Wednesday, October 5, 2011

Both Apple motions to stay Motorola Mobility lawsuits have been denied

Three weeks ago I reported on two Apple motions to stay lawsuits with Motorola Mobility (MMI) until the closing of MMI's proposed acquisition by Google, arguing that MMI lacked standing to sue due to restrictions the merger agreement imposes on its use of its patents. MMI opposed those motions and even offered to try to amend the merger agreement in order to address any conceerns.

Last week, the United States District Court for the Southern District of Florida denied Apple's motion filed there. The judge didn't provide any particular reasoning, at least not at the time. On Monday (October 3, 2011), the other court with which Apple filed such a motion -- the United States District Court for the Western District of Wisconsin -- also denied it, but did state a reasoning.

Here's the order, and I'll comment on it briefly further below:

11-10-03 Order Denying Apple Motion to Stay Motorola Lawsuit in W.D. Wisconsin

The Wisconsin-based judge recognizes that "[s]tanding to sue is a threshold question", but also recalls that a patent holder "shall have remedy by civil action for infringement of his patent" and ultimately believes that this access to justice is key and shouldn't be denied too easily.

The judge disagrees with Apple on the need to have Google join this lawsuit as a party (which wouldn't be possible at this stage, so Apple asks for a stay). The decisions cited by Apple related to situations in which both patent holders and exclusive licensees had to pursue an action together. Google, however, is not a licensee.

The LitigatingApple blog had also found that there were "a few holes in Apple's motion" but pointed out that the outcome was uncertain. Looking at the judge's reasoning, I think Apple's initiative was far from pointless at the outset.

In particular, I felt that Apple had a point by saying that a party which is not allowed to settle such a lawsuit shouldn't be allowed to sue. The fact that Google is not a licensee of MMI's patents may very well have enabled the judge to deny that Apple was entitled to a stay, but I can't find anything in the order that suggests to me the judge was precluded from determining that a party precluded from settling shouldn't sue, given that courts usually like parties to settle (at least ahead of a trial). In this case, the fact that Google's chief legal officer said in a conference call on the proposed merger that all litigation would continue until Google is in control (post-acquisition) was a strong indication that a settlement is highly unlikely to receive Google's approval before the deal is closed, and that circumstance is a bit unusual from other mergers that come with restrictions on the acquisition target's use of its patents. If the judge had ordered a stay based on a rather unusual and presumably unprecedented combination of circumstances, that wouldn't have opened the floodgates for similar motions in too many other cases to succeed.

That said, I can understand that the judge is primarily concerned about the ability of patent holders to defend themselves against alleged infringers. If it's too easy for alleged infringers to win a stay, intellectual property enforcement is weakened, and that's something the judge clearly thinks runs counter to the most essential purpose of patent law.

I previously suspected that Apple might have hoped for some discovery that would give it (or at least its lawyers) access to some additional information concerning the merger. Based on those orders, it seems that Apple didn't find out anything it didn't know before. But Apple's motions weren't a clear sign of concern or of litigation fatigue, so the fact that those lawsuits continue won't weaken Apple in its wider dispute with MMI. It didn't cost Apple much to try this tactical game.

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