Context: In the long-running (since July 2021) standard-essential patent (SEP) licensing dispute between Nokia and OPPO, prospects for a settlement appeared dim after the Finnish company announced its intent to appeal a Chinese court’s FRAND determination. Nokia’s injunctions forced OPPO out of the German market, but the smartphone maker deemed that the lesser evil than caving to royalty demands it rejected when a previous agreement was up for renewal.
What’s new: Two German OPPO v. Nokia cases (one in Munich, one in Mannheim) have the potential for injunctions that could come down and be enforced in a matter of months. One of those cases appeared dead in the water, but a turnaround occurred yesterday (Tuesday, January 16, 2024) in the Federal Patent Court of Germany, resulting in the affirmance of OPPO’s EP3445093 on “dedicated information transmission based on validity of scheduling information.”
Direct impact: The Munich I Regional Court’s 7th Civil Chamber had stayed an infringement action over EP3445093 because it deemed the patent essential to 5G but likely to be annulled. The proceedings will resume shortly, and unless Nokia can convince the court that its perspective essentiality was wrong (or is wrong form today’s vantage point), an injunction will issue unless Nokia prevails on its FRAND defense. In another case, OPPO is asserting EP3624524 on “wireless communication methods, network device, and terminal device.” The Mannheim Regional Court will hold a hearing on April 9, 2024. There, the patent may no longer be standard-essential, yet there could be a meritorious infringement claim, in which case an injunction would issue without regard to a FRAND defense. If OPPO obtained just one of those potential German injunctions, or possibly both, Nokia may prefer to settle on the basis of the Chinese FRAND determination rather than risk disruptions to its business.
Wider ramifications: OPPO’s IP department has put itself on the map as a strategically sophisticated party to multijurisdictional licensing disputes, and the company as a whole has displayed enormous strength by not caving after the first few German injunctions (like Apple on steroids). That was unforeseeable for Nokia, which has for a long time been on top of patent enforcement. A settlement would enable both to focus on more productive endeavors. Either way, those developments in Germany are not going to have any bearing on the €360 million investment in Germany that Nokia announced this morning (company press release).
OPPO may now land a “lucky punch” against Nokia, or even two in short succession, not because of sheer luck but because of an admirable combination of steadfastness and strategy.
ip fray respects both companies and particularly their IP departments. For an IP website, this is an interesting Clash of Titans to cover. But it is doubtful now that going into yet another year or more of litigation is reasonably likely to be profitable for Nokia.
Either company has dealt fatal blows to some of the respective rival’s patents. Given that OPPO is going to be the net licensee, there is, however, more pressure on Nokia to gain decisive leverage, and failure in a defensive case is not an option. It looked a few months ago as if Nokia had been able to fend off all of OPPO’s countersuits over its own patents, with some patents exclusively licensed from Huawei (which confers standing under German law) possibly being the best hope. Yesterday, however, the Federal Patent Court of Germany (Bundespatentgericht) upheld in its granted form a 5G SEP that OPPO is enforcing against Nokia and that the Munich I Regional Court’s 7th Civil Chamber (Presiding Judge: Dr. Oliver Schoen (“Schön” in German)) apparently considered essential (thus the stay as opposed to a final judgment for defendant) after a full trial last year.
EP3445093 reduces overhead in 5G communications as compared to 4G (LTE). Previously, an entire set of system information was transmitted periodically, even in situations where none of the devices in a given cell (i.e., those connected to a given base station) had a need for it. OPPO’s invention optimizes this by providing for the possibility that the scheduling information of selected system information may be identified as valid. The related system information is not transmitted if there is no use for it.
The Munich court held a trial on April 20, 2023 and scheduled a decision for May 25, 2023. Just three days prior to the envisioned announcement (with the opinion most likely already having been 99% if not 100% final), the Federal Patent Court rendered a preliminary opinion according to which the patent would fail to overcome just one (but one is enough) prior art reference (known to ip fray only as Exhibit K2), which the nullity panel believed rendered the claimed invention obvious in light of common general knowledge. Against that backdrop, the Munich court obviously wasn’t going to enter an injunction: it stayed the case pending the outcome of the parallel nullity action.
Yesterday, the Federal Patent Court heard the case, and as usual ruled from the bench at the end of the hearing. The initial outline of the five-member panel’s inclination already gave OPPO some hope. While the court reaffirmed the views articulated in the preliminary assessment, one of OPPO’s auxiliary requests (amended claims) was deemed meritorious. After hearing both parties’ counsel on the granted form of the patent as well as on various potential claim amendments, and following a lunch break, the Federal Patent Court indicated second thoughts regarding the impact of prior art reference K2. This reopened the debate over whether the patent should be upheld in its original form, which is what indeed happened in the end.
The sequence of events suggests that OPPO was on the winning track last spring with respect to infringement. As mentioned before, the infringement ruling must have been final or at minimum near-final at that point. If the court had at that point already identified a reason to reject the complaint on non-infringement grounds, it would have put out the already-authored decision instead of staying the proceedings.
FRAND is another question. Even if the infringement court had deemed Nokia’s FRAND defense meritorious, it would have stayed the case as FRAND is only a defense to injunctive relief, but doesn’t resolve a damages claim. At this point, and given the track record of defendants to SEP cases in Munich in recent years (even harking back to the build-up to Sisvel v. Haier), ip fray notes that it would be a huge surprise if Nokia prevailed on its FRAND defense in this case.
When a patent is amended, a new infringement analysis is necessary. In this case, the claims have not changed, and while ip fray is critical of the lack of coordination between German infringement and nullity proceedings (under Federal Court of Justice guidelines, it is incredibly possible for a patent to be deemed valid with a narrow claim construction but enforced on the basis of a broader one), the law of the land does not require the Munich court to analyze the Federal Patent Court’s reasons for upholding the patent.
In another German OPPO v. Nokia case that poses a threat of injunctive relief to Nokia, the issue is not FRAND but whether the SEP-in-suit (EP3624524) has become a non-SEP as a result of additional claim limitations, and if so, whether it is nonetheless infringed.
To clarify the logic of this, German infringement allegations are well-pled if a product is advertised as implementing a given standard and the patent-in-suit is argued to be essential to the standard. In what amounts to a reversal of the burden of proof, a defendant would have to make a showing that it does not actually implement that part of the standard in the accused product(s), and that happens very rarely. As there is no pretrial discovery in Germany, infringements committed by the inner workings of complex technology products are not always identifiable, but when communications protocols are at issue, intercepting the messages is sometimes a means of developing a robust claim chart. For instance, Ericsson brought a non-SEP infringement action in Munich in 2022 over the iOS version of WhatsApp (the defendant was Apple, not Meta).
The Mannheim Regional Court will hear that case on April 9, 2024. It previously wanted to await the nullity decision before making a decision. Should the patent be a non-SEP, yet infringed, then there won’t be a FRAND defense, and the question is then whether Nokia can work around the narrowed patent.
In ip fray‘s assessment, the 5G SEP that was affirmed in its entirety (EP’093) is a potential silver bullet, while the narrowed EP’524 is a bit of a wild card, which is uncomfortable when you don’t have a margin of error (of course, unless you already have a workaround strategy).
If the dispute wasn’t ripe for a settlement before those five Federal Patent Court judges returned from lunch yesterday, then it may be now. In that case, German patent law would ultimately have brought about a settlement, just after a reversal of fortuntes that hardly anyone would have predicted in the spring of 2022 when Nokia won its first few German injunctions against OPPO.