Friday, April 13, 2012

The significance of May 7 for the temporary restraining order Microsoft won against Motorola

The decision by a United States district court on Wednesday to grant a Microsoft motion for a temporary restraining order against Motorola Mobility's near-term enforcement of a potential German patent injunction was certainly one of the most interesting recent developments in the ongoing smartphone patent disputes. The decision was announced in court a few hours after a hearing on that issue, and the written order didn't enter the public record until late on Thursday.

Some of the reports after the decision said, or could have been easily misinterpreted to say, that the temporary restraining order would be in effect until May 7. I never believed that there was such a firm date but wanted to await the actual order before taking a firm position.

The order says that "without prior leave of this court, Motorola is enjoined from enforcing any injunctive relief it may receive in the German court system relating to the patents at issue in Microsoft's Motion" and that the order "shall remain in effect until the court's ruling on Docket No. 236, for which a hearing is scheduled on May 7, 2012."

Note that this does not make May 7 a date of automatic expiration. It means that May 7 is the earliest possibility for the order being lifted, provided that the court rules on a summary judgment motion relating to Motorola's alleged breach of contract on the same day as the hearing.

A footnote explains that the goal is to decide on May 7, but it's only a target, not a definitive deadline:

"Pursuant to Federal Rule of Civil Procedure 65(b)(2), the court finds good cause for extending this temporary restraining order beyond the fourteen day limit ordinarily imposed by Rule 65(b)(2) because the purpose of this anti-suit injunction is to provide this court the opportunity to adjudicate issues properly presented in this jurisdiction as opposed to permitting a foreign court to adjudicate those issues. The court intends to commence adjudication of the issues requiring this anti-suit injunction on May 7, 2012 or as soon as possible thereafter."

There certainly won't be a decision prior to the hearing, but the court can take more time than just a few hours to weigh the parties' arguments and reach a conclusion. The court could even determine after the hearing that some further briefing or evidence is needed.

What's more important is that Motorola may very well be barred from enforcement of a German injunction beyond the decision on the breach-of-contract summary judgment motion. The current order will expire whenever the summary judgment comes down, but that doesn't mean that there couldn't be a follow-on order if warranted. Yes, this could become an "affaire à suivre".

  • If the court finds that Motorola breached its contractual commitment by making royalty demands that were irreconcilable with the notion of FRAND, Microsoft can probably bring a new motion for a temporary restraining order and preliminary injunction on an even stronger basis (stronger in the sense that another key legal question would have been decided). Even if Microsoft didn't or wasn't allowed to bring another motion of that kind, it's possible that Motorola would realize that any enforcement of a German injunction could have serious implications under U.S. law.

  • Even if the court found that Motorola did not breach its contractual FRAND licensing obligations, Motorola would not necessarily be free to enforce. Theoretically, Microsoft could always try to bring a new motion on a different legal basis, but for now it's not easy to see how a new motion would succeed in a scenario in which the court held Motorola to have complied with its obligations. This is totally speculative but there could be a sitaution in which the court believes Microsoft is highly likely to prevail on the breach-of-contract claims at the envisioned FRAND mini-trial (the May 7 hearing is not the FRAND mini-trial; it's only a summary judgment hearing before the judge, without a jury) but believes there's a genuine factual dispute that requires the involvement of a jury. If there's a strong likelihood of success on the merits but summary judgment is denied as premature, then that could be a basis for a new motion for a temporary restraining order and preliminary injunction that might succeed.

    I personally believe this matter is ripe for summary judgment, but I wanted to outline the implications of a decision that a jury involvement is needed (which is, obviously, Motorola's position).

As I reported yesterday, the Mannheim Regional Court pushed back its ruling on Motorola's infringement lawsuit by two weeks. The German decision will come down on May 2. Motorola can then make some preparations for enforcement, but it can't actually enforce until the U.S. court has ruled on the breach-of-contract claim, provided that there's no subsequent restraint on Motorola.

Judge James L. Robart in Seattle doesn't want to impose overreaching constraints on Motorola, but for the reasons I outlined here, it's too early to tell what will happen on and, especially, after May 7. At the very least, I can't imagine that Motorola would be free to enforce after a finding of a breach of contract.

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