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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