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HTC may ignore smartphone sales ban in Germany [updated]

IPCom has reportedly moved to ban HTC from selling smartphones in Germany. HTC lost a patent lawsuit to IPCom in 2009 and recently decided not to file an appeal against the ruling, likely in an effort to avoid further litigation it might have faced from a ruling on two additional patent cases. HTC may ignore IPCom’s request to stop selling smartphones because it believes IPCom’s lawsuit is no longer valid. According to BBC, HTC has argued that the German Federal Patents court ruled that IPCom’s patent claim was invalid in December of 2010. Whether or not HTC faces a fine for ignoring IPCom’s request will be the court’s decision. “It’s up to the court and could go up to 250,000 euro per violation per phone,” IPCom managing director Bernhard Frohwitter said, noting that IPCom is still willing to settle with HTC if the two companies can reach a licensing agreement.

UPDATE: HTC supplied BGR with the following statement via email:

There have been a lot of claims made by IPCom over the last few days and we want to set the record straight. While IPCom has continued to try to position recent events as a win for them, the events actually represent a setback for IPCom and their efforts to provide returns to their investors. They are currently leaning on a weak finding from 2009 for which HTC has a design around that does not fall within the claim of the patent as it was defined by the Mannheim Court. HTC remains convinced that this case will have NO material impact on our business.

The facts remain:

  • Had HTC continued with the appeal of the #100 patent, it is unlikely the Karlsruhe Court of Appeal would have reinstated an injunction based on the #100 patent given that the claim of the patent had been found invalid by the FPC, and that IPCom had conceded during the appeal that the amended claim was not infringed.
  • The UK part of the same patent (having the same claim) was found invalid by the English Court in the corresponding Nokia case and revoked in its entirety.  IPCom did not appeal the finding of invalidity but sought to amend the patent on appeal –a tacit acceptance that patent claim as granted was invalid.
  • IPCom is now seeking to enforce rights in a patent claim that it knows to be invalid.  Despite almost four years of litigation, IPCom has failed to achieve one significant victory against Nokia or HTC and failed to secure any damages.  On the contrary, IPCom is liable to both HTC and Nokia for substantial sums in legal costs resulting from its many losses.
  1. Actions under the so-called #173 and #006 patents were dismissed by the Mannheim court,  actions under the #44, #90#, #99, #120 were withdrawn by IPCom because the cases were unsustainable, actions under #28 EP, #28DE, #107 and #100Utility Model are stayed pending resolution of respective validity proceedings.
  2. IPCom’s  ‘victory’ over HTC under the #100 in the District Court of Mannheim in 2009 can hardly be called a victory when the patent claim found to be infringed by the court was subsequently found invalid in the Federal Patents Court.  HTC is confident that the German Supreme Court will ultimately uphold this finding.
  3. IPCom might also claim a victory in the so-called #100a  (divisional of the #100) against Nokia in the District Court of Mannheim and the English High Court.   However, these decisions are currently under appeal, and at the same time the UK court found six alternative implementations of the UMTS standard not to infringe the #100a patent.
  • HTC is respectful of the intellectual property rights of others and has concluded licences with many other essential patent owners.  However, HTC considers IPCom’s royalty demands to be disproportionate and unjustifiable given the weakness of the patents in its portfolio and the minor importance of the associated inventions to the UMTS standards.
  • IPCom’s current strategy is one of desperation because it has been legally outmanoeuvred.  It made a significant tactical mistake  by introducing the  #100a and #100DE directly into the appeal proceedings and now has to start from scratch with those patents in one of the German district courts.
  • We reiterate our position that the original injunction relates to only one, now-obsolete, handset.  HTC’s position is supported by earlier rulings of the Court of Appeal in  Karlsruhe in other related IPCom cases.
  • We reiterate our position that we have an alternative implementation of the standard in place, which does not infringe the interpretation given to the  #100 patent by the Mannheim Court .
  • These two points will now have to be argued before the LG Mannheim if IPCom initiates its ‘Zwangsgeldverfahren’.
  • Based on comprehensive legal advice from some of the best patent lawyers in Germany, HTC is confident that District Court of Mannheim, will find in its favour. Meanwhile, HTC has planned for all contingencies.