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

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

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

Reopening of record in VoiceAge EVS v. OPPO case

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

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

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

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

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

This is almost as good for OPPO as a stay.

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

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

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

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

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

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

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

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

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

September 19, 2022 order on report and recommendation

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

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

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

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

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OPPO, HMD win Federal Patent Court ruling against VoiceAge EVS: all challenged claims declared invalid, final decision to be made by Federal Court of Justice

After an impressive and unprecedented series of six favorable decisions against HMD--a company that makes Android smartphones under the (licensed) Nokia brand and whose shareholders include Qualcomm, Google, and Nokia--patent licensing firm VoiceAge EVS now faces a first unfavorable court ruling:

The Bundespatentgericht (Federal Patent Court of Germany) has just informed me that at the end of a hearing in case no. 4 Ni 11/21 (EP) on Tuesday (August 2), the court's Fourth Nullity Senate announced a decision in plaintiffs OPPO and HMD's favor concerning VoiceAge EVS's EP3132443 on "methods, encoder and decoder for linear predictive encoding and decoding of sound signals upon transition between frames having different sampling rates". The written ruling will issue at a later stage. The net effect is that

• claims 1-4 and 10-17 have been declared invalid, and

• claims 7-9 have been declared invalid to the extent they reference claims 1-4.

VoiceAge EVS had won--and had since been enforcing--a Munich injunction against HMD about a year ago. A ruling in a case over the same patent against OPPO is scheduled for August 18. Until the nullity decision on Tuesday, it actually looked like VoiceAge EVS was going to win that case, especially since the Federal Patent Court's preliminary opinion had been that the patent is valid, which suggests to me that this is a close call and the nullity appeal can go either way.

Not all claims were challenged by OPPO and HMD. What I don't know is whether VoiceAge EVS could build a meritorious infringement case on any of the claims that weren't challenged, and how swiftly those other claims--if pursued--would be adjudicated.

For now, OPPO doesn't have to fear an injunction over EP'443. A different VoiceAge EVS v. OPPO decision has been scheduled for September 29, an several other cases will go to trial in early 2023. All in all, VoiceAge EVS is asserting a handful of patents against OPPO.

Xiaomi was being sued over the same patent (and others), and apparently took a license.

For OPPO, this outcome is a boost and much-welcome good news after Nokia won two Mannheim injunctions against the smartphone maker. It shows that OPPO can snatch victory from the jaws of defeat. The Karlsruhe Higher Regional Court confirmed to me that OPPO has brought a motion to stay enforcement in at least one of the two cases, which motion hasn't been definitively resolved yet. I'm sure that a motion has been--or will be--brought in the other case (a SEP case) as well. For now it looks like Nokia is not yet enforcing those injunctions, and let's see whether it will be able to do so later this summer. OPPO isn't easily beaten--this much is certain.

I've found out who represented the successful nullity plaintiffs:

• OPPO's patent attorney is Dr. Ju Min Kim of Vossius. Its lead counsel in the infringement proceedings is Dr. Andreas Kramer (same firm).

• HMD's patent attorneys are Dr. Georg Jacoby and Dr. Thomas Behrens (both of Samson & Partner). Its lead counsel in the infringement proceedings is Hoyng Rokh Monegier's Klaus Haft, who has been mentioned on this blog in a number of contexts, such as Qualcomm v. Apple. Mr. Haft was part of HMD's team at the nullity hearing as well.

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Xiaomi apparently took codec patent license from VoiceAge EVS: Munich court confirms voluntary dismissals

Munich makes patent holders money.

The same apparently applies--credit where credit is due--to the Wildanger patent litigation boutique.

On May 25, the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judge Dr. Hubertus Schacht and the rapporteur in these cases, Judge Benjamin Kuttenkeuler) heard two VoiceAge EVS v. Xiaomi standard-essential patent (SEP) infringement cases. Decisions were scheduled to be announced last Thursday (July 21) and in early August.

Yesterday evening a spokeswoman for the Munich I Regional Court informed me that both announcements had been canceled as a result of voluntary dismissals. There was a similar pattern last year in some VoiceAge EVS v. Apple cases. Just like then, there is no room for reasonable doubt that this means Xiaomi has taken a SEP license from VoiceAge EVS, as had eight other major smartphone makers before it. I believe that was the rational thing for Xiaomi to do. Well over half the market has a license to those patents.

On the two patents-in-suit, VoiceAge EVS had previously prevailed over HMD in what is an unprecedented winning streak (six out of six). There was no indication at the May trial that VoiceAge EVS wasn't going to win again, which would have extended the streak to eight out of eight, but they're in the licensing business and not competing for an entry in the Guinness Book of Records.

Next month, the Munich court is scheduled to announce at least one decision in a VoiceAge EVS v. OPPO case. We'll see whether history repeats itself.

HMD continues to hold out--and failed to dissuade the Seventh Civil Chamber from ordering another injunction by recently arguing that an injunction was disproportionate as it would cause irreparable harm while disputing that it needed to implement the patented techniques in the first place. How's that for some self-contradiction?

The fact that VoiceAge EVS has signed up another high-profile licensee is also a major success for the law firm I mentioned further above: Wildanger, which also won the Munich injunction against Ford that--based on the sequence of events--must have played a key role in the iconic U.S. car maker's decision to take an Avanci patent pool license. And this month, Wildanger effectively won a Munich non-SEP trial against Pokémon GO maker Niantic (a Google-Nintendo joint venture represented by Quinn Emanuel): Judge Dr. Zigann made it clear that the defendant was on the losing track and should take a license to conserve court and party resources. A decision in that case has been scheduled for August 18 (like the VoiceAge EVS v. OPPO case I mentioned before).

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VoiceAge EVS scores unprecedented winning streak against HMD's Nokia-branded phones: 6 out of 6 German standard-essential patent cases resulted in injunctions--but holdout continues

At a time when policy makers on both sides of the Atlantic are weighing SEP policy statements and initiatives, this post here is going to tell a tale of caution. The TL;DR version is that no matter how much concern may be voiced about hold-up, I've now come across an extreme case of hold-out that needs to be considered before weakening SEP enforcement.

The hit rate of standard-essential patent (SEP) assertions is normally not too high (often just about 10%-20%), which is why I applauded InterDigital last year for its "hole-in-one" in a UK dispute with Lenovo. The second InterDigital v. Lenovo case resulted in an invalidity finding, but one win is enough to be entitled to a UK FRAND trial. Not only is it remarkable when a SEP holder prevails on the merits of the first asserted patent but even more so when it wins more than two cases in a row--just like the maximum number of serial Super Bowl or UEFA Champions League wins in recent history has been three (New England Patriots, Real Madrid).

Today I was in a Munich courtroom and listened to the announcement of the sixth VoiceAge EVS v. HMD injunction in Germany in a row. A 100% hit rate for the U.S.-based licensing firm and its outside counsel, the Wildanger firm that was named German Patent Law Firm of the Year 2021 by Juve Patents and obtained a high-profile injunction for IP Bridge against Ford Motor Company--the news of which sent the car maker's stock price down by 3% on Friday.

As far as I've been able to research this, every single VoiceAge EVS patent that has been asserted to date (from five different patent families) has been upheld (whether in the original or an amended form)--and has been found to be truly essential to the Enhanced Voice Services (EVS) standard. To expect a similar performance of LTE or WiFi SEP holders would be an apples-to-bananas comparison. Each field of technology is different, and codec patents generally tend to be more sophisticated than the average protocol patent. But even in codecs, this spotless track record is, to the best of my knowledge, unprecedented. This is the information I've been able to obtain from the press offices of the Munich and Mannheim courts:

• Mannheim Regional Court (Seventh Civil Chamber under Presiding Judge Dr. Peter Tochtermann)

  • July 23, 2021: injunction in case no. 7 O 116/19 over EP2707687 on a "transform-domain codebook in a CELP coder and decoder"

  • September 10, 2021: injunction in case no. 7 O 32/20 over EP1509903 on a "method and device for efficient frame erasure concealment in linear predictive based speech codecs" (encoding-side claims; see April 1, 2022 decision for decoding-side claims)

  • March 1, 2022: injunction in case no. 7 O 33/20 over EP2162880 on a "method and device for estimating the tonality of a sound signal"

  • April 1, 2022: injunction in case no. 7 O 90/21 over EP1509903 on a "method and device for efficient frame erasure concealment in linear predictive based speech codecs" (decoding-side claims; see September 10, 2021 decision for encoding-side claims)

• Munich I Regional Court (Seventh Civil Chamber under Presiding Judge Dr. Matthias Zigann)

  • August 19, 2021: injunction in case no. 7 O 15350/19 over EP3132443 on "methods, encoder and decoder for linear predictive encoding and decoding of sound signals upon transition between frames having different sampling rates"

  • TODAY, May 25, 2022: injunction in case no. 7 O 14091/19 over EP2102619 on a "method and device for coding transition frames in speech signals"

Most SEP disputes simply don't last enough for even the most successful plaintiff to sustain such a series against a single defendant. At some point the parties would normally settle. HMD, however, is an outlier. VoiceAge EVS claims to have licensed more than half of the smartphone market. I can see just based on information from German courts that VoiceAge EVS#s disputes with Apple, Lenovo/Motorola, and TCL settled ahead of trial. HMD is still holding out--even after two contempt fines that the Mannheim Regional Court levied (in late 2021 and early 2022).

What makes this even more counterintuitive is the fact that HMD is the company that makes today's Nokia-branded phones. Nokia is an investor in HMD (as are Google and Qualcomm), but doesn't have a controlling interest. Nokia itself has a rather different philosophy than HMD when it comes to patent licensing.

Standard-setting organizations recommend EVS support. Various major carriers around the globe demand it. In order for a call between two persons to get the benefit of EVS, the end-user devices and at least one carrier must support it. If someone with an iPhone calls my Google Pixel, it's going to be an EVS call (on 4G and especially 5G). But if I called someone with a non-compliant phone, the devices would have to fall back to a lower-quality codec. The result is a quality degradation--and potentially an environmental impact (carbon footprint).

In the German patent law community, the Mannheim court's contempt orders (though officially sealed) have been widely read. Patent infringement disputes rarely reach that stage. I found nothing surprising there. I remember from various Mannheim cases that device claims (more formally called "apparatus claims"--but I say "device claims" because the word "device" is found more often in the relevant claims than "apparatus") are infringed by simply selling a device that is equipped to perform a certain functionality unless there's the equivalent of a brick wall between the user and the relevant functionality. That analogy was used by then-Mannheim now-Karlsruhe judge Andreas Voss ("Voß" in German). Here, HMD failed to dissuade Judge Voss's successor (and former deputy), Presiding Judge Dr. Peter Tochtermann, from ordering contempt sanctions by arguing that the EVS codec on the devices in questions wasn't going to be activated for calls initiated or received in Germany. The practice of German courts is actually pretty clear that even if the infringement occurs after exporting the product, the infringing act is the sale. HMD appealed the fines, but the one to review the decisions will be...Judge Voss.

In Brazil, the injunction was lifted and not lifted at the same time. There is a per diem of approximately US$20K. It's not being collected by the court for now, but should VoiceAge ultimately prevail (and all it would take would be for the Brazilian court to take similar views as the German judges), it will apply retroactively.

There is criticism of EVS license fees, and it's not limited to VoiceAge EVS. IAM reported on it. I believe the problem has a psychological component: some major EVS patent holders like Huawei also hold cellular SEPs, and then they obviously license entire portfolios (no "piecemeal"). But there are some, like VoiceAge EVS, whose portfolios are EVS only--no wireless protocol patents. One can't just extrapolate from the number of patent families in an EVS portfolio to a total wireless portfolio involving 4G (and/or 5G) plus technologies like EVS. If all those patents were worth about the same, the 6-out-of-6 hit rate that VoiceAge EVS now has in Germany would also be the norm for other SEP disputes--but it's not. And that's because in other fields of technology there are numerous overdeclarations--and higher invalidation rates.

I'd like to get full circle back to the first paragraph. VoiceAge EVS v. HMD is an example of SEP enforcement not being nearly as easy some would have policy makers believe. If HMD was publicly traded like Ford, the Street might get nervous--and lose confidence in a company that displays such brinkmanship. Here, there is a company with a battle-tested portfolio, with more than half of the smartphone market licensed (including the likes of Apple, anything but a soft target), yet the dispute hasn't ceased to be.

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Implementers must 'promptly' seek standard-essential patent license to avoid being deemed unwilling licensees and enjoined: Munich I Regional Court

Subsequently to this post, I'll report on the latest injunction that standard-essential patent (SEP) licensing firm VoiceAge EVS has obtained against smartphone maker HMD (Nokia trademark licensee). I originally didn't intend to write about today's VoiceAge EVS v. Xiaomi trials, which I attended purely for research purposes, but something was said there that is relevant far beyond that particular dispute as it relates to the willing licensee standard in the world's #1 SEP litigation hotspot, the Landgericht München I (Munich I Regional Court).

A couple of VoiceAge EVS v. Xiaomi cases are pending before the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann; side judges: Judge Dr. Hubertus Schacht and Judge Benjamin Kuttenkeuler, the judge rapporteur in the cases heard today). In accordance with the court's new "lead case" program for multi-patent SEP disputes, the Seventh Civil Chamber held a VoiceAge EVS v. Xiaomi FRAND hearing about a month ago. Today, Xiaomi's counsel in that dispute, Noerr's Dr. Ralph Nack, moved for a preliminary reference to the European Court of Justice in order to clarify

• which party (SEP holder or implementer) has to act first and

• whether a SEP holder must negotiate with an implementer for a certain period prior to seeking an injunction.

Judge Dr. Zigann gave that motion short shrift because the question is not whether an infringement notice is needed: the Munich court recognizes that the ECJ established that requirement in Huawei v. ZTE. There is only a factual dispute in VoiceAge EVS v. Xiaomi as to whether such notice was properly given. As to the second part, Judge Zigann believes that Huawei v. ZTE and Germany's Sisvel v. Haier I and II decisions provide sufficient clarity.

What's interesting here, however, is how Dr. Nack sought to justify his motion. He quoted Judge Dr. Zigann form the late-April FRAND hearing as having stated that implementers must "promptly" seek a license to the SEPs they implement lest they be deemed unwilling licensees and, as a result, enjoined. The German word Judge Dr. Zigann used (according to Dr. Nack's uncontradicted quote) was "zackig"--it's a colloquial term that means to act swiftly, without hesitation, like lightning.

While Xiaomi's concern over implementers potentially having to move first by seeking a license (which was actually the legal standard in Germany under Orange-Book-Standard, a decision by the Federal Court of Justice that predated Huawei v. ZTE) has been alleviated, it nevertheless sounds like implementers will pay a high price in Munich for not going out of their way to obtain a license on FRAND terms once they've received an infringement notice. And with every new SEP injunction the court enters, such as in IP Bridge v. Ford last week, implementers around the globe (provided they do business in Germany, which most of them do) are reminded of their obligations.

I felt I had a duty to inform you all of this standard.

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Most Nokia-branded phones banned in Germany due to enforcement of patent injunction by Fortress-funded VoiceAge EVS

Nokia itself stopped making phones a while ago, but a company named HMD has a trademark license allowing it to sell Nokia-branded phones (running Android, not Symbian). In August I reported on a patent injunction secured by VoiceAge EVS, an audio codec patent licensing firm funded by Fortress Investment, in Mannheim against HMD. Today I learned that VoiceAge EVS went ahead and enforced the injunction, which requires some security (bond or deposit) during an appeal, and apparently moved for contempt-of-court sanctions against HMD. As a result, HMD had to stop selling most of its phones in Germany.

Heise online, Germany's leading information & communications technology new site, spoke with HMD, which blamed the removal of the vast majority of its products from its German online shop on a defeat in an enforcement proceeding. HMD appealed the decision (which may be an order of contempt sanctions). It sounds like the Mannheim Regional Court sided with VoiceAge EVS over an enforcement-related question, and HMD then appealed that order to the Karlsruhe Higher Regional Court.

EVS (Enhanced Voice Services) is a 3GPP audio codec standard (Wikipedia). Apparently HMD removed support for EVS from the products it most recently launched in Germany (Nokia G21 and G11; the latter is presently sold out). Some resellers such as Amazon and the MediaMarkt consumer electronics retail chain still have some older Nokia products on stock. VoiceAge EVS would have to sue those resellers as the injunction obtained against HMD does not apply to them.

While consumers generally don't know about EVS and the benefits it offers, there's a significant quality degradation (for the quality of voice communications) when phones don't support that standard any longer.

What VoiceAge EVS v. HMD shows is that German patent injunctions can be commercially impactful. Three years ago, Apple was unable to sell some older iPhone models in Germany because of an injunction Qualcomm had won in Munich. Shortly thereafter, the parties settled, but just because Apple needed Qualcomm's 5G chips. At that stage, Apple had resumed its German sales of certain older iPhone models by incorporating Qualcomm 4G chips into them. And last summer Apple settled with Fortress, which also resulted in the voluntary dismissal of all VoiceAge EVS lawsuits against Apple. Otherwise Apple would likely have been enjoined as well.

While we're on the subject of patent enforcement in Germany, there's a huge two-day trial taking place in Munich over the next couple of days in IP Bridge v. Ford (case no. 7 O 9572/21), IP Bridge v. Apple (case nos. 7 O 2395/21 and 7 O 2963/21), and IP Bridge v. OPPO (case no. 7 O 8133/21). All these cases will be decided by the Munich I Regional Court's Seventh Civil Chamber (Presiding Judge: Dr. Matthias Zigann).

The patent-in-suit (EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator") was originally obtained by Japanese electronics maker Panasonic, which declared it essential to 4G/LTE and later assigned it to Japan's national patent licensing firm IP Bridge. The patent was previously asserted against others, and an attempt to invalidate it went all the way up to the Federal Court of Justice, which upheld the patent.

Daimler would have had to defend itself against the same patent this week, but took an Avanci license late last year.

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Fortress-funded VoiceAge EVS recently won German patent injunction against HMD and apparently settled with Apple

This here is a follow-up to both yesterday's post on VLSI Technology inching closer to a final (though appealable) judgment against Intel and earlier reports on VoiceAge EVS v. Apple. Both VLSI Technology and VoiceAge EVS are funded by Fortress Investment.

The Mannheim Regional Court confirmed to me today that VoiceAge EVS won a case against HMD (which makes phones and has a license to the Nokia trademark for that purpose) on July 23 over EP2707687 on a "transform-domain codeblock in a CELP coder and decoder" (case no. 7 O 116/19; the Presiding Judge of the Seventh Civil Chamber in Mannheim is Judge Dr. Peter Tochtermann).

There are no more VoiceAge EVS v. Apple cases in Germany anymore. Since Apple's withdrawal (in June) from its joint antitrust action against Fortress and multiple Fortress-funded entities, various patent infringement cases brought by Fortress-funded companies against Apple have become known to have been withdrawn, suggesting that a global settlement was reached.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Two more VoiceAge EVS v. Apple patent infringement cases pending in Munich

On Tuesday I listed a number of standard-essential patent (SEP) infringement cases brought by VoiceAge EVS against Apple, Lenovo, Motorola Mobility, and Nokia trademark licensee HMD in Munich. Two of the patents-in-suit have been asserted against all those parties, but there are also three cases against Apple over different patents. Those three cases will all be decided by the 21st Civil Chamber (Presiding Judge: Tobias Pichlmaier).

I had already mentioned that a first hearing in case no. 21 O 13503/20 would take place on April 28 unless the COVID pandemic necessitates a postponement. I've meanwhile learned from the court that the patent-in-suit in that case is EP2707687 on a "transform-domain codeblock in a CELP coder and decoder." CELP stands for code-excited linear prediction, a linear predictive speech coding algorithm.

Case no. 21 O 13505/20 had an even earlier first-hearing date: April 21. This one may already have been pushed back, but I will try to find out again next week. In that case, VoiceAge EVS is asserting EP2162880 on a "method and device for estimating the tonality of a sound signal."

The fifth patent over which VoiceAge EVS is suing Apple in Munich is EP1509903 on a "method and device for efficient frame erasure concealment in predictive based speech codecs." The case no. is 21 O 13504/20, and the court scheduled a hearing for May 12.

VoiceAge EVS is also enforcing patents in the United States, such as against Xiaomi. According to an RPX Insight report, VoiceAge faces challenges to its standing in its U.S. cases. That's just a non-issue in Munich.

VoiceAge EVS generally appears better and stronger than Uniloc, which is the most infamous patent licensing firm funded by Fortress Investment because it countless complaints.

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

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

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

The patents VoiceAge is asserting in Munich are

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

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

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

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

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

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

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

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Apple and Intel defend their amended complaint against Fortress patent troll conglomerate, announce further allegations of FRAND abuse

With respect to its App Store terms and policies, Apple is now arguably the most prominent antitrust defendant in the tech universe. Simultaneously, Apple is pressing antitrust charges--through private litigation--particularly in connection with abusive patent-leveraging practices. While the issues are very distinct, having the shoe on one foot today and on another foot tomorrow requires Apple, which is represented by different law firms (Wilmer Hale against Softbank-owned Fortress Investment, Gibson Dunn and Orrick against Epic Games and various class action plaintiffs), to espouse a more flexible approach to antitrust enforcement in one context than in the other. Case in point, a Ninth Circuit panel's wholesale acquittal of Qualcomm took a more restrictive and limiting perspective on how to apply the antitrust laws (particularly--but not only--in connection with patents), and the panel opinion contained legal statements that Apple can and does cite to as it defends itself against Epic, but complicate matters in its joint case with Intel against Softbank's Fortress.

In the summer, San Francisco-based Judge Edward M. Chen of the United States District Court for the Northern District of California granted Fortress's first motion to dismiss Apple and Intel's complaint, but also allowed the plaintiffs to amend the complaint. The absolute low of the Trump Administration's involvement with patent policy was when the Department of Justice intervened on behalf of that foreign-owned patent troll group that has been bringing many dozens of vexatious lawsuits against not only Apple, but also others, notably Google. That was the very opposite of "Make America Great Again." It was anti-American, and unfortunately the matter doesn't have the prerequisite high profile that lawmakers would have raised questions (plus, there are some Democrats on Capitol Hill who are beholden to the world's patent trolls, such as "Looney Coons").

Apple and Intel amended their complaint, and Fortress--not unexpectedly--brought a renewed motion to dismiss, on which the court will probably decide in December. Fortress alleged that Apple and Intel had failed to cure the deficiencies identified by the court in its order to dismiss without prejudice.

Last night, Apple and Intel filed their opposition to Fortress's second motion to dismiss (this post continues below the document):

20-10-27 Apple-Intel Opposi... by Florian Mueller

The #1 question here is market definition--which is just as essential to antitrust law as claim construction is to patent law. Fortress claims Apple and Intel's amended complaint still lacks the prequisite specificity, and the DOJ had also focused very much on that one earlier this year. But Apple and Intel point to how much more detailed their amended complaint is (it's 77 pages longer than the original complaint), and that it's now not just about an "Electronics Patents Market" but about 13 patent markets. And what will likely benefit Apple and Intel in this regard is that Judge Chen's order on the first motion to dismiss had states that the law doesn't require an absolutely clear-cut market definition in cases where there are very specific allegations of anticompetitive effects. "Rough countours" of a market have been deemed sufficient in such cases.

If the amended complaint survives, Apple and Intel wish to amend it as one Fortress subsidiary, VoiceAge EVS, sued Apple just after the filing of the amended complaint (no coincidence if you ask me) over five LTE patents. Apple and Intel say that the related patent transfer was made in an effort to circumvent FRAND licensing obligations.

Apple & Intel v. Fortress is not only about standard-essential patents (SEPs). Most of Fortress's lawsuits are about non-SEPs. But when Apple joined Intel (which had previously brought a complaint, but withdrew it in order to refile together with Apple), SEP-related allegations became part of the case. In that context, the Ninth Circuit's FTC v. Qualcomm panel opinion is particularly unhelpful, but the issues in the Fortress case aren't exactly the same. For instance, never did the FTC (or Apple) allege that Qualcomm sought to evade FRAND obligations by means of patent transfers.

Two organizations have filed amicus curiae briefs in support of Apple and Intel's opposition to the motion to dismiss: the Fair Standards Alliance (FSA) and ACT | The App Association. Apple and Intel are members of the FSA, and corporate sponsors of ACT. ACT claims to have thousands of smaller companies as members, though it's another question how strongly involved and committed those "members" really are, given that many years ago a professor and former White House technology policy adviser (under Clinton) told me he just filled out a web form and was accepted--no payment or anything. Also, for a long time ACT used to promote the interests of patent holders, not those of implementers. By contrast, the FSA has several dozen corporate members, of different sizes but all of them significant and some of them among the world's largest tech companies (such as Microsoft and Google). The FSA has been very consistent about SEP policy. Fortress didn't want the FSA to file an amicus brief, at least not without getting to review it beforehand, but the FSA has now filed a motion for leave and I guess the court will grant it (the document below contains both the motion for leave to file and the actual amicus brief):

20-10-27 FSA Amicus Curiae ... by Florian Mueller

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