08/27/2010 - 19 - REDACTED VERSION of 17 Declaration, of Karen L. Pascale in Support of Reply Brief in Support of Motion to Transfer Venue Pursuant to 28 U.S.C Section 1404 by Exedea Inc., HTC (BVI) Corp., HTC America Inc., High Tech Computer Corp.. (Attachments: # 1 Exhibit 1-8)(Pascale, Karen) (Entered: 08/27/2010)

• Exhibit 1 - Complainants Apple Inc and NeXT Software Inc.’s Combined Opposition to the Staff’s Nokia’s and HTC’s Motions for Consolidation filed in ITC Inv. Nos 337-TA-704 and 337-TA-710 on April 21, 2010

• Exhibit 2 - Apple Inc’s Answer, Defenses and Counterclaims from Nokia Corporation v. Apple Inc., C.A. No.10-CV-249 (W.D. Wisc.), filed on June 28, 2010

• Exhibit 3 - Apple Inc.’s Memorandum In Support of Motion to Transfer Venue to the District of Delaware Pursuant to 28 U.S.C. § 1404(a) from Nokia Corporation v. Apple Inc., C.A. No.10-CV-249 (W.D. Wisc.), filed on June 29, 2010

• Exhibits 4 and 5 - Redacted

• Exhibit 6 - Apple Inc.’s Reply Memorandum In Support of Motion to Transfer Venue to the District of Delaware Pursuant to 28 U.S.C. § 1404(a) from Nokia Corporation v. Apple Inc., C.A. No.10-CV-249 (W.D. Wisc.), filed on July 30, 2010

• Exhibit 7 - Defendants HTC Corp. and Exedea, Inc.’s Reply Brief In Support of Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404 from Apple Inc. and NeXT Software Inc. v. HTC Corp. and Exedea, Inc., C.A. No. 10-166- RK and 10-167-RK (D. Del.), filed on June 9, 2010

• Exhibit 8 - Order No. 5: Granting the Commission Investigative Staff’s Motion for Partial Consolidation of Investigation Nos. 337- TA-704 and 337-TA-710 and Denying Nokia’s Motion for Full Consolidation, filed in ITC Inv. No. 337-TA-704 on April 26, 2010

First, the big picture. Apple says, as I'll show you, that Nokia tried to use its own patents to force Apple to license its iPhone tech to Nokia and when Apple refused, the Nokia lawsuits began. So I gather this is not so much about real legal issues as using patent litigation for competitive, business purposes.

After Nokia filed the first lawsuit in Delaware, it was sort of like World War I, which began small with a gun in Sarajevo and then quickly encompassed the world. This is mobile phone war, and it's huge.There are now five different litigations, plus complaints at the ITC. It's ugly. And it's about patents. Blech. But let's try to hold our noses and dig in and figure it out.

Keep in mind as we go through them that these are HTC exhibits, but some of them are Apple's filings, but none of them are Nokia's, meaning these exhibits don't provide all points of view, but they do provide at least a broad view of what it's about, even if only in seeing answers to Nokia arguments. Apple accuses Nokia of misusing standards as well, as you'll see. I hate to feed the cynicism some of you have developed from watching the legal system up close like we do here, but it is what it is. Here's what the documents reveal as to what's been going on.

Exhibit 1 and Exhibit 8:

First, as to the investigation going on at the US International Trade Commission in Washington, DC., both Nokia and Apple filed complaints there. Then HTC did too, which added more complexity. HTC counts 44 patents all told. The ITC's investigative staff filed a motion for partial consolidation, because some of the patents overlap, and Nokia and HTC both requested full consolidation there, and the last exhibit, Exhibit 8, indicates that the staff's motion was granted for partial consolidation.

Apple opposed consolidation of any kind vigorously. It sounded positively frantic in its unsuccessful opposition:

The Staff and Respondents Nokia and HTC seek unprecedented relief and propose conflicting forms of consolidation that will radically complicate and delay the investigations ordered by the Commission. Apple commenced these investigations against two separate infringers that sell completely different infringing products based on different software platforms. Consolidation will lead to an unmanageable investigation structure and prevent the Commission from meeting its statutory mandate to complete the investigations "at the earliest practicable time." In short, the consolidation "solutions" proposed by the Staff and Respondents would create more problems than they allegedly solve.

Although the delay resulting from consolidation would severely prejudice Apple, that is not the only prejudice Apple will suffer. Either full or partial consolidation will result in an unworkably complex investigation with different products based on different software platforms, and witnesses from Respondents from different foreign countries speaking different languages requiring interpretation. The complexity multiplies when one considers that Nokia's accused products are based on at least three different operating systems and HTC's products implicate the Android operating system developed by Google and the Open Handset Alliance.

What is the up side of consolidation in litigation, by the way? Obviously, the first benefit is that plaintiffs can't tell different stories in different courtrooms. Imagine if SCO, for example, had had to consolidate all its cases. That would have left the Boies Boyz speechless. Well, hardly. But it would at least have forced them to be consistent.

But think about the defendants. If IBM, Novell, Red Hat, AutoZone, SUSE, and DaimlerChrysler could have shared the cost of discovery instead of each one shouldering the burden of doing it separately, it would have been cheaper and less annoying for each of them. Discovery is the main rat hole money disappears into during litigation. And if your witnesses and experts only have to show up once, for one trial, that's a savings too, not to mention more convenient for them.

Seeing the list of defendants who had to deal with SCO also highlights the difficulty with consolidation. If the claims are different enough, then it can actually slow things down and make things more complex, which is what Apple was arguing. Even just in the IBM litigation, IBM dropped the patent counterclaims at one point, because it was getting complicated, SCO was asking to bifurcate and it was looking like another way for SCO to delay the outcome. So imagine if you have six different cases, all doing discovery at the same time.

Apple's litigations are about patents, furthermore. So not only will there have to be the usual depositions, which even Apple says could be consolidated, and paper searches via interrogatories and the usual, but there will be Markman hearings, the hearing to decide what words mean in a patent. If you watched tridge's explanation of the patent system, you understand that, and if you didn't watch it, please do. If you have four Markman hearings instead of one, and four trials instead of one, it's a lot more expensive, obviously, because you have to prepare and attend, and that means paying the law firms to do that.

For that reason, if you are the plaintiff and you are suing a lot of different entities, you think strategically. And your decisions will be case by case, or in the case of Apple, courtroom by courtroom.

Exhibit 2:

Exhibit 2 is Apple's Answer to Nokia. This is the kernel of the patents involved, according to Apple:

Apple admits that the patents-in-suit relate to a modulator, a position method selection device, and antenna design.

Apple describes itself like this:

12. Long a leader in computer technology, Apple foresaw the importance of converged user-friendly mobile devices. Capitalizing upon its unique hardware, application and operating system software, services, and know-how, Apple provides its customers new products and solutions with superior ease-of-use, seamless integration, and innovative industrial design. Apple has designed a business strategy based on the convergence of personal computers, mobile communications, and digital consumer electronics, and has produced cutting-edge, technologically superior, and user-friendly devices such as the iPod, iPod Touch, iPhone, and iPad.

21. After copying Apple's innovative technologies, and implementing them in its smartphones, Nokia attempted to leverage its own patents in licensing negotiations with Apple in an effort to obtain a license to Apple's highly valuable technology.

22. When Apple rejected Nokia's unreasonable licensing demands, Nokia began filing a series of complaints for patent infringement, including two complaints in the District of Delaware, a related complaint in the International Trade Commission, and, most recently, this action in the Western District of Wisconsin.

Maybe it's because Wisconsin is the new rocket docket for patent and other IP cases. You sue where you think you have the best chances for a successful outcome. And you saw how long the SCO cases drag on and on and on. In Wisconsin, you get to trial usually within a year. Here's how Wisconsin Technology News describes the rocket docket there:

The accelerated pace of federal litigation in Madison frequently surprises defendants, who are under the gun to mount a catch-up defense from the moment a lawsuit is filed. Plaintiffs, on the other hand, have the built-in advantages of having as much time as needed to prepare their case before the court sets an aggressive schedule, as well as the advantage of surprise. Once a lawsuit is filed, the countdown to trial begins, a process that is far shorter in Madison than in other courts.

Nationally, patent infringement cases typically take two to three years. Patent cases filed in Madison have an average resolution time of six months, four days!

Trial dates in this court are firm. Discovery - an area often plagued by disputes and delays - must proceed quickly if the parties are to properly prepare for trial. Legal life on the rocket docket moves at warp speed, with few exceptions even for emergencies.

In one instance, a hearing continued while paramedics rushed to the courtroom to attend to a defendant who was suffering a mini-stroke. The judge later explained the proceedings continued because the conference was expected to last only 60 to 90 seconds, and the parties should not be “inconvenienced.”

Here's Nokia's press release in May about that:

Nokia announced that it has today filed a complaint against Apple with the Federal District Court in the Western District of Wisconsin, alleging that Apple iPhone and iPad 3G products infringe five important Nokia patents.

The patents in question relate to technologies for enhanced speech and data transmission, using positioning data in applications and innovations in antenna configurations that improve performance and save space, allowing smaller and more compact devices. These patented innovations are important to Nokia's success as they allow improved product performance and design.

"Nokia has been the leading developer of many key technologies in mobile devices" said Paul Melin, General Manager, Patent Licensing at Nokia. "We have taken this step to protect the results of our pioneering development and to put an end to continued unlawful use of Nokia's innovation."

Exhibit 3:

You can read all about Apple's stated reasons for wanting to consolidate all the Nokia cases in Exhibit 3. Nokia as plaintiff filed two cases against Apple in Delaware. And in this document, Apple again portrays the dispute not so much as a legal battle but more as Nokia using the courts as a tactic to force Apple to license its technology to Nokia:

When Apple rejected Nokia's demands, Nokia began filing a series of complaints claiming that Apple's products infringe Nokia's patents. In the first case, filed on October 22, 2009, in the District of Delaware, Nokia alleged infringement of ten patents based on "wireless communication devices such as the Apple iPhone, the Apple iPhone 3G, and the Apple iPhone 3GS. ( See Ex. 3, Compl. Section 70, Nokia Corp. v. Apple Inc., No. 09-CV-791 (D. Del. Oct. 22, 2009) ("Delaware I" or the "791 Case").) Apple filed counterclaims for breach of contract and attempted monopolization (based on Nokia's promotion of standards to the relevant standards-setting organizations while concealing its own patent applications allegedly covering these standards, as well as its assertion of patents it was legally obligated to license on fair, reasonable, and non-discriminatory terms), as well as infringement of nine Apple patents by Nokia's N900, as well as other related products.

Are you with me so far?

It was after all this that Nokia filed in Wisconsin its third lawsuit, listing five more patents. It did this, Apple points out, despite being able to add those patents to the Delaware case, the first Delaware case. Apple responded in Wisconsin with counterclaims listing seven more Apple patents, accusing Nokia's N97, N900, and N8 products. It's really just one long argument between two businesses, then, but with cases cropping up all over the place. Apple provides a patent by patent breakdown of what it's all about beginning on page 10 of Exhibit 3. It's all the same technology being fought over. And Apple on page 11 says that in addition, there is significant overlaps with the three HTC lawsuits, and in fact three of the patents Apple is suing Nokia over are also at issue in the HTC litigation. That isn't what Apple stressed to the ITC, of course.

I can't understand why people fight so hard for a patent system that works like this. The truth is, the way software works, I imagine there is no technology you could try to sell that doesn't infringe someone somewhere, because the US Patent Office doesn't know tech from its bellybutton, sadly, and it issued some peculiar patents over the years. Apple, to be fair, is all about hardware as well as software, so this mess has both. Here they are fighting about antennas as well as GUIs and operating systems.

And as for those of you who comment on every patent article on Groklaw that Europe is patent-free, not only is that not true, but please note that Nokia is in Europe, with US subsidiaries, filing patent litigation in US courts. Life is complicated. And the smell of money makes companies act like this.

Speaking of money, the ITC can't award damages, only an exclusion order, Apple points out in footnote 2. So for that reason, Apple writes, "it is common practice for parties to initiate simultaneous actions in the I.T.C. and a federal district court." In case you wondered what patent litigation is about.

Anyway, so Apple wants the five cases consolidated, except at the ITC, where it argued the opposite. And it points out that the only other time Nokia was in Wisconsin, only as defendant that time, in Qualcomm Inc. v. Nokia Corp. et al, it argued that Wisconsin was an inconvenient forum because it had no connection to the state.

Exhibits 4 and 5:

Exhibits 4 and 5 remain sealed, so we don't get to read them. But the Declaration tells us what they are. Exhibit 4 is deposition excerpts from the deposition of Brian Ong in the Apple v. HTC case. Exhibit 5 is bits from the deposition of Andrew Rubin from the same litigation. Both depositions happened in May. In Exhibit 7, HTC describes Rubin as the "group leader" for Google on the Android OS.

Exhibit 6:

Exhibit 6 is Apple again, responding to Nokia, so we at least get a clue about Nokia's position. And thus we learn that Nokia argued that transfer out of Wisconsin would result in "delay of over a year and a half". But Apple argues that speed in Wisconsin is measured by cases overall, and you should look at relative complexity too. If you look at the specifics of these cases, HTC argues, it would be almost the same amount of time to trial. And anyway time-to-trial isn't the only issue to consider. Convenience is important too.

Nokia at the ITC argued, if you recall, for consolidation. Here, not so much, evidently. How to explain all this to you, without you thinking the law is cynical?

Well, it is sometimes, but it's more situational. That's all I can say. Lawyers look at each microcosm, and they strategize. It's about being successful for your client, whatever is best for the client, looking at the specific facts of each issue in each place. Logic isn't king in the law. That's one reason why it's sort of squishy, compared to bedrock reliability of things like math.

Both Nokia and Apple are arguing one way here and another there. HTC too. And if you read all the filings, you'll see they try to point at the other guy for doing so, while explaining away their own contradictions.

Exhibit 7:

Exhibit 7 is HTC arguing for the transfer of venue for its dispute with Apple to California. That's where the Android Operating System, "a key element of the accused products", was developed, HTC says. That's where Google folks are, and California has subpoena power over them, as well as over "nearly all of the 69 named inventors of the asserted patents" and over "Qualcomm personnel responsible for designing the baseband chip identified in Apple's infringement contentions." HTC has an office in California, and it's where Apple's worldwide headquarters is. Apple can't claim anything like that for Delaware. There aren't any witnesses there, HTC says, documents or other evidence. It's not inconvenient for anybody to do this in California instead of Delaware. It accuses Apple of strategy moves to stay in Delaware, moving to consolidate HTC with the Nokia cases there, only because HTC is asking to transfer to California.

HTC says in this document that it makes no sense to consolidate with Nokia, that it would undermine judicial efficiency. I know. The needle on your cynicism meter is positively dancing. But that's the argument.

There are 44 patents in this "patent monstrosity", HTC says. We shouldn't be distracted by HTC arguing differently at the ITC "in litigating an unrelated motion before the ITC" and rather it suggests "this Court should focus on the statutory transfer factors" that favor transfer. It's more convenient, witnesses are in California, especially with regard to Google employees "who developed the Android OS" and who Apple concedes will be "critical third-party witnesses". Apple will be taking "extensive discovery from Google", HTC quotes Apple as saying.

Well, that'll teach Google to innovate. I know. According to Apple (and Oracle), they didn't. But we'll see as this plays out to the end who is who and what is what.

By the way, that bit about subpoena power means this: if a court battle is in California, and you live there, the court has the power to make you show up. If you live in Delaware, a Delaware court has to so order you to show up. We saw that play out in the SCO v. Novell case, if you recall the elaborate effort Novell had to make to get Computer Associates in New York to obey a subpoena for a case in Utah. It was hilarious. But also hard to get accomplished. So usually courts will favor a venue where subpoenas are compulsory over residents.

HTC then quotes, in footnote 5, Apple arguing in another case for venue in California, speaking of hilarious. Lawyers don't write in plain English what they actually mean in every situation. If they did, they'd write things like, "I want to stay in Wisconsin so you won't know what hit you in time to react well." If they did, judges would rule against them, so you see these elaborate dances over words that are about what they'd say if they were plainly telling the truth, but which they can't say, so that's what makes it get elaborate and sometimes contradictory. If you are the plaintiff, you want to be in Wisconsin. If you are the defendant, you want out of there. So in answer to Apple's argument, mentioned in footnote 7, HTC says that its filing a complaint at the ITC "has no bearing on the convenience analysis because the ITC is a single-venue forum." Lawyers stay up nights figuring out arguments like that. It's a good one, because HTC is saying it can't transfer out of that one venue. It has no choice, so its position there is irrelevant to the transfer analysis about going to California. But what the judge will be realizing by now, just as you do, is that all the parties are angling for where they think they will do the best. HTC in fact then goes on to accuse Apple of tactically asking to consolidate in Delaware, basically to avoid California, but arguing against consolidation at the ITC.

Judges are totally used to this. They'll look at the facts and figure out a solution that they hope maintains an even playing field. On Apple's side, they are already in Delaware. So that tilts their way. But if everyone is located in real life in California, it tilts HTC's way. And 44 patents for just one judge to rule on is a lot.

HTC also argues case congestion in Delaware, and it points out something true and meaningful: that California cares about all this. Delaware has no connection to the dispute, other than the fact that the products in dispute can be bought in Delaware, just as in every other state. And so HTC asks the court to let it transfer its dispute with Apple to California, arguing, "These cases do not belong in Delaware."

This look at the unsealed exhibits isn't the complete picture, but after reading them, don't you feel more confident that you are at least starting to get a handle on what this is all about?

Update: An industrious member, squib, has posted all the Nokia patents except one, 6,882,727, and I think Google Patents has that one here.