Monster Litigation

, Focus Europe

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Trolls populated Old Norse myths long before they roamed the Eastern District of Texas. As U.S. policy turns hostile to patent trolling, the epic battle between Nokia Oyj and IPCom GmbH may determine whether trolls return to their original stomping grounds, and repopulate Europe.

"Classic U.S. trolls are looking at Europe and thinking of coming here," says Nokia litigation head Richard Vary, "but they are waiting to see how the IPCom case works out."

Bernard Frohwitter learned the art of patent lawyering in Houston during the 1990s, where he managed the U.S. office of Munich's Bardehle Pagenberg and later set up Frohwitter Intellectual Property Counselors. After his return to Germany, Bosch GmbH hired Frohwitter to license a promising portfolio of mobile phone patents. In 2007, he formed IPCom with Fortress Investment Corp., bought the mobile patents himself and brought claims against Nokia worth up to €12 billion.

Vary calls Frohwitter Europe's "first pure, classic patent troll" who "targets the big guys with injunctions" (or as the Skaldic poets put it more lyrically, sucks the wealth of giants). Nokia's lead outside counsel, Jane Mutimear of Bird & Bird, calls Frohwitter "the first and possibly only U.S.-style IP lawyer" in Europe, in the sense that "he bought a portfolio himself and is trying to monetize it." In short, Frohwitter's foes see him as Europe's answer to Raymond Niro of Niro, Haller & Niro or David Berten of Global IP Law Group.

If Frohwitter is a troll, then Vary plays the role of the Norse god Odin. His avowed aim for the last seven years has been to keep Europe safe from what the poets called the swallowers of heaven's wheel.

After spending a decade at Linklaters, Vary moved to Nokia in 2006. Not coincidentally, soon afterwards Nokia fired its opening salvo in the European smartphone wars, seeking a declaration that any troll wishing to buy Bosch's patents should offer Nokia a fair royalty. In the ensuing months Bosch and Nokia tried to negotiate the sale of a patent license. As Vary tells it, a Bosch lawyer warned that if Nokia didn't agree to a license, Bosch would sell the portfolio to "a shark." Vary didn't know it yet, but as he sees it in retrospect: "The shark was already Bosch's outside counsel. Frohwitter was behind the threat, and then he created the shark."

Frohwitter sees himself as more of an engineer and entrepreneur than a lawyer, and certainly not as a troll or shark. He calls Nokia's attacks self-interested and hypocritical, because Nokia has a sizable business selling patents to licensing companies. "Nokia is worse than any troll because it is a 'troll-master,'" he gamely concludes. More fundamentally, Frohwitter argues that most licensors play a valuable role by demanding a fair price to reward the creativity of inventors. In the U.S., he concedes, licensors with weak patents can "blackmail" companies with the threat of high legal fees and hassle. But in Europe the cost of litigating is much lower, he argues, and licensors must win on the strength of their patents.

In late 2007, after buying Bosch's portfolio, IPCom launched its first wave of patent actions in Germany, eventually expanding its campaign to assert over 60 patents in three countries. Nokia's response was to file a wave of invalidity claims in English court the next year. Its approach was to use English findings of invalidity to persuade German courts to stay infringement actions on some patents, and to persuade the licensor to abandon other patents for fear of losing in English court and getting stuck paying opponents' legal fees. Vary credits Bird & Bird's Mutimear with inventing the strategy. The new rule of thumb, he says, is that European patent claimants like German courts because they're the quickest to decide infringement; patent defendants like English courts because they're the quickest to decide invalidity; and nobody likes French courts because they're slow on everything.

With the exception of only one patent, Nokia's approach has succeeded on a grand scale. More than 60 Bosch patents have been declared invalid as granted or conceded by IPCom, and IPCom has paid more than $12.5 million in costs for its failed actions. For its efforts, Bird & Bird was given an award this summer for technology team of the year from the London magazine Legal Business.

But the exception—IPCom patent #100a—is asignificant one. Observers say that any award implying that Nokia has won the war, or that IPCom has lost it, would be highly premature.

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