Letter from AmeriKat I: Patents and Trade Marks

Last week the AmeriKat was so engrossed in reading the latest issue of Vanity Fair and Michael Wolff’s article on Rupert Murdoch, newspaper content, and the internet on her flight back to London that she forgot to sleep. This Kat does not do well without sleep. So when she made it to Heathrow last Sunday morning, her paws were too shaky to sit and write her weekly letter. Now finally acclimatized to Greenwich Mean Time, if not the dark and drizzly weather, she is back at her computer, bushy tailed and bright eyed.

iPhone apparently needs an ‘app’ for paying Nokia’s FRAND licensing fees

The AmeriKat finds iPhones slightly obnoxious (or maybe it's just some of their owners), so she was excited to read the case brought by Nokia in Delaware against Apple Inc. for patent infringement and declaratory judgment. The claim focused on no fewer than 10 patents, each one alleged to be essential to the Global System for Mobile Communications (“GSM”) Standard, the Universal Mobile Telecommunications System (“UMTS”) Standard and other universal standards. The patents covered included patents that are claimed to enable access to a mobile station so the network can be accessed with less delay (U.S. Patent Nos. 6,775,548), to ensure clear, efficient speech communications over mobile networks (U.S. Patent Nos. 5,862,178) and to ensure secure transmission of date over (U.S. Patent Nos. 6,882,727).

Nokia had granted licences under each of the patents on fair, reasonable, and non-discriminatory (FRAND) terms and conditions. FRAND terms and conditions are licensing standards that are set by Standards Setting Organizations (SSOs) (see article in JIPLP here). Where an IPR holder has voluntarily undertaken to license its IPR on FRAND terms it irrevocably commits itself to allow the standards to be implemented under its IPR and thereby waive its legally defined right to exclude others from practising the standard under its IPR. This in turn lets other manufacturers use the IPRs that are essential to maintaining set standards, for example in the instance where mobile phone technology needs to be compatible to work on various networks. In return for the right to use the patents, the manufacturers are obligated to compensate the IPR holder for FRAND compensation. If the manufacturer refuses to be subject to a licence or refuses to pay altogether, the IPR holder may seek an injunction to prevent the manufacturer from continuing to use the patent without payment.

According to the complaint, Nokia allegedly made various offers to Apple under the FRAND terms and conditions to license the patents to them; however Apple rejected Nokia’s offers and refused to compensate them for use of the patents.

Nokia is seeking compensation under FRAND and a declaration that:

1. The patents are infringed by Apple’s products and that they are not invalid or unenforceable;
2. That Nokia has complied with its obligations under the FRAND undertakings by negotiating in good faith;
3. That Apple has refused to compensate Nokia on FRAND terms for the patents and
4. That Nokia is entitled to an injunction until and unless Apple pays FRAND compensation for past infringement of the patents and irrevocably commits to pay such compensation in the future.

As reported in the Financial Times, Nokia’s vice president for legal and intellectual property, Ilkka Rahnasto stated:

“The basic principle in the mobile industry is that those companies who contribute in technology development to establish standards create intellectual property, which others then need to compensate for. Apple is also expected to follow this principle. By refusing to agree appropriate terms for Nokia’s intellectual property, Apple is attempting to get a free ride on the back of Nokia’s innovation.”

According to this New York Times article, the timing of Nokia’s lawsuit may be all-telling. Last week Nokia reported a 35% fall in its share of the global smartphone while its competitors, RIM and Apple posted significant gains. According to London analyst Neil Mawston of Strategy Analytics, “where there is a hit, there is a writ.”

Other Patent and Trade Mark News

• Last week the USTPO filed a motion for summary judgment to dispose of the case brought by German company Sigram Schindler Beteiligungsgesellschaft (say that three times fast!) in the Eastern District of Virginia against them challenging their rules for appealing USPTO decisions on ex parte re-examination proceedings.

Left: Sigram Schindler himself

Ex parte re-examination proceedings are employed when third parties request that the USTPO review another party’s patent validity. If the USPTO declared that the patent is invalid, the patent owner can appeal the decision. If the patent owner demands a further appeal, following a change to rules in 2001, the only option available to the owner is to issue a complaint in the U.S. Court of Appeals for the Federal Circuit of Columbia. The German company alleges that the USTPO has overstepped its statutory authority in regulating proceedings outside of the USPTO. The USPTO allege that the legal and factual basis for Sigram Shindler’s “does not apply to the complainant now and may never apply to them at all.” For further information please see this article from the National Law Journal.

• South Korea’s LG Electronics has filed a patent infringement claim in U.S. District Court of New Jersey against Whirlpool for infringement of LG’s refrigerator patent for “ice-making system in the fresh food compartment”. According to the Wall Street Journal, Young Ha Lee (chief executive of LG’s home appliance unit) said:

"LG has a superior technology in French-door refrigerators protected by its patents. LG will aggressively enforce its rights against any infringing products.”

This October International Trade Commission Judge Essex ruled in favour of LG in another patent dispute brought by Whirlpool that LG’s use of ice storage bins in its refrigerator doors did not infringe any of Whirlpool’s patents.

• The USPTO granted Man & Machine, a small computer-accessories company, the trade mark for “Mighty Mouse” for their waterproof mouse. Apple Inc. also sells a mouse under the same sign. Man & Machine’s trade mark registration means that Apple will have to start calling their mouse something different. Not such a problem, given Apple’s unveiling of their new multitouch mouse, Magic Mouse.

• Those skiing enthusiasts among us will undoubtedly know of Warren Miller, skier and filmmaker. Warren Miller, Warren Miller Entertainment and Level 1 Productions (WME) are currently embattled in a dispute brought by WME against Level 1 Productions for their use of Miller’s image, name, and likeness (rights of publicity) in their film Refresh. Miller sold the rights to his name “Warren Miller” and associated names to WME’s predecessor company in 1988. It is undisputed that WME owns the rights in these names. Miller appeared in Level 1’s film under his name and likeness (obviously). Last Tuesday Judge Arguello granted a motion to delay the legal dispute between the parties pending the completion of a private arbitration between WME and Warren Miller. For further information see this article in the Examiner.