Smartphone Apps for Facebook, WhatsApp and Instagram declared patent infringing by German Court
The End of Social Networks?
08 January 2020
On 5 December 2019 the Regional Court of Munich ruled that offering and distributing WhatsApp, Facebook, Facebook Messenger and Instagram in its current configuration is prohibited in Germany due to patent infringement. The lawsuit was brought by the Canadian company BlackBerry. The case offers many interesting IP and Tech topics which are worth a closer look, in particular the patentability of software and its effects on Tech offerings in Europe.
BlackBerry's patent infringement proceedings – a patent-troll case?
According to the findings of the Regional Court of Munich (file no. 7 O 5314/18), parts of the software applications Facebook, Facebook Messenger, WhatsApp and Instagram infringe four patents owned by BlackBerry. Affected are the function "Suggested Friends" and the possibility to send WhatsApp 'chat history' via e-mail. The matter relates to a series of other legal action brought by BlackBerry all across the world.
- In February 2017, BlackBerry sued Nokia for allegedly infringing patents concerning 3G and 4G wireless communications technology.
- In March 2018 a lawsuit was brought against Facebook in the USA, in which BlackBerry claimed the infringement of seven different patents, for instance with regard to the idea of tagging people in photos and getting name suggestions in a search line or providing an app-icon with a counter for the number of unread messages.
- In April 2018 Blackberry also filed a lawsuit against Snapchat (Snap Inc.).
- In February 2019, Blackberry took Twitter to court, accusing it of using software developed by BlackBerry without permission.
These lawsuits gave rise to the suspicion of BlackBerry being a so-called "patent-troll". This term commonly describes non-practicing entities that strategically acquire a large number of patents in order to obtain high royalties from allegedly infringing companies. Patent trolls do not enforce their patents in order to protect their market position against competitors but rather to extract profits. This impression is promoted by BlackBerrys attempt to persuade different companies to pay for the use of its huge amount of patents and no longer producing phones themselves.
In this case, the Regional Court of Munich verdict is not yet legally binding and Facebook announced that it is not only planning to appeal to the High Regional Court of Munich but it plans to also resort to the Federal Patent Court to have BlackBerrys patent invalidated. Additionally, Facebook stated that there will be no consequences for the consumer, as it is ready to update its applications to a non-infringing version as soon as necessary. This could be the case as soon as BlackBerry deposits a security of approx. 1.6 million Euro to provisionally enforce the verdict.
Patentability of Software in Germany and Europe
Legal action by Facebook against the protection of BlackBerry's software patents could make sense due to the strict requirements an invention must meet to be granted a patent.
All patents must be (i) new, (ii) involve an inventive step and (iii) must be susceptible of industrial application. Typically, most patent applications are prone to attacks during or after the application process due to the lack of one of the above-mentioned requirements. With regard to software, another issues arises from the statutory provisions in Section 1(3) No. 3 of the German Patent Act (GPA) and the corresponding Art. 52(2) lit. c) of the European Patent Convention (EPC) which state that "programs for computers" shall not be regarded as patentable inventions. Therefore, it is always questionable whether software can be the subject matter of a patent. Essentially, most software are "programs for computers" as this applies to all kinds of computing devices such as smartphones, personal computers, mainframe systems or even autonomous cars and other IoT-devices.
However, this exception only applies to the "computer program as such", not to an underlying invention. It must always be distinguished between mere ideas or mathematical regularities, which cannot be patented in the interest of free use by the society, and technical inventions that may give the inventor a time-restricted monopoly to use and exploit. Software can be protected as part of a so-called "computer implemented invention", which often is at hand if the software directs a technical procedure or apparatus. However, the invention underlying the software has to meet the same requirements as any other invention. Those requirements are that an invention must comprise of an instruction that enables to solve a technical problem using technical methods (e.g. ABS-brake in cars). Consequently, there are many software patents in the context of embedded systems, in particular for autonomous driving solutions or in the software-defined 5G infrastructure. You may also find software patents in the context of Blockchain or Distributed Ledger technology, mainly for cryptographic solutions. However, social media apps as "classic" application software usually are not a common field for patents. This makes the decision highlighted in this article the more interesting.
Long story short, patentability of software must be assessed on case-by-case basis. By now, there is a differentiated case law by the German and European patent offices and courts which has to be taken into account. It always requires a precise legal and technical delimitation to be able to judge whether the respective software is patentable. The owner of a software patent may prohibit not only the identical use, but also equivalent solutions if they are not legitimized by license agreements and royalty payments. As we now witness with BlackBerry, this can be quite a source of revenue.
Copyright Protectability of Software
Software not meeting the requirements of patent protection, however, is not left without any protection. Any kind of software plus the respective drafts are in principle protectable by copyright, without the need of a registration in any kind of register.
According to section 2(1) No. 1 of the German Copyright Act (GCA) software – or more precisely, the human-readable source code – is protected as a literary work Additionally, sections 69a ff. GCA contain special protection provisions for computer programs which are the transposition of the European Computer Programs Directive (2009/24/EC).
Copyright therefore is the main protection instrument for most software. However, copyright law offers a far less effective protection in contrast to patent law. This is due to the fact that copyright protection only refers to the substantially identical reproduction of the copyrighted subject matter (i.e. normally the source code). Further, according to caselaw by the European Court of Justice, copyright protections for computer programs does not include the functionality of the program. Thus, if an allegedly copyright-infringing computer program has the exact same functionalities but was created without a reproduction of the prior existing program, there is no copyright infringement. The same case could, in contrast, lead to a patent infringement, if the developer of the prior existing program has applied for and was granted a software patent. It is no coincidence that there are not many high-profile copyright infringement cases regarding software.
Consequences after a patent infringement
Under German law, a patent infringement leads to, among others, claims against the infringer to cease-and-desist and damages. The damages may easily be calculated on the basis of a fictional market standard royalty. This alone may be a good amount of money in the BlackBerry v. Facebook case taking into account the large number of users for the apps.
However, the cease-and-desist claim is generally the more crucial part because it concerns the future business operation. Normally, there are three options to cope with cease-and-desist after a patent infringement.
First, one may simply stop using the patent infringing app at all. This only makes sense commercially, if the patent infringing app is not executable without the patented subject matter and a workaround is not possible or the cost are disproportionate to the benefits.
Second, the patent infringer might obtain a license from the patent owner against the payment of royalties. This, of course, is only an option if the patent owner agrees to license the patent, which is generally not mandatory, except for FRAND-cases.
Third, the patent infringer may workaround the patent infringement. In this case Facebook has opted for this workaround which seems to indicate that the scope of BlackBerry patents are limited for the overall apps.
Sometimes the patent infringer has a fourth option – the counter attack. Facebook has also taken this approach. The counter attack makes sense if the patent could be voided due to the lack of protection requirements (see above).
The beginning of the end of Social Networks?
Clearly this proceeding is not the beginning of the end of social networks. However, even software companies like Facebook and Google must be aware of software patents.
Due to the all-encompassing digitalization and the prevalence of software applications, it must be expected that software patents will increasingly become more and more important. This will not only be a gold mine for "patent trolls" but also for market participants to carve their way to market leadership in software markets. In any case, the BlackBerry v. Facebook case will not be the last of its kind. Don't be scared, but be prepared!
Key Take-Away Points
- Software is only patentable under the same conditions as any other invention. The statutory exceptions for patentability of "computer programs as such" do not exclude "computer implemented inventions" to be granted as a patent. Patent protection offers a large scope of protection and, thus, great economical rewards.
- In general, copyright law provides the protective framework for software, which is harmonized under Union law. However, the easily obtainable protection is rather ineffective in practice.
- The legal consequences of IP infringements comprise of cease and desist and/or damage claims – while the latter may lead to high payment duties, the first may influence the whole future business operation.
- In order to react to cease-and-desist claims, the infringer may choose between three different options, depending on the specific case: to stop using the application, to obtain a license or to create a workaround.
- The fourth option, counter-attacking the patent itself, may be chosen if there is a certain chance that the patent does not meet the protection requirements.