In advance by fax:

Mannheim Regional Court

- 7. Civil Division -
A1, 1
68159 Mannheim [Translation]

Klaus.Haft@rokh-ip.com
Extension: +49 (0)211 550 22 340
3279-12RE140714-eng-tc-ct
14 July 2014

Reply and amendment of the action

In the matter of

Vringo Germany GmbH REIMANN OSTERRIETH KÖHLER HAFT

Attorneys at Law Klaus Haft, Christina Tenbrock, as
well as all other lawyers of the partnership with limited
professional liability

- Plaintiff-

versus

1. ZTE Corporation
2. ZTE Deutschland GmbH Olswang Germany LLP, München

- Defendants -

we further request

that the defendants be ordered to have their respective legal

representative declare before the competent local court in
lieu of an oath that they have provided the information ac-
cording to their counsel's letters dated 25 April 2014 and 05
June 2014 (Exhibits K 9, K 15) as completely and truthfully
as they are able to.

REIMANN OSTERRIETH KÖHLER HAFT - Partnerschaftsgesellschaft von Rechtsanwälten mbB

Sitz: Düsseldorf - AG Essen PR 1320
 -2-

Reasons:

1. To the pending action we include two further letters in which the defendants pro-
vided information after having been asked to update their rendering of account.
The suspicion we already had at the time the action was filed that the information
so far provided by the defendants (namely with letter of 23 January 2014 and 10
February 2014) was incomplete and not rendered with the required due care, has
again been corroborated after the Dutch customs authorities recently seized SDR
base stations intended for the German market, the sale of which had been pro-
hibited to the defendants by the judgement of the Mannheim Regional Court of
17/12/2013 (file no. 2 O 41/13). For this reason, the defendants were asked to
update the information and accounts rendered, and through the present amend-
ment of the action, this update shall also be made the subject matter of the pre-
sent proceedings.

2. There is an acute suspicion that the information provided until today has not been
rendered with the required due care. The argumentation of the defendants give
rise to point out the following:

a. The Regional Court in Mannheim decided by judgement of 17 December

2013 that all of the defendants' SDR base stations that are UMTS-enabled
and provide the diversity transmission capability that is optional in the UMTS
Standard infringe the patent of the suit. Only as an example the SDR-base
stations of the type ZXSDR 8700 and ZXSDR 8900 A were mentioned.
b. As a consequence, the defendants have been ordered to – absolutely – re-
frain from offering and delivering said SDR-base stations (so called
“Schlechthin-Verbot” = absolute prohibition). In this context the Mannheim
Regional Court took for granted that the attacked embodiments generally
implement the optional functionality but that they can easily be changed in a
way that they do not longer offer the option of transmit diversity through a
mere software modification (p. 28 LGU).
c. This decision is binding for the procedure of rendering of accounts. The de-
fendants are free to dispute the legal opinion of the first instance court by
means of appeal proceedings. Under no circumstances can the first in-
stance patent infringement proceedings be continued within the procedure
 -3-

of rendering of accounts. Therefore, within the procedure of rendering of ac-

counts, the defendants cannot be heard with the argumentation that the at-
tacked embodiments do not infringe the patent of the suit because the pa-
tent provides a different TSTD than the standard. This already has been af-
firmed by the Regional Court in Mannheim and is thus binding. The defend-
ants can also not be heard with the argumentation that the optional transmit
diversity is not generally implemented in the attacked embodiments but will
only be implemented on specific customers’ wish. Again, for the specific
named SDR-base stations it has already been affirmed by the Regional
Court in Mannheim that they implement the option of TSTD. This remained
undisputed by the defendants. The (new) argumentation of the defendants
in the proceedings of rendering of account, the functionality is not imple-
mented as standard version, is not plausible: As Exhibit K 6 we submitted
documentation that describes the functionality of “transmit diversity” which
form is used by ZTE for proposals to customers:
-4-
 -5-

Thus it must be assumed that all attacked SDR base stations of the defendants
provide the functionality of TSTD as a standard. If customers decide to use the
functionality, no new software is needed. Vice versa, the functionality could be
excluded from the outset by a simple software modification, removing the TSTD
functionality all together, and thus providing more security for the claimant, which
is why the Mannheim Regional Court granted an absolute prohibition. In light of
the judgement the defendants need to change their SDR-base stations, i.e. need
to remove the TSTD functionality all together, to be able to offer and distribute
them without committing an act of patent infringement.

3. The written affidavits submitted by the defendants with their statement of defence
do not fulfil our claim. The voluntary submission of an affidavit is a matter of vol-
untary jurisdiction according to Sec. 410 No. 1 FamFG. The competent court is
the court in the district of which the information and rendering of accounts are
owed (cf. Sec. 411 No. 1 sentence 1 FamFG). If the obligee has its residence or
 -6-

abode in Germany, he can submit the declaration to the local court at his resi-
dence or abode (Sec. 411, No. 1, sentence 1 FamFG). The person obliged to
submit an affidavit must appear in court in person (Sec. 412 No. 1 FamFG). In
this respect, the obligation based on Sec. 259 Para. 2 BGB is not fulfilled by
submitting a simple letter with a corresponding declaration in proceedings before
the Mannheim Regional Court.

The action for submission of an affidavit is therefore admissible and well-founded.

In detail:

I.
Facts of the case

(1)

1 By judgement of the Mannheim Regional Court (cf. Exhibit K 1) the defend-

ants were simply ordered to refrain from offering and/or supplying network
devices for digital cellular mobile networks which are suitable and intended
to perform a method according to claim 1 of EP 1 186 119. After careful as-
sessment the first instance court thus came to the conclusion that the at-
tacked embodiments constitute means that relate to a material element of
the invention and are suited to make use of the invention (p. 19) and indent-
ed to make use of the invention (p. 26). The court further ruled that the sub-
jective requirements of Sec. 10 Para. 1 PatG are also met (p. 27). Since
transmit-diversity is only an option, the attacked embodiments could also be
used without infringing the patent. However, after thorough assessment of
the various interests involved, the Mannheim Regional Court decided that
the defendants are generally refrained from offering and delivering said
products, i.e. that a general prohibition is justified in the present situation
(cf. also the explanations in the Regional Court judgement on p. 28 et seq.).
Said legal assessment is the basis for the proceedings of rendering of ac-
counts.

2 The defendants have provided “zero information” with regard to the delivery
of patent infringing SDR-base stations. In order to dispel the suspicion that
 -7-

the information previously rendered was incomplete or incorrect, the de-

fendants argued that they never admitted any offerings and deliveries of pa-
tent infringing base stations in the first-instance proceedings (cf. p. 3(2)) –
although they neither sufficiently disputed it either (p. 26) – , and after hav-
ing been ordered to cease and desist anyway, they provided "zero infor-
mation" with regard to sales and deliveries, while they conceded to have of-
fered the attacked embodiments (cf. p. 4 top). The same information has
meanwhile been given in the pending appellate proceedings. The defend-
ants allege that thus, their declarations were not contradictory, nor was their
behaviour as such contradictory.

3 We would like to add that in the context of the information provided, the de-
fendants always resorted to the following standard wording:

"The debtors did not sell or supply any SDR base stations allow-
ing or providing a diversity transmission according to the 3G TS
25.211 V3.20 (hereafter: TS 25.211) standard in Germany in the
period referred to in the judgement. [...] None of the SDR base
stations sold in or supplied to Germany by the debtors can be
used for performing a diversity transmission (Time Switched
Transmit Diversity) according to section 5.3.3.4.1 of the TS
25.211 standard." (cf. Exhibit K 3, no. 2; Exhibit K 5, p. 1, 3rd
paragraph).

4 Contrary to the defendant's allegations these statements from Exhibit K 3

and K 5 were certainly not repeated in the pending appellate proceedings.
In their statement of grounds for appeal the defendants make the following
submission under the heading "No use of the patent in suit":

"Contrary to the opinion held by the Regional Court, the attacked

embodiments do not make use of the teaching of the patent in
suit. For lack of realisation of feature 3 and 4, the performance of
the diversity transmission described in section 5.3.3.4.1 of the TS
25.211 standard does not lead to a use of claim 1 of the patent in
suit. As we have already explained the Mannheim Regional Court
already started from an incorrect interpretation of the patent in
suit. In addition to that, it also misunderstood the way a diversity
transmission according to the standard works as described in
section 5.3.3.4.1 of the TS 25.211 standard."

5 We submit the defendants' statement of grounds for appeal as

 -8-

Exhibit K 7.

6 In their statement of grounds for appeal, the defendants thus deny a patent
infringement on the grounds that the patent in suit does not describe the
TSTD method of the standard, and not on the grounds that they do not sup-
ply any base stations to Germany that provide the TSTD method according
to the standard. However, this argumentation cannot be heard in the pro-
ceedings of rendering of accounts, because in this context only the first in-
stance decision is relevant, in which it has been ruled that the patent in suit
describes the TSTD of the standard and that the attacked embodiments act
in accordance with the standard.

(2)

7 Upon expiry of the first quarter, the defendants were again asked by letter of
11 April 2014 to fulfil their obligation to provide information and render ac-
counts for the first quarter of 2014. We hereby submit this letter as

Exhibit K 8.

8 With the letter of 25 April 2014 which we submit as

Exhibit K 9

and include in the present proceedings the defendants had their counsel
inform us that the information provided in the letters of 23 January 2014 and
10 February 2014 also applies to the period after 10 February 2014 (up to
today) and therefore nothing had to be added.

(3)

9 On 23 April 2014 the Dutch customs authorities stopped a container with

components for the base station ZXSDR BS8700 attacked as an example in
the infringement proceedings 2 O 41/13, namely baseband units of the type
B8200 and radio remote units of the type R8880A . Precisely this specific
 -9-

radio remote unit had been introduced into the parallel infringement pro-
ceedings at first instance as a patent-infringing component of the base sta-
tion ZXSDR BS8700. The Mannheim Regional Court thus already decided
for said SDR-base stations that they infringe the patent in suit and thus fall
under its judgement and consequently in the obligation to render account.

10 The two antenna connections, that are required for the use of TSTD, are
clearly visible in the stopped Radio Remote Unit:
 - 10 -

11 The customer of these products sold by defendant 1) was indicated as E-

Plus 3G Luxembourg S.a.r.l. This company does not exist any more; it has
merged into the German E-Plus 3G GmbH, as is evidenced by
Exhibit K 10

which is an excerpt from the Commercial Register. These products are

therefore clearly intended for the German market.

12 The delivery address stated is ComPass Transport Systeme GmbH, Zum

Gut Heiligendonk 16-20, 40272 Düsseldorf. This company is a logistic ser-
vice provider who according to information provided by the company itself
specializes in telecommunication and consumer electronics companies. On
the internet, the company advertises its services as follows:

"In the fields of mobile communications and fixed network, for ex-
ample, we provide warehousing and transport logistics to all re-
nowned systems technology manufacturers (e.g. Ericsson, ZTE,
Alcatel-Lucent, etc.) as well as to their APSs (authorised service
partners) - from customs clearance through warehousing and dis-
tribution, to the delivery of the transmitting stations on site by
 - 11 -

means of cranes and elevated work platforms. Depending on the

requirements, these "base stations" are already pre-configured in
our warehouse for installation at their destination. We also make
sure that the disassembled legacy equipment is removed and re-
turned to our customers' stock, or disposed of in a certified man-
ner."
(http://www.compass-gmbh.net/de/leistungen/compass-transport-
systems/systemtechnik/)

13 As

Bundle of Exhibits K 11

we submit selected photographs made available by the customs authorities.

(4)

14 In view of these new insights, the plaintiff deposited the security for the
claim to injunctive relief and had the deposit receipt of the security provided
served on the defendants through a bailiff by letter of 12 May 2014. We
submit the corresponding order of service including enclosures as well as
the confirmation of service made on 13 May 2014 as
Bundle of Exhibits K 12.

(5)

15 Following the enforcement of the claim for injunctive relief and the seizure
by the Dutch customs authorities, the defendants were again asked, by let-
ter of 22 May 2014, to update their information and accounts. We submit the
corresponding letter as

Exhibit K 13.

16 With the letter of 05 June 2014 which we submit as

Exhibit K 14
 - 12 -

and include in the present proceedings the defendants informed us through

their counsel that the products seized by the Dutch customs authorities
were not products that are covered by the operative provisions of the
judgement of the Mannheim Regional Court of 17 December 2014 (2 O
41/13), as these products do not provide any TSTD transmission according
to the 3G TS 25.211 V3.2.0 standard, neither in their current configuration
nor in their final customized configuration, and they are thus not covered by
the operative provisions of the Mannheim Regional Court judgement.

(6)

17 Interestingly, the Dutch counsel for the defendants, the Brinkhof law firm,
appear to assess the situation differently and to assume that the seized
products are indeed products that are covered by the injunction imposed by
the Mannheim Regional Court judgement. In a letter dated 14 May 2014 of
which we submit the original and an English translation as

Exhibits K 15 a and b

the Dutch counsel withdrew the previously filed application for a preliminary
injunction against the seizure on the grounds that it would currently not help
to lift the seizure to supply the products to Germany (as planned), because
the present plaintiff had enforced the injunction in Germany. Upon rever-
sion, this can only meant that even if the seizure of the seized products
could be lifted; those products still could not be delivered to Germany with-
out violating the now enforced injunction.

18 The defendants' statement in Exhibit K 14 that the Dutch counsel for the
defendants withdrew the application for a preliminary injunction only be-
cause the court in Rotterdam had no jurisdiction over questions of patent in-
fringement, is wrong. The court in Rotterdam indeed has jurisdiction over an
application for release of seized items, and it is also able to deal with the
technology and patent related aspects thereof. Merely for patent infringe-
ment or patent nullity proceedings, the court in The Hague has exclusive ju-
risdiction. While maintaining that we do not bear the onus of proof we offer
to furnish
 - 13 -

Evidence: Hearing of the witness Bart van den Broek, Hoyng

Monegier LLP, Amstelplein 1, 1096 Amsterdam, The
Netherlands.

19 In fact there is no other explanation for the withdrawal of the application with
reference to the enforcement of the injunction in Germany than that the
Dutch counsel assumed that the seized products are covered by the injunc-
tion. This is because the application for release of the seized products was
based on the grounds that the plaintiff had violated its FRAND obligations.
Even if there had been any technical issues to discuss during the proceed-
ings for preliminary injunction, this would have been no reason to take back
the original application because of the enforcement of the injunction in Ger-
many, because if the defendants had won the proceedings for a preliminary
injunction, the products could have been imported into Germany as
planned, and German courts would have had to determine whether the
products are covered by the injunction or not.

20 The application for release of the seized products thus only makes sense if
they assumed that the products were covered by the injunction and could
not be imported into Germany anyway (even if they won the proceedings for
preliminary injunction).

II.
Legal Considerations

21 Based on the described facts there is justified reason to believe that the "ze-
ro information" the defendants provided with respect to offerings, sales and
deliveries of SDR base stations covered by the injunction is incorrect.

(1)

22 The wording to which the defendants resorted in their information prior to

the seizure of the products by the Dutch customs authorities (cf. no. 3
above9 already leaves plenty of room for interpretation, because this word-
ing can also mean that the only reason the defendants assume that the at-
 - 14 -

tacked embodiments do not infringe the patent EP 1 186 119 is that in their
opinion, the diversity transmission described in the standard describes a dif-
ferent method than the patent EP 1 186 119. Therefore, this statement can
also be interpreted to mean that the products offered and delivered by them
do not provide a diversity transmission according to the standard only be-
cause the defendants have a different legal opinion on this, although these
products were prohibited in the first-instance proceedings before the Mann-
heim Regional Court as patent infringing.

23 Yet such "zero information" is widely recognized to be inadmissible:

"Zero information" on the grounds that patent infringing objects

were not sold, because the objects at issue - contrary to the as-
sumptions in the trial instance - did not make use of a certain fea-
ture of the patent in suit", is irrelevant (Kühnen, Handbuch der
Patentverletzung, 6th edition, 2013, no. 2151 with reference to
OLG Düsseldorf, decision of 20.09.2011 – I-2 W 38/11).

24 The procedure of rendering of accounts is based on the first instance deci-

sion and the finding set out in the decision. The appeal proceedings cannot
be lead within the proceedings of rendering of accounts. Both proceedings
are separate proceedings. The legal assessment of the first instance court
can only be attacked in the appeal proceedings. For the proceedings of ren-
dering of accounts the first instance decision is binding.

25 The wording in the statement of grounds for appeal (cf. no. 4 above) again
suggests that the information provided is to be understood to mean that the
only reason that no patent infringing products were sold or delivered was
that the defendants assume that their products sold and delivered do not in-
fringe the patent, contrary to the judgement of the Mannheim Regional
Court. The defendants cannot be heard with that argumentation in the pro-
ceedings of rendering of account.

(2)

26 The seizure of the products that are covered by the injunction by the Dutch
customs authorities gives rise to even more doubts about the correctness of
 - 15 -

the information provided. This is because the seized containers contained

precisely such components of SDR base stations which were referred to as
examples at the first instance of the patent infringement proceedings before
the Mannheim Regional Court and which have been found patent infringing.

27 The judgement of the Mannheim Regional Court generally prohibited the

defendants from offering and supplying said means for indirect patent in-
fringement, regardless of whether said base station can possibly also be
used in a non-patent infringing manner. It is clear from the document sub-
mitted as Exhibit K 6 (and depicted above) in which the Transmit Diversity
function is described that this functionality needs to be implemented as a
standard feature in base stations of the defendants that realise the UMTS
standard and is only activated on a customers whish. This must be true for
the proceedings of rendering of account as well.

28 In order to avoid a violation of the cease and desist order by the Mannheim
Regional Court the defendants have to modify the software of the attacked
embodiments to remove the TSTD functionality all together. The defendants
have to ensure that the TSTD functionality is not present in the software of
the base stations such that the functionality cannot simply be switched on/
made available for use by changing the configuration of the SDR base sta-
tion. To eliminate said risk the court issued a general and absolute injunc-
tion. The defendants did not submit that this functionality was removed, let
alone did they provide evidence as to by which measures the TSTD func-
tionality was removed. Therefore the base stations seized by the Dutch cus-
toms authorities and clearly intended for the German market qualify as in-
fringing products. Attacked embodiments cannot simply “disappear” in the
proceedings of rendering of account. The fact that the photographs submit-
ted as Bundle of Exhibits K 11 show two clearly visible antennas which are
required for the use of TSTD is a clear indication that they implement the
optional TSTD functionality.

29 The information provided by the defendants is contradictory at least in that

no new acts of offering were communicated with the updated information.
Yet a delivery of the seized base stations must naturally have been preced-
ed by an offer.
 - 16 -

(3)

30 In summary we can therefore note that the information given as part of the
required provision of information is contradictory because

a) the delivery of patent infringing products was never disputed in a sub-

stantiated manner at the trial instance;

b) the same standard wording was used over and again for providing this
information, which gives us reason to assume that the defendants be-
lieve that EP 1 186 119 describes a different method than the one of
the standard and therefore assume that the base stations delivered by
them do actually not infringe the patent, although they are covered by
the judgement of the Regional Court.

c) a delivery of the base stations under attack intended for the German
market was seized by the Dutch customs authorities;

d) the defendants maintain, despite this delivery, that no deliveries/sales

of patent infringing base stations were made, while at the same time
they did not update their information about acts of offerings performed;

e) the Dutch counsel for the defendants withdrew an application for a pre-
liminary injunction directed at a release of the seized products, after
the plaintiff's claim to injunctive relief had been enforced, which can
only be explained by the fact that the seized products are covered by
the injunction.

31 These contradictions give rise to the suspicion that the information provided
is incorrect.

In view of the above, the action is well founded.

(Klaus Haft)