negotiation of almost five years during which Ericsson had provided Intex a list of its Standard Essential Patents, Claim Mapping Charts to show essentiality and also a test report to show infringement." For those five years, or even longer, "Intex did not share any of its own claim charts with Ericsson either indicating use of alternate technology or disputing essentiality of Ericsson patents or countering Ericsson’s claim charts and the fact that Ericsson had already issued around One Hundred (100) licenses for its worldwide patents to various third parties"

• Here's the next--and final for this post--reference to the EU initiative: para. 89 of the decision quotes--and describes as reflective of common sense--"a paper dated 9th May, 2022 filed by legal academics, economists, and former United States governmental officials in response to European Commission call for evidence for an impact assessment." According to how the Indian judges summarize a passage from that document, if SEP owners "are flatly precluded from seeking injunctions, then infringers would have little reason ever to agree to, or negotiate in good faith, a licence with a Standard Essential Patent owner." Instead, "[a] well-resourced infringer would rationally reject any licence offer an compel the Standard Essential Patent owner to enter into litigation that typically requires millions of dollars in legal expenses in multiple venues around the world."

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Burgeoning IP and antitrust jurisdiction: Brazil's Superior Court of Justice allowed Ericsson to enforce preliminary injunction against Apple over FRAND-pledged standard-essential patent

The dispute between Ericsson and Apple that got settled last month has put two Latin American jurisdictions on the standard-essential patent (SEP) litigation map:

• A preliminary injunction (PI) in Colombia barred Apple from selling and importing 5G-capable devices for about four months. Carlos Olarte, founding partner of the OlarteMoure firm, made patent litigation history.

• It came to light only this month that some rather interesting decisions had also come down in Brazil, South America's largest economy. The most important one was made by the Superior Tribunal de Justiça (STJ; Superior Court of Justice). In a major win for Ericsson's counsel, Licks Attorneys' Rodolfo Barreto and founding partner (who once worked as a full-time intern for the Federal Circuit's famous former Chief Judge Rader) Carlos Aboim, the enforcement of a temporarily-stayed SEP-based PI against Apple was allowed.

Here's the original decision (in Portuguese):

December 6, 2022 ruling on internal appeal ("agravo interno") in Ericsson v. Apple by Brazil's Superior Tribunal de Justiça (unanimous decision by Reporting Judge Antonio Carlos Ferreira, Presiding Judge Raul Araújo, and Judge Marco Buzzi)

A recording of the STJ ruling is available on the court's YouTube Channel (starting at 29:39).

Little was known about the Brazilian proceedings during the course of last year. About a year ago, I reported on the fact that some PI motion(s) had been filed, and followed up when Apple mentioned in a U.S. court filing that Ericsson was also seeking a PI against a Brazilian Apple distributor.

The fact that the Brazilian STJ decision was rendered three days prior to the global Ericsson-Apple settlement is certainly interesting, but there also was a Texas trial underway, so I believe it was one relevant factor that informed the parties' positions (but obviously not the only one). Looking beyond this particular dispute, it is fair to say that Latin America is an increasingly interesting continent for technology law (IP and antitrust), and Brazil is an up-and-coming jurisdiction for technology disputes:

• The reasoning behind the Brazilian STJ's decision was that Apple should not be allowed to continue to infringe Ericsson's patents without paying any royalties. A court in Rio de Janeiro had granted a PI over a 5G patent (Reporting Judge: Claudio Dell'Orto), requiring Apple to either leave the Brazilian market or to make payments in accordance with the prior global patent license agreement (apparently $200 million per year). But on a Sunday on which Brazil's most recent presidential elections began (October 2, 2022), enforcement was stayed. Licks Attorneys--the firm that according to my research has represented patent holders in all (23) information and communications technology patent infringement cases in Brazil so far--kept on fighting and got an unusually soon hearing date (December 6).

  The key rationale on the STJ's part was that there is no reason why PIs should not be granted over SEPs (with the FRAND pledge being deemed a matter of contract law that does not weigh against injunctive relief), and to encourage negotiations. Ericsson never wanted the Brazilian courts to set a royalty: it sought to stop infringement until a new agreement would be struck.

  Under the STJ's decision, Apple would not have been required to make royalty payments based on its global use of Ericsson's patent portfolio, but would have had to compensate Ericsson for the use of its patents in Brazil (to the tune of $3 per device, with the concomitant inconvenience of having to make royalty reports). In other words: no more hold-out. Damages owed at the very end of infringement litigation were not considered an adequate remedy.

  That reasonably IP-friendly judicial philosophy contrasts with what you find in some other jurisdictions. For instance, a Dutch court denied Nokia a PI against OPPO, and the same judge had previously denied Ericsson one against Apple even over a non-SEP, based on a balancing of the hardships.

  That said, it's not a cakewalk for plaintiffs: a PI is granted only if there is a strong prima facie showing of a likelihood of success on the merits. The threat of an injunction does, however, bring infringers to the negotiating table.

• On Thursday I reported on a decision by Brazil's antitrust authority (CADE) to open formal investigations of Apple's App Store terms and policies further to a complaint by MercadoLibre (Mercado Livre in Portuguese) and another regional e-commerce company, Clique.

• In October, I was favorably impressed with CADE's well-reasoned decision to grant unconditional clearance to Microsoft's acquisition of Activision Blizzard.

Getting back to Ericsson v. Apple, there was also a 4G PI that likely would have become enforceable in the wake of the STJ decision in the 5G case. And on the day of the STJ decision (December 6), a Rio de Janeiro district court entered a PI against Apple over two non-SEPs.

Three other information and communications technology patent holders also obtained PIs in Brazil: DivX (against Netflix and Amazon), Philips (against TCL), and G+ Communications against Samsung. In a procedurally unusual case, Disney sought a declaratory judgment of non-infringement against DivX (apparently out of fear of being enjoined there), but a settlement fell into place shortly thereafter.

An injunction that VoiceAge EVS obtained against HMD in Brazil was mentioned in a post on that dispute last year.

Sophisticated patent holders increasingly bet on Brazil, and I have a hunch that it won't be long before this blog will learn about the next interesting complaint or decision in that jurisdiction.

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Ericsson and Apple settle 5G patent dispute during Texas and ITC trials, agree on global cross-license; $400 million one-off payment plus ongoing royalties at unknown rate

While one major litigation started less than 24 hours ago (FTC v. Microsoft-ActivisionBlizzard, see my analysis of the complaint), another one has come to an end: Ericsson and Apple have made peace. Another important patent cross-license agreement was announced earlier today by Huawei and OPPO.

I wish to thank a number of readers for reaching out to me about today's Ericsson-Apple settlement. The reason I didn't get to write about it immediately was purely logistical: I was not at my desk, and didn't have a portable computer with me either. I did, however, share the news within a couple of minutes on Twitter as well as on LinkedIn. I strongly encourage readers to follow my feeds there, especially the one on LinkedIn, a platform that is becoming ever more relevant for purposes like sharing and commenting on news. And when I've already shared the news on social media, I'm in less of a hurry to share my further thoughts via this blog.

Major patent disputes typically settle right before or somewhere between trials. It is not unheard of for settlements to fall into place during a trial, such as between Qualcomm and Apple in 2019 (I was at the federal courthouse in San Diego when the news suddenly broke). However, Ericsson v. Apple may be the first patent dispute in history to have settled during two simultaneous trials: a FRAND trial in the Eastern District of Texas (Presiding Judge: Chief Judge Rodney Gilstrap) and an Apple v. Ericsson evidentiary hearing (a trial by any other name) in the United States International Trade Commission (USITC, or just ITC) (Presiding Judge: Administrative Law Judge (ALJ) Monica Bhattacharyya.

Here are the minutes of the final trial day in Texas, which was rather short owing to the settlement:

Ericsson v. Apple, Minutes for Jury Trial Day No. 5 Held Before U.S. District Judge Rodney Gilstrap (December 9, 2022)

The press release does not state the exact length, but it is a "multi-year" agreement. The last one had a seven-year term and ended in January.

Last year, Ericsson settled with Samsung within only a few months of expiration of the previous agreement. Even the settlement with Apple took less than a year from the point where infringement actions started (mid-January 2022).

I actually told Swedish financial daily Dagens Industri last week that I thought a settlement would make sense before the Texas trial. It was simply a logical point in time. For whatever reason, they couldn't make it work, so the Texas trial had to start, but there won't be a jury verdict anymore.

In a quote contained in the press release, Ericsson's Chief Intellectual Property Officer touts the "strategic importance [of the new agreement with Apple] to [Ericsson's] 5G licensing program." Ericsson has renewed its license agreements with the world's two leading consumer electronics makers: Apple and Samsung. It is unknown whether there any other agreements have recently expired or are about to expire. In any event, whoever has yet to work things out with Ericsson for 5G now knows that the company has another important license to point to as a comparable agreement with a view to the "ND" in "FRAND"--and the settlement of the earth-spanning dispute with Apple has freed up litigation resources in case they are needed.

Given that no injunction was currently being forced or imminent, neither Apple nor third parties can easily convince a court or a jury that the terms of the new Ericsson-Apple agreement were attributable to "hold-up."

I believe Ericsson would have been very likely to gain significant leverage in 2023, above all through its patent assertions in the Munich I Regional Court. Maybe also in Mannheim and/or the ITC, or maybe some other countries like the UK or Colombia (where a preliminary injunction had been lifted, but various cases were still pending). With a view to 2023 I was, however, most optimistic about Munich. Mannheim is an increasingly unpredictable venue for plaintiffs, which I regret to say (because I really like that court just like sports fans like certain venues), but it is a fact that plaintiffs sometimes run into unforeseen issues there, which I've heard it from a top-notch litigator who was not involved with the Ericsson-Apple dispute and has not recently filed any cases there for that very reason.

It didn't look like Apple's countersuits were likely to move the needle.

The financial terms are, as always, confidential. In a note to clients, Arete's Richard Kramer said "[t]he real question for Ericsson will be about the ’23 and onwards guidance for IPR income, whether it can keep or improve on the SEK8bn run rate." For now it is known--according to Arete--that a one-off payment from Apple amounts to SEK 5.5-6 billion in the current quarter, which must relate to back royalties for 2022 and may also include "pre-payments to reduce ongoing liabilities." but that is the big question: how much of the $400 million that Apple pays upon signing of the agreement was related to 2022, and how much of it just serves to reduce ongoing payments in the years ahead. According to Arete, Apple paid an estimate of $225 million per year under the old agreement "[s]ince losing Apple in the mix took Ericsson IPR payments down from SEK 8.1bn for ’21 (when Apple was a 4G licensee) to a run-rate of SEK 5.75bn [in the aggregate of the first three quarters of 2022]."

My guess is that this is a reasonably good outcome for both sides, and that also appears to be Mr. Kramer's take (he assumes it's "a sensible result"). But again, there is limited visibility, so it's more of an educated guess than anything else.

What I liked about this Ericsson-Apple dispute was that the dots were connected between Apple's arguments in App Store antitrust cases (such as on iOS-Android switching costs) on the one hand and Apple's positions on patent licensing terms on the other.

Finally, I'd like to mention some of the lawyers. At this week's Texas trial, it appears that WilmerHale's Joseph J. "Joe" Mueller was effectively Apple's lead counsel. He had been on "Team Apple" in various patent cases before this one, but this was the first high-profile dispute where he did most of the work at a key trial. Ericsson's lead U.S. counsel, Alston & Bird's Theodore "Ted" Stevenson, had largely prevailed on the structure of the Texas case--and he had previously scored a key victory there (and in the Fifth Circuit) for Ericsson against HTC. Ericsson v. Apple was a clash of titans.

In the German cases, the firm of Kather Augenstein--with name partner Dr. Christof Augenstein having the lead--thoroughly impressed me. I must admit I didn't have a similarly favorable view of them before, but that was largely because I never saw them in action and just had some disagreements with some of those lawyers on social media. Their performance in those German cases was top-notch. In Colombia, Carlos Olarte, name partner of Olarte Moure, made history with the aforementioned preliminary injunction. I believe Colombia is now on the radar of more patent holders than ever.

The big question is now the status of Apple's patent license agreement with Nokia. I thought it would expire this year (based on the term of a previous agreement), but I am not so sure anymore.

For now, I wish to congratulate both Apple and Ericsson on having put their dispute behind them!

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Apple expert witness coined 'feminazi' term to disparage committed feminists, testified for Apple yesterday against Ericsson in U.S. International Trade Commission

Yesterday was Day Two of two Ericsson-Apple courtroom clashes that started on Monday.

In the Eastern District of Texas, most of the day was spent on testimony by Ericsson's Chief Intellectual Property Officer Christina Petersson. First she was examined by her lead counsel, Theodore "Ted" Stevenson III of Alston & Bird, then cross-examined by Wilmer Hale's Joseph J. "Joe" Mueller, again by Mr. Stevenson on redirect and finally by Mr. Mueller on recross. That's what I gathered from Judge Gilstrap's minutes. I don't know what was said. I remember her as a witness who came across as trustworthy, knowledgeable, and fairly balanced in the FTC v. Qualcomm case in the recording that the FTC played in support of its case.

In the United States International Trade Commission (USITC, or just ITC), a U.S. trade agency (thus based in Washington, D.C.) with quasi-judicial powers (in particular, it can impose import bans on patent-infringing products), Administrative Law Judge (ALJ) Monica Bhattacharyya is presiding over a case in which Apple wants to win an import ban on Ericsson base stations and has already heard some Apple witnesses. One of the expert witnesses who testified on Apple's behalf yesterday is Clemson University professor of economics Thomas W. Hazlett. He specializes in telecommunications and served as the Federal Communication Commission's chief economist from 1991 to 1992. But it was not his work on telecoms matters that earned him an entry in The Oxford Dictionary of American Political Slang:

Mr. Hazlett is "credited" for having coined the term "feminazi"--a portmanteau of "feminist" and "Nazi" that according to the dictionary refers to "a committed feminist or a strong-willed woman"--that was popularized by conservative radio talk show host Rush Limbaugh. In his 1991 book "The Way Things Ought to Be", Rush Limbaugh wrote the following:

"I prefer to call the most obnoxious feminists what they really are: feminazis. Tom Hazlett, a good friend who is an esteemed and highly regarded professor of economics at the University of California at Davis, coined the term to describe any female who is intolerant of any point of view that challenges militant feminism."

While I often liked Rush Limbaugh's resistance to political correctness and think he sometimes explained more convincingly than anyone else what drove some politicians' decisions and influenced their positions, I never really understood his obsession with the term "feminazi" and never once used it myself.

It is out of character for--otherwise liberal or at least politically correct--Apple to rely on an expert witness with that history, even more so in front of a female judge.

In a recent post on this mmWave patent case I already published Apple's prehearing brief. It described the purpose of Dr. Hazlett's testimony as follows:

"In immediately apparent distinction from Ericsson and its experts in the Investigations on Ericsson’s complaints against Apple, which have provided little more than conclusory 'expert' ipse dixit, Apple and Dr. Tom Hazlett, an economist and Professor at Clemson University, here will provide real-world, economic evidence that demonstrates the minor role of mmWave in 5G deployment. For example, Dr. Hazlett will provide and explain specific data demonstrating that the mmWave portion of 5G communications is responsible for less than 1% of consumers’ mobile access as measured by data usage, that US network carriers’ investment in FCC licenses specific to mmWave spectrum comprises merely 4% of their total investment in 5G licenses, and Ericsson’s mmWave radio sales comprise less than 10% of its total 5G radio unit volume (and is projected to decrease). Moreover, Dr. Hazlett will identify evidence from the network carriers themselves showing that, should Ericsson’s Accused Products be excluded, other suppliers such as Samsung and Nokia are positioned to fill demand for its mmWave base station products, and alternative technologies from 4G, 5G, and other networks are also available. In sum, Apple’s requested relief will do no more than stop Ericsson’s unauthorized use of Apple’s patented technology."

I'm sure that not only Ericsson but especially U.S. mobile telecommunications carriers like Verizon sharply disagree with Apple and Professor Hazlett, as does the ITC staff (see the post I linked to further above).

In a July 20 document identifying Apple's expert witnesses, this expert's background was summarized as follows:

"Dr. Hazlett an expert in economics, including analysis of markets and regulation in telecommunications. He is a former Chief Economist at the Federal Communications Commission (“FCC”) and is currently holds the H.H. Macaulay Endowed Chair in Economics at Clemson University. He earned a Doctor of Philosophy (Ph.D.) in economics from University of California, Los Angeles in 1984. Dr. Hazlett’s curriculum vitae, attached hereto as Exhibit F, sets forth his qualifications. If called upon to testify, the general nature of Dr. Hazlett’s testimony is expected to relate to at least background information about 5G communications, the appropriate remedy in this Investigation, and its effect on the public interest, bonding, and any other issues relevant to Apple’s claims and Respondents’ defenses for which expert testimony is required or useful. Dr. Hazlett may also testify in rebuttal to the issues, opinions, and evidence offered by Respondents or its retained expert witnesses in this matter."

I was pointed to this by a third-party source who requested anonymity.

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Ericsson v. Apple trial started in Eastern District of Texas yesterday; Apple dropped one patent right before ITC trial, blames logistical problems on lifted Colombian injunction; Munich court schedules four trials for July

I have multiple updates from the Ericsson v. Apple 5G patent dispute:

1. Ericsson v. Apple FRAND trial started in Eastern District of Texas yesterday: jury selection, opening statements, initial testimony

2. Apple v. Ericsson mmWave trial: Apple dropped one of its three patents-in-suit right before trial

3. Apple gives Colombian 5G iPhone customer refund, incredibly claims Ericsson's lifted (!) preliminary injunction made repair or replacement impossible

4. Munich I Regional Court schedules four Ericsson v. Apple patent trials for July 2023

Ericsson v. Apple FRAND trial started in Eastern District of Texas yesterday: jury selection, opening statements, initial testimony

Apple is back in Judge Rodney Gilstrap's court on 100 E Houston St, Marshall, TX 75670 (party representative: Apple's Head of Licensing Heather Mewes). So is Ericsson (party representative: Head of Intellectual Property, Christina Petersson), but the difference is that Ericsson has repeatedly made the choice to enforce its intellectual property rights in Marshall, Texas, while Apple even closed two of its retail stores in the Eastern District of Texas in order to be able to move patent cases brought against it out of the Eastern District (as a permanent place of business weighs against a venue transfer).

I actually thought there was a high probability of a settlement at this procedural juncture, but no. It looks like Apple is still engaging in hold-out. It hasn't paid Ericsson royalties in about a year, and presumably hopes that at some point Ericsson will back down and lower its rates so much that Apple takes the deal. Apple has a history of squeezing the suppliers that make its parts, and also a history of "coerc[ing] low-ball agreements" with patent holders as Qualcomm, one of America's most innovative companies, and other industry players explained six months ago. Apple even uses astroturfers--lobbyists who are paid by Apple but claim to speak for others-- for its campaign to devalue standard-essential patents.

By contrast, the royalty rate Ericsson is seeking (they offered Apple a license at a rate of $5 per 5G iPhone, or $4 if Apple had signed up early) is not excessive when compared to the $4 per 4G phone that a jury in the very same court found reasonable in a dispute with HTC (which makes cheaper phones, and for that reason alone Apple should pay more). That jury decision was upheld not only by Judge Gilstrap but also by the court above, the United States Court of Appeals for the Fifth Circuit.

The jury will also see evidence that Apple pays Qualcomm a lot more than Ericsson (in fact, Qualcomm traditionally gets higher patent royalties from Apple than all other standard-essential patent (SEP) holders combined).

Chief Judge Gilstrap entered the following minutes of the first trial day:

Minutes for Jury Selection/Jury Trial Day No. 1 Held Before U.S. District Judge Rodney Gilstrap -- December 5, 2022

I'd have liked to follow the trial in one of the world's most important patent litigation venues, but due to other obligations and plans I couldn't make it. Unfortunately I can't find any media report on the first trial day, so I don't know what the parties' lawyers said in their opening statements. I've looked at the list of counsel, and while I like and have the greatest respect for Joe Mueller (who worked on many Apple patent cases in the past) and Ruffin Cordell (who represented Apple against Qualcomm in 2019), I believe Ericsson's counsel--which won the HTC case in the same district over similar issues--will probably win. Despite the rhetorical skills of Apple's top-notch lawyers, I can't see how a jury could reasonably find that Ericsson did not live up to its FRAND (fair, reasonable, and non-discriminatory) licensing commitment: Ericsson could have asked for even more in light of the $4-for-4G outcome in the HTC "cheap phone" case as well as in light of what Apple pays to Qualcomm.

As an app developer, I know that Apple charges app developers more than 30% (which is why Apple is under antitrust investigation around the globe and ejected the popular Fortnite game from its App Store, which saddened so many kids) while paying only about 2% of its iPhone sales to SEP holders.

If it takes much longer before Apple and Ericsson agree, I may even find the time to draw up a "battlemap" like the one I created for the Nokia-OPPO dispute on Friday.

Apple v. Ericsson mmWave trial: Apple dropped one of its three patents-in-suit right before trial

For the same day--yesterday--the United States International Trade Commission (USITC, or just ITC) had scheduled the trial of Apple's countersuit against Ericsson. I assume it also kicked off as planned. There is no indication to the contrary on the ITC docket.

In that complaint, Apple initially asserted three mmWave patents against Ericsson's base stations, seeking a U.S. import ban that would hurt telecommunications carriers like Verizon but ultimately also consumers. The judge presiding over that case denied an Apple motion that would have precluded Ericsson from making a right-to-repair argument. Previously, the ITC staff also supported Ericsson at least to some extent in the public interest context.

On Saturday, Apple brought an (unopposed) motion for partial termination, withdrawing various claims of the asserted patents. U.S. Patent No, 9,882,282 on "wireless charging and communications systems with dual-frequency patch antennas" has now been withdrawn in its entirety, meaning that only two patents-in-suit remain in the case. It is the normal course of business to narrow ITC cases ahead of trial, but normally parties drop patents weeks or months ahead of trial as opposed to doing so on a Saturday before a Monday trial.

The ITC trial is the second Apple v. Ericsson trial this year. Another one was held in Germany a few months ago, and Apple lost that case.

Apple gives Colombian 5G iPhone customer refund, incredibly claims Ericsson's lifted (!) preliminary injunction made repair or replacement impossible

I just mentioned the right to repair in the previous section. A Colombian iPhone customer--José Caparroso (Forbes co-editor for Latin America) went to (presumably) an Apple Store because he needed his 5G iPhone repaired, but Apple incredibly told him--I'll explain further below why I don't buy it--that due to a preliminary injunction that Ericsson had obtained over Apple's alleged infringement of a 5G standard-essential patent, they couldn't repair or replace the gadget, giving him a refund instead and leaving him with only the choices of buying an iPhone abroad (such as in the U.S.) or switching to Android:

Por el fallo de Colombia contra Apple, Apple no me pudo reparar ni reponer un celular 5G en garantía y me devolverá la plata. Qué desgaste todo.

Para conseguir el nuevo celular me toca comprarlo en Estados Unidos o cambiarme a otra marca.

— José Caparroso (@JoseCaparroso) December 5, 2022

Actually, an appeals court in Colombia found that there was nothing wrong with the lower court having entered that preliminary injunction, but lifted the sales and import ban at this stage based on additional information that was on the table (which still doesn't mean that Apple won't ultimately be liable for infringement).

So, as we speak, Apple is absolutely free to sell, import, advertise, repair, or replace 5G iPhones in the South American country. I responded that the problem appears to be purely logistical (manufacturing issues due to a global bottleneck) than legal. José Caparroso replied to me that the case isn't closed despite the appellate decision and that he merely stated the reasons that Apple gave him for refusing to repair his iPhone, and that he doesn't rule out it could be due to a combination of factors. I acknowledged that the litigation is ongoing, but that there can be no doubt about Apple not facing any legal restrictions at the moment and that it now controls its destiny.

Munich I Regional Court schedules four Ericsson v. Apple patent trials for July 2023

It may very well be that the Ericsson v. Apple dispute will effectively be decided in Munich, the world's leading SEP enforcement venue.

The Munich I Regional Court held two Ericsson v. Apple hearings in September, and Ericsson is on the winning track in both cases. One of the cases involves a patent that is not subject to a FRAND licensing commitment, while the other one is about a SEP that the court believes (at this stage) to be infringed by Apple. After that hearing, the court threw out an Apple motion to dismiss that case.

The trials in those two cases were scheduled for April, so the decisions will most likely come down in May or June.

There will be four more Ericsson v. Apple patent trials in Munich in July 2023: two on July 7, and two on July 12. I reached out to the Munich court and obtained the following information:

Two weeks ago, the court had to cancel two hearings on short notice because someone called in sick (case numbers 21 O 1686/22 and 21 O 2922/22, as well as 21 O 1687/22 and 21 O 2925/22; there are two case numbers per case because service of process to foreign defendants takes longer, so the claims against foreign defendants are formally severed from the case, but later everything is put on the same schedule again). The court agreed with the parties not to hold those hearings, but to proceed straight to trial in July.

In two other cases (21 O 1688/22 and 21 O 2926/22, as well as 21 O 1689/22 und 21 O 2927/22), the Munich court did indeed hold hearings last week. I don't know what inclination the court indicated. Those cases, too, will go to trial in July.

On December 21--just two weeks from tomorrow--the Munich court will hold an Ericsson v. Apple FRAND hearing at 1:30 PM local time, discussing similar questions as the ones before the jury in Marshall, TX. I believe Ericsson will win the FRAND decision in Munich, and will try to find out more on or after the 21st.

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Over Apple's objection, ITC judge allows Ericsson to defend telecommunications carriers' right to repair mobile base stations: mmWave patent trial starts next week

Apple knows that sooner or later Ericsson will have decisive leverage from some of its numerous patent enforcement actions, and while there will always be a huge asymmetry in exposure, the iPhone maker would like to get at least a little bit of mileage out of its countersuits. That's easier than done, though. Earlier this week, a German court threw out Apple's first patent lawsuit against Ericsson, over a patent that was granted to Tony Fadell, who oversaw the development of the iPod and is one of the co-creators of the iPhone (before he went on to co-found Nest) as I mentioned yesterday.

Apple's pursuit of a U.S. import ban over three mmWave patents raises public interest questions: that's critical network infrastructure, a factor that the United States International Trade Commission (USITC, or just ITC) has to take into account. Apple brought a motion in limine, asking the Administrative Law Judge (ALJ) presiding over the investigation of Apple's countercomplaint to exclude any argument Ericsson might make at next week's trial for a service-and-repair carve-out (should an exclusion order issue at all).

The Office of Unfair Import Investigations (OUII, commonly referred to as the "ITC staff") actually recommends a superset of a service-and-repair carve-out: the ITC staff says that geographic areas in which Ericsson base stations are already in use should not be affected. In addition, the ITC staff filed a response to Apple's motion in limine and said "Ericsson could have more clearly expressed its intention to request a service-and- repair exemption in its contention interrogatory responses," but "it was reasonably foreseeable that Ericsson would request a service-and-repair exemption." Therefore, the staff also opposed that motion in limine.

On Thursday, ALJ Monica Bhattacharyya ruled on the parties' motions in limine. She denied either of Apple's motions: the one I just mentioned (service and repair), and one targeting Ericsson's defenses to Apple's indirect infringement theories. Those two are somewhat related: as Ericsson explained in one of its filings, the majority of the accused products are actually assembled in the U.S., but certain components are imported. Apple needs an indirect infringement theory in order to obtain an import ban on such components. The fact that Ericsson makes base stations in the U.S. (unlike its main competitors) is another reason for which the ITC may just be the wrong forum for what Apple is trying to accomplish.

Ericsson's only motion in limine has been granted in part. Ericsson said some of Apple's claim construction and validity arguments were untimely.

ALJ Bhattacharyya's decisions are sealed for the time being, but the following screenshot from the ITC docket shows the outcome (click on the image to enlarge):

This is not a good pretrial outcome for Apple.

Starting Monday, the United States District Court for the Eastern District of Texas will hold an Ericsson v. Apple FRAND trial. It is the first situation in this dispute where a settlement would make a lot of sense, but it depends on how far apart the parties' positions are. That's what I also replied to someone on Twitter who wrote he had the feeling the Texas trial wasn't going to take place. The time would be right for a settlement, but sometimes a dispute isn't ripe for settlement because the parties can't bridge their disagreement on the terms. And then those trials go forward and verdicts and rulings come down...

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Apple loses first patent case against Ericsson: Mannheim Regional Court rejects Apple's first offensive patent complaint that has come to judgment since 2014

The first final judgment (as opposed to a preliminary injunction ruling such as the one in Colombia) in the current multijurisdictional Ericsson-Apple patent dispute came down yesterday--and Apple lost an offensive case in Germany. Apart from design patent cases, it's the first judgment in an offensive technical (utility) patent case brought by Apple since the second case against Samsung that went to trial in San Jose in 2014.

As a spokeswoman for the court just informed me, the Second Civil Chamber (Presiding Judge: Dr. Holger Kircher) of the Landgericht Mannheim (Mannheim Regional Court) yesterday handed down a judgment in Ericsson's favor, rejecting Apple's patent infringement complaint and imposing all costs on the iPhone maker. Apple can appeal this decision to the Sixth Civil Senate (Presiding Judge: Andreas Voss ("Voß" in German)) of the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court).

The case no. is 2 O 9/22; the trial was held on October 18; and the patent-in-suit is EP2945332 on an "apparatus and methods for network resource allocation."

Ericsson was successfully defended by the Dusseldorf-based law firm of Kather Augenstein. I've found out now that Ericsson's lead counsel defending against this particular Apple lawsuit was Christopher Weber, who was supported by Dr. Christof Augenstein and Sophie Prudent.

The patent specification describes EP'332, which has not been declared essential to any cellular standard, as being "directed to a computer networking device (e.g., a router) which is adapted to allocate portions of a communications network or its available bandwidth between different uses." While the specification also says the claimed invention "relates generally to the field of data networks," it appears that Apple couldn't show that Ericsson's cellular (4G/5G) base stations infringe this patent that clearly has its roots in the WiFi space. That is obvious from the use of typical WiFi terminology such as "access point" in the claim language (emphases added):

A method for allocating a collective bandwidth of a plurality of wireless access points, the method comprising:

at a first wireless access point of the plurality of wireless access points

• receiving a request for a first use from a wireless client device;

• in response to the request for the first use, allocating a first portion of the collective bandwidth to the first use based at least in part on a bandwidth allocation rule that is dynamically set and that implements in part a bandwidth allocation of the collective bandwidth, wherein the bandwidth allocation rule is based on a level of network security associated with security requirements for different types of traffic;

• allocating a second portion of the collective bandwidth to a second use different from the first use based at least in part on the bandwidth allocation rule; and

• servicing the request for the first use using the first portion of the collective bandwidth,

• wherein each of the plurality of wireless access points dynamically allocates one or more portions of the collective bandwidth to at least the first use or the second use based at least in part on one or more bandwidth allocation rules to maintain the bandwidth allocation of the collective bandwidth.

In theory, a patent stemming from WiFi research could cover such a foundational technique and be so broad that even cellular (4G/5G) base stations infringe it. But a patent holder would be lucky in that case, and Apple wasn't.

None of Ericsson's cases against Apple has come to judgment yet, but it's going to happen in the not too distant future. The Munich I Regional Court held two hearings (not yet full trials) in September and is inclined to find that the iOS version of WhatsApp (which Apple exclusively distributes due to its app distribution monopoly abuse) infringes an Ericsson non-standard-essential patent (non-SEP) as well as a standard-essential patent, with respect to which the Munich court denied Apple's motion to dismiss the complaint at this stage. Three weeks ago the Mannheim Regional Court heard an Ericsson v. Apple SEP case and appeared inclined to deem the patent infringed and likely valid. The FRAND part was discussed behind closed doors, but Apple would be the first defendant in a Mannheim or Munich SEP case in the post-Sisvel v. Haier era to be deemed a willing licensee.

A FRAND trial in the Eastern District of Texas will start on Monday, and it won't be easy for Apple to persuade the jury that the royalties it pays to Qualcomm should be ignored.

The United States International Trade Commission (USITC, or just ITC) will also hold an Apple v. Ericsson trial starting next week. Apple is seeking a U.S. import ban on Ericsson's base stations. Whether that would actually happen and (should it happen) make an impact is questionable. The ITC staff opposes an untailored import ban (while Apple even opposes telecommunications carriers's right to repair). Yesterday a public redacted version of an Ericsson filing with the ITC became available, and it states that "[t]he vast majority of the Accused [Ericsson] Products are manufactured and assembled in the United States from [REDACTED] of individually imported components." Apple's strategy is to "[rely] on indirect infringement allegations to demonstrate a violation through Ericsson’s imported components."

While the first Ericsson v. Apple injunction is just a matter of time, it looks like Apple can't easily find patents in its portfolio that can do damage to Ericsson's business. And Ericsson is a lot smaller than Apple anyway, especially in unit volumes, which means its exposure to patent assertions is dwarfed by Apple's.

The dispute is now entering a very interesting stage, and Apple has just suffered a setback in the form of the rejection of its Mannheim countersuit.

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Apple's biggest problem at next week's Ericsson FRAND trial in Texas: Qualcomm deal will be evaluated as comparable license agreement

I am still trying to find out what happened in Mannheim, where the court had originally scheduled the announcement of an Apple v. Ericsson ruling for yesterday (Tuesday, November 29). The response I received from a spokesman for the court (himself a judge, but not on this case) was that the court is not presently in a position to provide information on that case. The court's Second Civil Chamber was in session all day yesterday, so maybe I will hear something today.

There are no clear signs of the parties having settled. Therefore, it is still a possibility that next week's FRAND trial in the Eastern District of Texas (before Chief Judge Rodney Gilstrap) will go forward. Given the complexity of the case, it's difficult to describe it as an uphill battle for the iPhone maker, but it is fair to say that Judge Gilstrap's pretrial rulings have been significantly more positive for Ericsson. I already made that inference from the minutes of the pretrial hearing: there was no breach of the 2015 contract by Ericsson, and Ericsson is under zero legal obligation to license non-standard-essential patents (non-SEPs) to Apple. Apple can point to the fact that the 2015 agreement included non-SEPs, but that was simply a voluntary inclusion of additional IP and has nothing to do with what Ericsson "owes" Apple under its commitments to ETSI.

That Apple can mention non-SEPs (while not being able to claim an entitlement to a non-SEP license when a new agreement is negotiated) is one of the things I learned from Judge Gilstrap's order on numerous pretrial motions:

Ericsson v. Apple, case no,. 2:21-CV-00376-JRG, Eastern District of Texas: Order on Pretrial Motions and Motions In Limine

Another thing that is clearer now is how Apple's Count IV will be adjudicated. Apple wants the court to set a FRAND rate. But as Judge Gilstrap explains, "[t]he jury need only concern themselves as to the prior conduct between the parties and whether that conduct comports with FRAND and good faith" and "the Court will tell the jury that it will set a rate that is fair, reasonable, and non-discriminatory between the parties as to these patents at a later date and that the jury need not be concerned about what an appropriate rate is."

So there won't be a jury verdict that states a specific FRAND rate. But, of course, what the jury says about Ericsson's FRAND compliance will matter in various ways.

Having read Judge Gilstrap's order, the one part that strikes me as the biggest problem for Apple is that its motion in limine number two was denied--unsurprisingly so, but that doesn't make the problem any smaller:

[Apple]'s MIL 2

Exclude Reference to Apple-Qualcomm Negotiations, Litigations, And Agreements Because the Apple-Qualcomm Agreements Are Not Comparable.

The MIL was DENIED. (Dkt. No. 290 at 29:11–34:4.) The Court found that the comparability of licenses is a question for the jury.

Apple pays Qualcomm more than all other patent holders combined. At least that was the case a few years ago during the FTC v. Qualcomm litigation, where the U.S. government was challenging Qualcomm's licensing practices (but the appeals court determined that Qualcomm was free to charge patent royalties separately from, and as a precondition for, its chip sales). At the time, Apple was paying Qualcomm $7.50 per iPhone. I don't know what the rate under the 2019 settlement is, but Apple needed Qualcomm's 5G chips as we all learned later (because we can see that what was then Intel's chipset division and acquired by Apple shortly thereafter, still doesn't have a 5G chip ready that Apple could use. So, chances are that Apple is paying Qualcomm the same or a similar license fee as it did at the time--and Ericsson will presumably argue to the jury that its 5G patents are stronger than Qualcomm's. Even if the jury felt that Qualcomm's patents were gradually more valuable than Ericsson's, it's still hard to see why Ericsson couldn't just ask for $5 per iPhone.

Apple will argue that the Qualcomm agreement isn't comparable. But jurors will learn about the terms, and Ericsson will get to explain why the jury shouldn't buy Apple's attempts to distinguish one license agreement from the other, but focus on the rate.

Ericsson v. Apple is in no small part about the discrepancy between what Apple pays to Qualcomm versus what Apple pays everyone else.

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