NEWS
UNITED STATES
Ford faces $105m damages for theft of software trade secrets
A US federal jury has ordered Ford Motor Company to pay damages to Versata Software for breach of contract and misappropriation of trade secrets.
In a hearing on October 26, the US District Court for the Eastern District of Michigan ordered Ford to pay damages of almost $105 million to Versata Software along with co-plaintiffs Trilogy Development Group, and Trilogy.
The software in question is Versata’s Automotive Configuration Management (ACM) software, which Versata licensed to Ford for about 10 years.
Versata alleges that Ford breached the parties’ contract by, among other things, using Versata’s software after the contract expired.
The damages amount is based on Versata’s assertion that Ford would have paid at least $17 million per year to use Versata’s software after the contract’s expiry.
Negotiation breakdown
The dispute, which began in 2015, centres upon whether Ford’s replacement software infringes Versata’s software patents. In mid-2014, Ford and Versata began negotiating a renewal of the annual licence for the ACM software.
Since both parties were unable to reach an agreement and negotiations “ultimately broke down”, Ford decided to decommission Versata’s ACM software and develop its own version internally.
A series of court filings and hearings ensued, with the original dispute resulting in two federal civil actions. One was filed by Ford against Texas-based Versata (the ‘Ford action’), and the other was a related action filed by Versata against Michigan-based Ford in the US District Court for the Eastern District of Texas (the ‘Versata action’).
In the Ford action, the car maker sought a declaratory judgment that it had not infringed any IP rights owned by Versata.
In the Versata action, Versata alleged that Ford infringed its patents and misappropriated its IP. According to the Michigan court in 2015, the two actions were “substantially similar and address much of the same subject matter”.
“I told the jury that Ford’s defence was a completely phoney and fabricated defence that had no support in the evidence.”
Dan Webb, Winston & Strawn
‘Chinese wall’
According to Versata, Ford had initially argued that there was a “Chinese wall“ (a virtual barrier to block the exchange of confidential information) between software developers and those working with ACM‘s technology. Versata says that Ford lied about this, and that due to a lack of evidence, Ford has since dropped this claim.
In July 2017, the Patent Trial and Appeal Board (PTAB) denied Ford its request to challenge the legitimacy of six of Versata’s software patents. Versata alleged at the time that Ford had attempted to “circumvent the legal system by challenging Versata‘s patents in the PTO nearly 30 times”.
In May this year, 2022, the court denied Ford’s motion in limine, requesting that Versata et al were precluded “from offering argument, testimony, or other evidence of contract damages” at trial because Ford believed they lacked evidence.
Dan Webb—partner at Winston & Strawn and lead counsel for Versata—was at the jury trial and told WIPR that he and his legal team were “very pleased with the verdict”.
“It was a very strong and favourable verdict in favour of Versata,” he said. “We‘re very grateful to the jury for dealing with a very complicated case, and they came to the right result.”
He explained that Versata prevailed on six out of seven of its legal claims and that the damages received represented about 85% of what they asked the jury to award.
He added: “I told the jury that Ford‘s defence was a completely phoney and fabricated defence that had no support in the evidence. And that when a party raises a phoney defence, then you know they‘re guilty, because why would you raise a phoney defence if you‘re innocent?”
Representatives for Ford did not respond immediately to WIPR’s request for comment.
Image: Shutterstock.com / jon lyall
UNITED KINGDOM
Nokia wins as UK court rules phone maker infringed patent
Oppo has infringed one of Nokia’s patents covering transmission signals in mobile phones, the High Court of England and Wales has ruled.
Justice Richard Meade delivered the decision on November 9, holding that Oppo’s mobile phones had infringed claim 1 of the patent-in-suit (EP3716560).
A global battle
The dispute arose over chips used in Oppo phones and is part of a wider, global battle between Nokia and Oppo over the terms of a licence for Nokia’s patent portfolio.
The alleged infringement centred on the operation of the chips inside Oppo phones. Qualcomm made and supplied the chip and the details of its arrangement with Oppo are confidential.
This meant that Nokia sought to prove infringement by doing experiments and by obtaining disclosure from Qualcomm in the US courts using the procedure under 28 USC §1782.
Commenting on the ruling, a Nokia spokesperson said: “Courts in Germany, the Netherlands and the UK have all found Oppo has infringed Nokia’s patented technologies in its smartphones. It’s time for Oppo to play by the rules and renew its licence on fair terms.”
The next step in the process is a hearing (or hearings) where the judge will hear arguments from Nokia and Oppo in relation to costs, any requests for permission to appeal, and the granting of any injunction.
The decision follows the injunctions granted in Munich and Mannheim on five patents, and in the Netherlands on two patents.
On June 21, the Mannheim Regional Court ruled that Oppo was infringing a Wi-Fi implementation patent (EP1704731). Mannheim Regional Court
On July 5, the same court again ruled in Nokia’s favour, this time on two cellular standard essential patents (SEPs). The court found that Oppo was an unwilling licensee and that Nokia had acted fairly.
Products withdrawal
The two SEPs were both from the same patent family and disclose efficient assignments of preambles when initiating random access to an LTE (4G) network or NR (5G) network.
On August 5, the Regional Court in Munich ruled on two separate cases and granted two more injunctions against Oppo, which then announced that it was voluntarily withdrawing its products from sale in Germany.
In the Netherlands, Oppo filed patent invalidation actions on Nokia’s patents, prompting the company to counter-sue for infringement.
The District Court of the Hague in the Netherlands found that Oppo infringed two of Nokia’s patents, essential to 4G and 5G standards and granted an injunction.
“Courts in Germany, the Netherlands and the UK have all found Oppo has infringed Nokia’s patented technologies in its smartphones.”
Nokia spokesperson
Image: Shutterstock.com / Arnold O. A. Pinto
SWITZERLAND
Lindt secures chocolate victory at home
In a win for Swiss chocolatier Lindt & Sprüngli, Switzerland’s highest court has ordered German retailer Lidl to destroy its remaining stock of foil-wrapped chocolate bunnies.
The ruling, handed down on September 29, ordered Lidl to stop selling the copycat product due to the risk of confusion and to destroy its remaining stock.
Lindt’s chocolate bunny—which is wrapped in gold foil and has a red ribbon with a gold bell—was found to be well known to the public and so Lindt’s two 3D shape marks were established in the market.
The court’s ruling overturns a Swiss commercial court’s finding against Lindt last year.
In late 2018, Lindt brought proceedings against two Lidl companies, seeking to stop the retailer from promoting, offering or selling its chocolate bunny wrapped in gold foil (or any other colour) and to destroy any Lidl bunnies still in stock.
According to the chocolatier, Lidl’s chocolate bunnies infringed its registered trademarks as they were very similar in shape and appearance and could be mistaken for Lindt’s bunnies.
Now, the Federal Court has concluded that there is a likelihood of confusion between Lindt’s and Lidl’s chocolate bunnies, despite the differences between them.
“Given the overall impression produced, Lidl’s rabbits evoke obvious associations with the shape of Lindt’s rabbit; in the mind of the public they cannot be distinguished. The ban requested by Lindt & Sprüngli against Lidl was therefore upheld,” said a summary of the decision (translated).
According to the court, the destruction of the remaining stock is proportionate as it “does not necessarily mean that the chocolate as such must be destroyed”.
In July last year, the German Federal Court of Justice ruled that Lindt could trademark the gold foil wrapping of its chocolate bunnies.
According to Mark Kramer, partner at European IP law firm, Potter Clarkson, Lindt had recognised the value of its iconic gold bunny early in the game and this is now paying dividends.
“The outcome of this case underlines a best practice approach to trademark protection, where we have seen Lindt carefully building its rights over time.”
Mark Kramer, Potter Clarkson
“IP protection won’t necessarily eliminate copycats or keep you out of the courts, but it provides the necessary tools to stop competitors in their tracks as we’ve seen here with the might of Lindt’s rights forcing Lidl to melt its entire stock of chocolate bunnies, he explained.
“The outcome of this case underlines a best practice approach to trademark protection, where we have seen Lindt carefully building its rights over time. Protection for the shape of the bunny was secured as early as 2001 and a trademark for the distinctive gold foil wrapper was registered just last year.“
Lindt, he added, has understood the significance of timing when it comes to securing rights—go too early and you won’t have established distinctiveness and leaving it too late will have left the door wide open for competitor products to establish market share.
“We saw the impact of having weaker IP rights with Marks & Spencer’s Colin the Caterpillar cake, which ultimately saw Aldi and others take a sizeable bite out of their market share.”
Commenting on the decision, a Lidl spokesperson said: “To confirm, the judgment only refers to Lidl in Switzerland and does not apply to Lidl GB, which operates as a separate entity.”
In a statement, the chocolatier said that the Federal Supreme Court had concluded that “the copies offered by Lidl, despite some differences, strongly and misleadingly resembled the Lindt Gold Bunny and that there was a likelihood of confusion.
“Because of their similar overall impression, the Lidl bunnies triggered associations with the shape of the Lindt Gold Bunny and could not be distinguished by the consumers.“
The ruling, said Lindt, is of great importance for the protection of the Lindt Gold Bunny on the Swiss market. “It will help to further protect the iconic form of the Lindt Gold Bunny against dilution from unauthorised copies and will likely serve as a precedent also in other countries.“
Image: Shutterstock.com / Ekaterina_Minaeva
EUROPEAN UNION
Streaming providers don’t infringe when users apply VPNs, CJEU urged
Streaming platforms should not be liable for infringement if their users use virtual private networks (VPNs), unless it emerges that they deliberately applied ineffective blocking systems, according to an advocate general (AG) of the Court of Justice of the European Union (CJEU).
AG Maciej Szpunar issued his opinion on October 20 urging the CJEU to rule that a platform would not be liable in this scenario—a development first reported by the IPKat blog.
However, he did note that liability would exist if the streaming platform failed to adopt effective geoblocking restrictions; made content available in areas for which it has not secured IP rights; or implemented geoblocks that are intentionally ineffective.
Szpunar issued his opinion following a request for a preliminary ruling from the Austrian Supreme Court of Justice (Oberster Gerichtshof), concerning a case between two Serbian companies.
The dispute arose between Grand Production, which produces entertainment TV programmes that are broadcast in Serbia by a local broadcaster; and GO4YU Beograd (now MTEL), which manages an internet streaming platform accessible from Serbia and elsewhere.
GO4YU currently does not have the rights to rebroadcast Grand Production’s programmes over the internet outside the territories of Serbia and Montenegro and is, therefore, obliged to block access for such users.
But, by using a special VPN server to connect to the internet, users can circumvent this block because the server camouflages the IP address and the user’s physical location to make it appear as though they reside in the permitted countries.
Allegations
Grand Production alleged that GO4YU would be aware of this workaround and believes that its programmes were viewed in Austria via Go4YU’s streaming service between April and June 2020.
Upon request by Grand Production, the Handelsgericht Wien (Commercial Court of Vienna, Austria) dictated a resolution in September 2020 of provisional measures against the GO4YU and MTEL, prohibiting them from broadcasting its programmes in Austria.
A series of interim injunctions ensued before the matter reached the Austrian Supreme Court, which decided to suspend proceedings and defer to the CJEU, asking it to clarify how the concept of communication to the public in Article 3(1) of the InfoSoc Directive should be interpreted and applied.
The Austrian court raised three issues: the scope of the liability of the operator of a streaming service for the communication to the public of copyrighted content without providing for the authorisation of the holders; the possible liability of entities collaborating with such an operator; and the scope of the courts of EU member states when addressing such alleged copyright infringements.
“While there are technical means to counteract this practice, they are not, and probably never will be, fully effective—the advancement of hacking techniques is always one step ahead of the advancement of protection mechanisms.”
Maciej Szpunar, Advocate General, Court of Justice of the European Union
Borderless nature
Szpunar pointed to the borderless nature of the internet, but stated that in a legislative context there are territorial rights and laws to consider.
This means there is a “fundamental contradiction between the transboundary and global character of the internet, and the territorially limited rights and obligations inherent in activity of various kinds carried out through it,” he said.
He principally addressed the issue of geographic access blocks, which are various security measures intended to prevent content in digital (electronic) format from being used, contrary to the will of the content provider.
Szpunar held that if the copyright owner (or its licensee) has applied such a block, its broadcasts are intended only for people who access content in territories where they are authorised to do so.
Circumvention is possible
While Szpunar found that in this case, GO4YU does not make a public communication of such programmes in the territory of the EU, he noted that different types of technical means, including VPN services, make it possible to circumvent these blocks.
“While there are technical means to counteract this practice, they are not, and probably never will be, fully effective—the advancement of hacking techniques is always one step ahead of the advancement of protection mechanisms,” he said.
He noted that while Grand Production company is “probably right” in stating that GO4YU is aware that its geoblocking of access is being bypassed via the VPN service, this does not imply that GO4YU is responsible for the public communication of such programmes to the aforementioned users.
A question of liability
The situation, he explained, would be different only if GO4YU “intentionally” applied an ineffective geographical block to enable access to people who are outside the territory in which access is authorised.
In conclusion, Szpunar opined that the operator of a streaming platform that retransmits a television programme on the internet “will not violate the exclusive right to communicate works to the public” when users circumvent, through a VPN service, a geographic access blocker.
He cited various cases, suggesting that the CJEU adopts a similar approach that it took with those. They include Svensson (2014), in which the CJEU held that although hyperlinking is a communication to the public, linking to content which has been made “freely available” online by the rights owner would not amount to infringement because that communication had not been to a ‘new public’.
Image: Shutterstock.com / Miha Creative