A German
district court has ruled that Apple Inc (AAPL.O)
violated patents acquired by Swiss security company Kudelski's OpenTV business,
which could force Apple to remove some video streaming features from popular
products sold in Germany.
The
ruling by a three-judge panel at the Duesseldorf district court on Tuesday said
that Apple must not supply software that infringes an OpenTV patent covering
the mixing of video, audio and online information in a single video stream.
The court's
decision puts pressure on Apple to seek a licensing deal from Kudelski, though
the U.S. technology leviathan could comply by removing or disabling the
offending features from its video streaming products. In the worst case, it
would have to pull the devices from the market.
Products that
could be affected range from iPhones to iPad tablets, Mac computers, the iTunes
music service, the Quicktime video software player and Apple TV, the Silicon
Valley company's video streaming box, according to court documents.
"The
claim is predominantly valid and well-founded," the Duesseldorf court said
in its ruling.
POTENTIAL FINES
It is unclear whether Apple will appeal.
The company faces fines of up to 250,000 euros per infringement if it fails to
comply, but the ruling did not specify how this would be calculated or what the
total amount of penalties might be.
Apple and Kudelski representatives declined
to comment.
Since 2012 Kudelski has waged a
high-profile campaign on intellectual property licensing, taking on some of the
world's biggest technology groups in courts far and wide. It has reached
settlement deals with Google (GOOGL.O), Cisco Systems (CSCO.O) and Netflix (NFLX.O). Financial terms were not disclosed.
The German injunction will come into
effect once Apple has been notified in writing that OpenTV has posted security
of 4 million euros ($4.5 million) demanded by the court as potential
compensation for Apple's losses if the decision is reversed on appeal.
Apple can apply to the regional appeal
court for a stay of enforcement, which can usually be obtained in a matter of
weeks, and appeal against the substantive ruling in that higher court.
OpenTV, which has filed a similar case
against Apple in the United States, alleged in the German case that Apple
products infringed three patents owned by it or other Kudelski operations.
Kudelski acquired OpenTV in 2010 and initiated the German case in 2014.
PATENT CHALLENGE
Apple responded by filing to have the
OpenTV patent invalidated in the Federal Patent Court in Munich.
The Duesseldorf court stated in Tuesday's
ruling that it was sufficiently confident that Apple would not succeed in
having the Munich court invalidate OpenTV patents.
Asked about the Apple challenges to the
OpenTV patents, a spokeswoman for the Munich court said two nullity cases
relating to patents for video delivery and integrated interactive video and
Internet were pending.
"In respect of the course of the usual
procedure in nullity proceedings an oral hearing might possibly take place in
the first quarter of 2017. As the proceedings are not public at this stage, it
is not possible to submit further information," she said in an email.
This week's ruling in the Duesseldorf court
found that Apple products infringed a single dot-com era patent filed in 1997
by ACTV Inc, which was later acquired by OpenTV. European Patent number 0 885
525 B2 is entitled "An Integrated Interactive Video and Internet
System".
Kudelski has developed and acquired a range
of movie and digital TV technologies over several decades and became a player
in the streaming-video market through its OpenTV acquisition.
The company, which is facing flat revenue
growth in its overall business, has two main operating units: secure media
distribution systems used in TV set-top boxes and access control systems for
car parks, stadiums and ski lifts.
Shares in Kudelski, which has a modest
market capitalisation of 793 million Swiss francs ($818.2 million), were down
1.9 percent at 15.85 francs at 1400 GMT on Thursday.
($1 = 0.9692 Swiss francs)
($1 = 0.8835 euros)
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