Based on what I heard in a Mannheim courtroom on Friday I figured that HTC had brought (or was readying) UK declaratory judgment actions against certain patents Nokia is asserting in Germany, a strategy that worked out well for HTC against four Apple patents and for Microsoft against a Google (Motorola Mobility) patent.
I have meanwhile found out the case numbers of HTC's first three UK declaratory judgment cases against Nokia (HC 12 B02049, HC 12 E02095, and HC 12 E02119), I have learned that HTC has brought more than a dozen other UK actions against patents Nokia is asserting in Germany, and I have obtained a copy of a June 2012 judgment denying expedited trials over the validity of the following three Nokia patents:
EP0812120 on a "method for using services offered by a telecommunication network, a telecommunication system and a terminal for it"
EP1329982 on an "antenna for wireless communications devices"
EP0792077 on a "multi-service mobile station"
Nokia is asserting those three (and at least 14 other) European patents against HTC in Germany. In December 2012 the Mannheim Regional Court already held a trial over the first one (EP'120), which is asserted against HTC's distribution of the Google Play store client app (Google is a third-party intervenor in that case), and scheduled a decision (which may or may not be a final ruling) for March 1, 2013. The second one (EP'982) will go to trial in Mannheim in about a month (on February 22, 2013). I don't know the trial date for the third one as far as HTC is concerned, but I know that ViewSonic will have to defend itself against this one in Mannheim on March 12, 2013.
Last spring it appeared that those three patents were going to be the first ones to go to trial against HTC in Germany, but some cases were reorganized and others rescheduled. Anyway, HTC was and presumably still is scared that these three patents are powerful enough to force it to take a license on Nokia's terms because it will be unable to sell smartphones in the German market if Nokia wins injunctions based on the claim constructions it advanced. HTC said so in a motion for expedited trials. It wanted the UK court to declare those patents invalid in time to dissuade the German court from issuing injunctions. Based on regular schedules, a UK validity decision will come down after an infringement ruling by the Mannheim Regional Court, the fastest German court for patent infringement cases. The motion was denied on June 1, 2012, but I obtained a copy only now -- there were no media reports on this UK activity, and UK courts don't make documents available over the Internet the way their US counterparts and the ITC do. Even after all of this time, the ruling provides some interesting information concerning
- the tactical situation between Nokia and HTC,
Nokia's ability to sell licenses to other Android device makers (such as ViewSonic, which it is already suing), and
the practical challenges defendants face when turning to UK courts for help against potential German injunctions.
Let me quote some passages from the ruling that refer to HTC's representations concerning the settlement pressure under which it could come from these patents:
"[...] HTC has sought to address by expedition those [patents] which appear to be the most oppressive based upon the construction that Nokia places on these patents for infringement purposes. This means those patents which: first, are the subject of a wide construction by Nokia for infringement purposes; and second: relate to features of HTC's phones that are extremely difficult to remove. EP '120 is pleaded by Nokia in Germany to be infringed by Google Play. This is the means by which HTC phones (and all phones using the Android operating system) acquire new applications ('apps'). Mr. Schulte of HTC gives evidence that a Smart Phone without such features would be unsaleable."
"[According to HTC] EP '[98]2 relates to a plastic spacer in the phone's internal antenna arrangement and says that the breadth of Nokia's construction makes it difficult to design around and that EP '077 relates to the way that long term and short term memory are used. Again, [HTC's outside counsel in the UK, Paul Brown of Hogan Lovells, the firm that is also representing HTC against Nokia in Germany] says that the wide scope put on the claims by Nokia's infringement case makes it difficult to avoid producing smartphones that use this feature."
"[HTC's witness said that] the consequences of an injunction being granted in Germany, without the issue of validity having been investigated and decided in HTC's favour, would be very serious for HTC."
"[This] is essentially a battle about whether HTC need to take a licence [...]"
The passages quoted above confirm what I wrote further above: if Nokia prevails on any of these patents, HTC's witness statement suggests that the company will either have to take a license on Nokia's terms, which I believe would not come at a huge discount, or it would have to say, at least temporarily, Auf Wiedersehen to the German market. In the latter event, Nokia could assert the same patents, or their equivalents, in additional jurisdictions until it reaches a point at which HTC decides to pay up.
HTC obviously wanted to convince the UK court of this being an urgent and pressing problem. In a different context, such as an enforcement proceeding relating to a workaround, HTC would have had just the opposite motivation. But its witness had to tell the truth, and when HTC brought the UK motion it knew that anything it says in it might be used against it elsewhere. All in all, I would not take literally all the desperation reflected by the paragraphs quoted above, but there is undoubtedly some profound concern on HTC's part. Google is also concerned. Otherwise it wouldn't have intervened in the Google Play case. Since Google doesn't guarantee Android licensees that it will defend and indemnify them, it doesn't have a formal obligation to act. It does so because it's worried that a Nokia patent tax will adversely affect the competitiveness of the Android ecosystem.
But it gets even worse: Justice Floyd, a high-profile UK patent judge, explained the denial of the motion with the fact that Nokia's other patents-in-suit might be just as strong as the three HTC claimed to be particularly worried about:
"What I find particularly difficult about HTC's application for expedition is that even if the court were to accede to HTC's application for expedition in relation to one or more of these patents, there would remain the other 14 patents which could, equally, have the consequences for which Mr. Schulte contends. [...] What I fear is that, even if one were to expedite the trial of these cases, the harm of which HTC complain would be by no means extinguished or removed."
It also appeared odd to Justice Floyd that HTC sought expedition with respect to the first three patents it believed, based on the Mannheim court's initial scheduling orders, would go to trial. It's statistically highly unlikely that the first three out of 17 are also the most devastating ones.
The way I read Justice Floyd's decision, the London-based High Court is quite willing to rule on the validity of certain patents that are being asserted in Germany, even though the impact of such a ruling on a German decision is merely persuasive. But the UK court will do so on its regular schedule, and it won't schedule its own cases according to a foreign court's schedules on the related infringement case. The order doesn't rule out categorically that a UK declaratory judgment case could be accelerated because of the commercial implications of a German patent case, but it appears that the hurdle is fairly high and the UK court will suspect purely tactical motivations if the first few out of a long list of patents are described as the most "oppressive" ones: in such a scenario, the far more plausible explanation is that someone just wants to avoid a first-round knockout in a wider dispute, hoping that the passage of time will have value all by itself and allow the defendant to make progress in some other areas. Justice Floyd understands that HTC is in an uncomfortable position, but was not persuaded that "it is right for this case to leapfrog all the other cases in the queue to be heard by this court".
If the motion had not been denied, some UK trials might already have taken place a few months ago, or they would have taken place this month. But now it looks like things will take considerably more time, and in the meantime, some German rulings will come down. Should HTC win any favorable UK judgments on patents on which Nokia prevails in Germany in the meantime, it can still leverage any UK decisions before a German appeals court and/or the Federal Patent Court (Bundespatentgericht), which rules on German nullity (invalidation) actions and is relatively slow.
RIM has already acceded to Nokia's demands. It's only a matter of time when HTC will do so, too. And probably not a whole lot of time.
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