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Nokia motion to require OPPO to make interim patent royalty payments (or deposit) deemed ‘fundamentally misconceived’ by Indian court: parties’ positions are far apart

Almost 17 months have passed since Nokia sued OPPO, and no resolution is in sight. With the benefit of 2020 hindsight, I doubt that Nokia would make the same decision again. There are plenty of soft targets out there while OPPO really gives Nokia a run for the money. Few companies sell as many wireless devices as OPPO (including its OnePlus and realme affiliates) does, but this is the toughest adversary that Nokia–no stranger to patent litigation–has ever faced.

OPPO’s withdrawal from the German market was noticed in the summer. By now, Deutsche Telekom (T-Mobile) is no longer selling OPPO and OnePlus phones, though one can still spot those products in some retail stores. While this constitutes a significant opportunity cost to OPPO, Nokia has multiple problems with the state of affairs:

  • Each time Nokia releases its quarterly numbers, it has to justify the impact of non-renewals. While I believe that patent holders often have to take that temporary effect into account (rather than leave money on the table), it depends on the parameters and dynamics of a given dispute whether it’s worth it. Here, reasonable people may doubt that Nokia’s perseverance against OPPO (as opposed to what might be the case with other defendants) will pay dividends.

  • There is a significant opportunity cost as Nokia could otherwise use its litigation resources and management bandwidth for some quick wins over soft targets.

  • OPPO keeps fending off infringement lawsuits and jeopardizing some of Nokia’s patents. The longer this dispute takes, the more Nokia patents will die. Some may be hardened, but again, OPPO is an exceptionally tough adversary.

  • Meanwhile, OPPO’s own countersuits (targeting Nokia’s base stations with 5G “diamond” patents) are progressing in Germany. In its offensive German cases (though not in the defensive ones, where OPPO is relying on the same firm as Apple against Ericsson: Hogan Lovells), OPPO is represented by Bardehle Pagenberg’s Professor Tilman Mueller-Stoy (“Müller-Stoy” in German).

  • A court in Chongqing, China, has already held a first hearing in the OPPO v. Nokia FRAND rate-setting case before it, and the proceedings will continue in the not too distant future. That case undoubtedly has the potential to resolve the entire global dispute.

Nokia has also received some favorable decisions, but they are unprofitable for the purposes of this dispute (though they may help against future adversaries). For instance, Nokia has an injunction in place in the Netherlands, but a company that has left the German market won’t care about the smaller neighbor country either. The UK Supreme Court unsurprisingly declined to modify its stance on global FRAND jurisdiction, and Nokia has won a UK infringement ruling over EP3716560 on “processing transmission signals in radio transmitter.” But the UK market is not going to be the decisive venue either:

Nokia would need leverage in markets in which OPPO sells high volumes of devices, and it most likely won’t achieve that kind of breakthrough before the Chinese rate-setting decision becomes enforceable.

In Indonesia, all four Nokia v. OPPO cases were thrown out in July. Nokia could refile (and maybe has).

And last week, the Delhi High Court denied a key pretrial motion that Nokia had brought. A public redacted version of the document has now become available (PDF).

Nokia had asked the court to force OPPO to make interim payments or a deposit of Indian patent royalties during the pendency of the infringement litigation, which can take years to be decided. If Justice C. Hari Shankar (here’s a picture) hadn’t written such a long decision (86 pages), I would say he gave Nokia’s motion short shrift. Para. 85:

“The entire application is, clearly, fundamentally misconceived.”

He does make clear that this here is just a decision on the motion at hand, and doesn’t prejudge the outcome of the case. It’s based on Nokia having failed to show that OPPO conceded liability. Obviously, OPPO reserved its rights to contest the validity and essentiality of the three Indian patents-in-suit, and OPPO disputes that Nokia’s royalty demand is FRAND. According to Nokia’s own representations, such interim payments or deposits had been ordered in all prior Indian SEP cases; should that be true, it would make OPPO’s win even more significant.

The ruling does mention the fact that OPPO has made and presumably continues to increase a deposit in Germany. But that’s only because of the way German courts adjudicated FRAND, and OPPO left no doubt that it has nothing to do with its legal positions in other jurisdictions, including (but not limited to) India.

The Indian decision also confirms that the parties are very far apart, though all numbers have been redacted out. OPPO made multiple counteroffers, the fourth and potentially last one of which was only for the purposes of German litigation. Nokia appears to argue not only that OPPO sells more devices than during the term of the July 2018-June 2021 license agreement, but also that OPPO should pay more because the previous agreement didn’t cover 5G. According to the Indian decision, OPPO argues that Nokia has yet to prove that it holds true 5G patents (that would be deemed essential by a court of law).

This dispute is a quagmire for Nokia. Maybe they’re tacitly begging for the Chongqing court to make a FRAND determination as soon as possible. That would provide Nokia with a face-saving exit, and it could always argue in future disputes (such as with Apple if need be) that whatever Nokia will ultimately get from OPPO should not be deemed a comparable license agreement by Western courts.

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