Vringo tries a novel strategy against ZTE

U.S. military doctrine requires the country to be ready to wage war in two theatres simulataneously.1 Patent assertion entity (PAE) Vringo has decided to go to the next level, and fight Chinese cellular equipment maker ZTE on ten fronts.

Using standards-essential patents it acquired from Nokia, Vringo sued ZTE in the United Kingdom (October 2012), Germany (November 2012 and again in September 2013, with an injunction granted in December 2013, and upheld in February 2014), France (April 2013, with an injunction sought but not granted), Australia (June 2013), Spain (September 2013), India (November 7, 2013, with an injunction granted on November 22 but vacated on August 5, 2014), Brazil (April 2014, with an injunction upheld in June 2014, and seizures ordered in October 2014), The Netherlands (May 2014 and again in August 2014, with an injunction upheld in October 2014), Romania (June 2014, with an injunction granted, but temporarily suspended in October 2014), and Malaysia (July 2014). Vringo is also suing ZTE in New York over a breach of an NDA.

This is a notable strategy. To the best of my knowledge, it’s the first time a PAE has forsaken a U.S.-centric approach and launched suits in so many countries against a single company. Thanks to a history of innovation, as well as strong legal support for the protection of patent holders’ rights, the United States leads the world in patent filings. Accordingly, many portfolios that PAEs license will consist solely or primarily of U.S. patents. But even when a portfolio has broad geographic coverage (that is, patents from many different countries), while initial negotiations may be for a worldwide license, if talks collapse and the patent owner must resort to litigation, suits tend to be filed in one or two countries at the most.

The second noteworthy aspect of Vringo’s strategy is its use of injunctions – requesting courts to bar the sale of ZTE’s infringing products. A patent confers the right to bar other people from “practicing” or using your invention within their own product. While this is a reasonable remedy for an operating company, PAEs prefer the alternative approach of signing revenue-generating licenses to infringers. An injunction can be a good tactic for gaining the attention of a reluctant licensee, and can significantly speed up settlement discussions.

The central question, of course, is how well Vringo’s strategy will succeed. Courts are generally reluctant to grant injunctions, especially to PAEs, due to the obvious damage it inflicts on the licensee. Long-time patent industry watchers will recall the famous injunction against Research in Motion (RIM) won by NTP, Inc., which would have shut down every Blackberry device in the United States, and that motivated RIM to reach a $612.5 million settlement in March 2006, shortly before the deadline expired. But the original injunction was awarded in 2001, with RIM able to delay its enforcement by various means. Vringo, however, has been successful in convincing a number of courts not only to grant injunctions, but (as can be seen in the Brazil case) to enforce them. This is likely due to the strength of Vringo’s Nokia-sourced patents.

As Vringo’s various cases make their way through the courts, we can be sure that other patent holders are watching closely to see how this strategy works out.

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