On April 17, the Mannheim Regional Court will hand down its ruling on a lawsuit in which Motorola Mobility (or more precisely, a wholly-owned MMI subsidiary named General Instrument Corporation) is suing Microsoft over two patents allegedly essential the H.264 video codec standard. Based on the debatable but firm positions the presiding judge took at the trial, it's not at all unlikely that Motorola might win a German patent injunction against Windows 7, the Internet Explorer 9, the Windows Media Player and the Xbox 360 (as far as those products implement the ubiquitous H.264 video codec standard).
The Google subsidiary-to-be was quick -- unusually quick by German standards -- to enforce two such injunctions against Apple (1, 2), but if it wins an injunction in Mannheim on April 17, a U.S. federal court might bar MMI from actually enforcing it while a lawsuit in Seattle, where Microsoft sued Motorola back in November 2010 for breach of its FRAND licensing commitments, is pending.
Late on Wednesday by local time, Microsoft filed a motion for a temporary restraining order and a preliminary injunction, asking the court to hold a related hearing on April 20:12-03-28 Microsoft FRAND TRO and PI Motion Against MMI
At a March 9 hearing, Judge James L. Robart, the judge presiding over the Seattle case, gave Microsoft permission to bring such a motion. I reported on that permission, the scope of which wasn't clear based on the minute entry. An excerpt from the hearing transcript (Exhibit 1 to one of the declarations supporting Microsoft's motion) shows that Motorola's counsel, Jesse Jenner, vehemently opposed the idea of even letting Microsoft bring the motion, but the judge pointed out that the motion would have to be judged on its merits and shrugged off claims that a U.S. court shouldn't interfere with a German dispute by saying: "Welcome to the Ninth Circuit, sir." Indeed, there is precedent in the Ninth Circuit (and in other parts of the United States) for anti-suit injunctions and other measures to preserve the status quo while U.S. litigation over licensing and similar obligations is pending.
Microsoft is not proposing to have a U.S. court tell a German court what to do, or to overrule a German court -- it is merely demanding that Motorola refrain from premature enforcement of the injunction it may win in a couple of weeks, which appears particularly reasonable since parties winning German patent injunctions rarely enforce them while they are on appeal (and Microsoft will appeal if it loses in Mannheim). Such injunctions aren't self-enforcing: it takes an enforcement letter and, in the event of premature enforcement, a bond. Everyone I talked to in Germany -- lawyers as well as reporters -- about the practice of enforcing injunctions during an ongoing appeal confirmed to me that enforcement of patent rulings during an ongoing appeal is extremely rare. Microsoft is not asking for anything unusual here. On the contrary, it is merely demanding that MMI refrain from unusually hostile and pernicious measures to gain leverage.
The Seattle action in which Microsoft brought this motion started in November 2010 as I mentioned above, while Motorola's related German lawsuits were filed in July 2011. In light of that, Microsoft's motion "seeks to prevent Motorola from making an end-run around the authority of [the United States District Court for the Western District of Washington]". In the Seattle action, Microsoft is fighting for its right to receive a worldwide license on FRAND terms. If and when Microsoft succeeds with that claim, Motorola will be unable to enforce a German injunction anyway. Microsoft asks to preserve the status quo for the time being.
Microsoft states its willingness to post a $300 million bond, which should be more than sufficient to protect Motorola against any harm it may suffer from not being able to seek premature enforcement of the potential Mannheim injunction. Footnote 2 even states that "Microsoft would consider increasing the bond amount" if Motorola opposed Microsoft's motion because it considered the amount inadequate. At the Mannheim trial I learned that Microsoft also posted a bond over approximately 1.5 million euros ($2 million) in Mannheim to guarantee any license fees it may end up owing MMI. Compared to that amount, the $300 million offer in Seattle is hugely greater. This certainly doesn't mean that Microsoft really believes Motorola will ever be entitled to an amount of that magnitude. The apparent purpose is to show that Motorola doesn't need to enforce an appealable injunction in order to protect its interests. It will be covered at any rate.
Microsoft's motion refers to some of the positions Judge Robart took in a recent summary judgment decision (on which I also reported). According to the motion, "the only contract interpretation issues presented here--whether Motorola has a [F]RAND obligation and whether Microsoft is a third-party beneficiary of that obligation—have already been decided and, indeed, are not disputed by Motorola". The motion accurately notes that German courts don't evaluate FRAND commitments under contract law. The Orange-Book-Standard line, especially as applied by the Mannheim court, is limited to antitrust considerations, denying a preliminary injunction only if the patent holder fails to accept an offer too good to refuse. This is how the motion describes the German situation:
"The German Orange Book practice does not require that Motorola enter into a license on RAND terms, only that Motorola accept a license at the outermost limit of legality under German antitrust law. Motorola’s commitment, however, is to grant worldwide [F]RAND licenses, not merely to abstain from antitrust violations in one country. The German courts have not decided and will not decide whether Microsoft is contractually entitled to a [F]RAND license."
One of the declarations in support of Microsoft's motion was authored by Microsoft's counsel in the Mannheim litigation, Professor Peter Chrocziel of Freshfields Bruckhaus Deringer, a leading European law firm, explaining the German legal situation. I uploaded that document as well.
Following Microsoft's motion, the court will presumably want to see MMI's response very soon. After that one, there would still have to be time for a reply brief from Microsoft between now and the requested April 20 motion hearing.
This is undoubtedly one of the most interesting developments in the ongoing smartphone patent wars.
I am now going to attend a trial at the Munich Regional Court. In that action, Microsoft is asserting a non-standard-essential patent against Motorola's Android-based devices. Microsoft brought several German actions only after MMI elected to turn Germany into a battlefield.
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