Monday, February 27, 2012

Translation of German appeals court's press release on decision protecting Apple against Motorola injunction

Earlier today I reported on the Karlsruhe Higher Regional Court's extremely important decision to suspend, for the duration of a pending appeal, the enforcement of Motorola's standard-essential patent injunction. As a follow-up, I am now providing my own (therefore, unofficial) translation of the court's press release. I believe this will help everyone understand that this is not a decision to stay in order to prevent Apple from suffering irreparable harm, but a summary determination by the court based on a preliminary analysis of Apple's arguments and a preliminary finding that Motorola would be violating antitrust law by seeking bans of Apple's products in Germany based on patents essential to wireless standards.

Concerning the provisional nature of this suspension, I would like to stress that this means in practical terms that no enforcement will be allowed for the duration of the appeal. Only if Motorola won the appeal (though the appeals court is presently inclined to agree with Apple), it could seek enforcement again. Motorola's reply brief was taken into account, but its arguments failed to convince the appeals court. There won't be any near-term opportunity for MMI to persuade the appeals court to allow enforcement again. There will now be a full-blown appellate proceeding before the Karlsruhe Higher Regional Court, and that will take time.


Press release of the press office of the Karlsruhe Higher Regional Court

February 27, 2012

Motorola v. Apple -- enforcement suspended

In a patent infringement lawsuit between Motorola and Apple, the Karlsruhe Higher Regional Court has suspended the enforcement of a ruling by the Mannheim Regional Court.

Motorola Mobility Inc. sued Apple Sales International in Mannheim for the infringement of a European patent. The complaint requested, inter alia, an injunction against the further sale in Germany of devices known under the iPhone and iPad brands. According to Motorola's representations, every device that works according to the established technical standard for wireless communications necessarily practices the related invention. Therefore, the patent was described as a so-called standard-essential patent.

Apple is defending itself in this litigation with, inter alia, the so-called compulsory license objection under antitrust law. By means of this objection, a defendant against allegations of infringing a standard-essential patent asserts that his use of the patent must not be prohibited since every participant in a market desiring to comply with the established technical standard is forced to use that patent, a reason for which the owner of that patent allegedly has to grant a license. In that manner, the rights of a patent holder under patent law are countered with an objection under antitrust law that a prohibition of the use of the patent would restrict competition.

The Federal Court of Justice ruled in 2009 that this objection is, in principle, valid. According to that ruling, the objection is availing if the defendant makes the patent holder-plaintiff a proposal for the conclusion of a license agreement that the latter cannot refuse without contravening antitrust law.

The Mannheim Regional Court ordered an injunction against Apple and stated, inter alia, in its rationale that the proposal for a license agreement Apple had made at the relevant time was not deemed to address Motorola's legitimate interests to a sufficient degree.

Apple appealed the December 9, 2011 decision of the regional court (case number 7 O 122/11). Simultaneously with the appeal, Apple brought a motion to suspend, on a provisional basis, the preliminary [pre-appeal] enforcement of the ruling, which the regional court had permitted. Apple's motion was based on, inter alia, the argument that it had made Motorola, after the regional court's ruling, a further, amended proposal for an agreement that Motorola should be required to accept. Apple's motion at that time was denied by this Court as per an order of January 23, 2012. This Court deemed Apple's then-proposal for a license agreement insufficient because it did not contain a clause for the event that Apple might challenge the validity of the relevant patents after the conclusion of the agreement.

A few days later, Apple brought another motion to suspend enforcement and highlighted another amended proposal for the conclusion of a license agreement. That proposal now does contain a clause according to which Motorola can rescind the agreement in the event of a challenge to the validity of the relevant patents.

This Court gave Motorola the opportunity to file a reply brief. As per an order of February 27, 2012, this Court has suspended enforcement on a provisional basis, holding that Apple's new proposal for a license agreement sufficiently addresses Motorola's legitimate interests. Based on the current state of the proceedings, which is however necessarily limited to a summary analysis of the parties' arguments, the assumption would have to be that Motorola would breach its obligations under antitrust law if it continued to demand that Apple cease and desist from the sale of the iPhone and the iPad.

Karlsruhe Higher Regional Court, order of 02/27/2012 -- [case no.] 6 U 136/11

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