Friday, February 3, 2012

Appeals court grants Apple temporary suspension of enforcement of Motorola injunction

This Friday may have been the most eventful day to date in the smartphone and tablet computer patent wars. The latest news is that Apple announced that its temporarily-removed products are going to be back online shortly -- but possibly only for a few days or weeks. The first report of this news that I saw was this tweet (in German) by dpa (leading German news agency) reporter Christoph Dernbach.

Apple told the media (here's a German article) that it won a temporary suspension of the injunction.

Since the Mannheim Regional Court's early-December ruling did not provide Apple with the option of posting a bond to prevent enforcement, it depended on a decision by the Karlsruhe Higher Regional Court, the court to which all Mannheim decisions are appealed (comparable to a U.S. circuit).

A statement by the appeals court clarifies that this temporary suspension will be in effect only for a limited period of time. The Mannheim ruling has not been overturned: this is just some temporary reprieve. In a best-case scenario for Apple, the suspension would have been in effect until the appeals court makes a decision on Apple's appeal. In that case, it would have been in effect for well over a year -- and that could still happen, but it need not. At this stage, this temporary suspension will be in effect only until a legal issue raised by Apple has been adjudicated.

The appeals court confirms my initial assumption (voiced in the first version of this post) as to the legal grounds on which the appeals court determined that a suspension was warranted. This afternoon I attended a trial at which Motorola asserted the relevant patent (and the one based on which a different decision came down earlier today) and learned that Apple very recently made a new offer to Motorola for taking a license to Motorola's standards-essential patents. Under German law, a FRAND defense only dissuades a court from granting an injunction if a defendant has made an offer to the patent holder for taking a license, and that offer must meet various criteria. When the relevant ruling came down in early December, an offer Apple had made at that stage was deemed insufficient by the Mannheim Regional Court, which therefore granted Motorola injunctive relief. But Apple has amended that offer in various ways. The Karlsruhe Higher Regional Court believes that Apple's new offer needs to be evaluated before this injunction can enter into force again.

More than a week ago, Apple already tried to win a suspension of the injunction, also arguing that it had made a new offer to Motorola. That first motion to stay was denied by the appeals court. But Apple amended its offer again, and its second motion to stay was granted, though at this stage only until the appeals court decides, based not only on Apple's motion but also on Motorola's reaction to that new offer. At that point, the appeals court could extend the stay (for example, until the end of the appeals process) or it could let the enforcement of the injunction resume.

A suspension like this is available only against a bond, but Apple is almost drowning in cash and obviously won't have had a problem with obtaining and posting a bond. The bond amount is probably 120 million euros (120% of the 100 million euro amount that the lower court had determined; 120% is a percentage that German courts normally apply in such situations).

For Apple and its lawyers, this suspension -- however temporary it may be -- is an important achievement. It means that at least in the very near term, Motorola does not manage to have the disruptive impact on Apple's business that the immediate enforcement of the injunction would have had. But regulatory agencies may still ask the question of whether Motorola's temporary enforcement was in line with its FRAND licensing obligations. Even if it may have been acceptable to a German court, the answer to this question would ultimately have to be answered under European antitrust law.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: