Thursday, October 20, 2011

Six-week delay of Apple's and Microsoft's cases against Motorola Mobility due to ITC overload

The US International Trade Commission is an increasingly popular patent enforcement agency especially among companies asserting patents against mobile devices, which are typically manufactured outside of the United States and therefore susceptible to import bans, which the ITC can order. But the rising tide of litigation and the fact that fewer ITC investigations are settled at their early stages than in the past make it hard for the ITC to cope with its enormous workload. There are definitely signs of the ITC slowing down a bit, even if it is still faster than the vast majority of United States district courts.

The latest sign of a slowdown: on Friday, Administrative Law Judge Theodore Essex entered orders in the investigations of Microsoft's and Apple's complaints against Motorola Mobility (investigations no. 337-TA-744 and 337-TA-750, respectively), extending the target dates of those investigations -- and consequently also the deadlines for his initial determinations -- by "approximately six weeks". Theoretically, this delay could be overturned by the Commission, the six-member decision-making body at the top of the ITC, but that is unlikely to happen.

Investigation no. 337-TA-744 (instigated by Microsoft)

This is my first blog post on litigation involving Microsoft since I announced that I am conducting a study on the worldwide use of FRAND-pledged patents that is commissioned by Microsoft. As I explained on that occasion, my blog is my personal platform and reflects my independent convictions regardless of which companies play a role in the subjects I report on. But on this particular occasion I thought it appropriate to remind everyone of the aforementioned disclosure.

The target date for the final decision of the ITC on Microsoft's complaint against Motorola Mobility was March 5, 2012. Motorola Mobility asked for a postponement by three months, which was denied. Now Motorola Mobility gets roughly half of the delay it asked for.

The ALJ's initial determination was due on or before November 4, 2011. It has now been pushed back to December 16, 2011. The new target date is April 16, 2012.

A six-week delay does not change much about the fact that Motorola Mobility's federal lawsuits are far behind this ITC investigation, after all of the non-stayed cases between the parties were transferred to the Western District of Washington.

In his order, ALJ Essex pointed out that Microsoft has dropped only two of the nine patents it originally asserted. In order to enable the ITC to decide quickly, litigants frequently drop many patents. For example, Apple dropped six of the ten patents it initially asserted in it first ITC complaint against HTC.

I believe a decision that finds Motorola Mobility -- and, by extension, Android as a whole -- in infringement of multiple Microoft patents is probably more useful to Microsoft than a quick decision on a smaller number of patents. The majority of all Android devices sold in the U.S. market are already covered by royalty-bearing licenses Microsoft granted to nine other device makers than Motorola, including Samsung (which just presented the Galaxy Nexus, the official lead device for Android 4.0) and HTC. But it appears that Microsoft expects to receive royalties on every Android device without any exception. Motorola Mobility is the last one of the "big three" Android device makers to have refused to take a license from Microsoft.

Investigation no. 337-TA-750 (instigated by Apple)

In Apple's ITC case against Motorola, the target date was March 30, 2012, and the initial determination was due by November 30, 2011. The new target date is May 14, 2012, and the initial determination will be issued on or before January 13, 2012.

ALJ Essex noted that the schedules of these two investigations would have required him to hand two initial determinations next month.

It's fair to say that prior to this delay, Motorola wasn't too lucky concerning the schedules of its ITC disputes with Apple. Even though Motorola filed its ITC complaint against Apple almost two months (!) earlier (in early October vs. late November 2010), Apple's case progressed faster -- in no small part due to the fact that Apple asserted only three patents in that complaint -- and Motorola's case was put on hold in early August because the ALJ originally presiding over that investigation (no. 337-TA-745), Paul Luckern, surprisingly resigned. He didn't explain his reasons in a public statement (according to rumors I heard, this was due to internal issues involving Kodak's case against Apple and RIM, but an ITC spokeswoman said this decision was unrelated to his work at the ITC and purely personal). The ITC hired two new ALJs just recently, but since early August, Motorola's case against Apple was on hold. Formally there was a new ALJ, but he didn't have time to work on it and suspended all dates (hearings, motions, everything). The hearing was originally scheduled to begin on August 22. The investigation should continue soon, but Motorola lost about three months for no fault of its own. This inconvenience is now alleviated in part by the six-week delay of Apple's case against Motorola.

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