Friday, May 11, 2012

Microsoft's prior user rights may trump Motorola's push notification patent in Germany

At least for the time being, German users of Hotmail and Microsoft Exchange are going to continue to receive BlackBerry-style push notifications of new emails despite a patent lawsuit by Motorola.

At this stage, Motorola cannot enforce any of the four patents it asserted against Microsoft in Germany in July 2011. Enforcement of two standard-essential patents is barred by a U.S. court; the push notification patent may be unenforceable against Microsoft due to prior user rights; and Motorola withdrew a lawsuit over a fourth patent (on a method of splitting handwritten input) ahead of a trial that had been scheduled for early 2012.

While Motorola has been enforcing its push notification patent (EP0847654 on a "multiple pager status synchronization system and method", the European equivalent of U.S. Patent No. 5,754,119) against the email services of Apple's iCloud and of its predecessor, MobileMe, in Germany for a few months, its efforts to win an injunction based on this patent against various Microsoft products including Hotmail and the Exchange Server face a much steeper challenge.

This morning, Judge Andreas Voss ("Voß" if not transcribed) of the Mannheim Regional Court announced that the court is not yet prepared to adjudicate Motorola's complaint and has formally reopened the case because Microsoft, in a pleading filed on April 20, presented facts that (please note that this is not a verbatim quote) lend a reasonable degree of credibility to its prior user rights defense, which necessitates further pleadings and (absent a stipulation by the parties to the contrary) a new trial. In a best-case scenario for Microsoft, which is a real possibility based on the court's initial assessment, its prior user rights will enable it to fend off this action altogether. At the very least, today's order will result in a delay of several months for this lawsuit. That delay also increases the likelihood of a stay pending the resolution of a parallel nullity action (invalidity proceeding) before the Federal Patent Court (be it a stay of the infringement proceeding in Mannheim or a subsequent suspension of enforcement by the appeals court, the Karlsruhe Higher Regional Court).

In my report on the hearing that took place on March 16, 2012, I explained that Microsoft raised multiple defenses against the push patent. In addition to making, like Apple did before it, a request to stay the infringement proceedings pending resolution of the nullity action and disputing infringement, Microsoft claimed that Motorola Mobility was barred from bringing this lawsuit in the first place (due to an old agreement between Motorola and Microsoft relating to ActiveSync) and raised the prior user rights defense. I discussed that defense in this section of the aforementioned mid-March post, which I'll just repeat here:

Microsoft says that the essence of today's DirectPush technology was already made available, as a beta version (of Exchange, I guess) in 1995. Microsoft said it has witnesses for this fact, and that it has provided written declarations from such witnesses.

Judge Voss said that clarification of this issue might require a second trial to take place. But he also pointed out that prior user rights would only serve as a defense for technologies that are materially consistent with what was made available to beta testers back in 1995.

The fact that a number of beta testers received that software back in 1995 is key, but the reason for which it matters to the court wasn't exactly clear to me at the March hearing. The priority date of the patent is August 31, 1995. A prior user rights defense wouldn't work if prior to that date Microsoft had only developed this technology in a U.S. laboratory without at least making some preparations for commercial use in Germany under Article 12 of the German Patent Act ("Patentgesetz"), and the distribution of that beta version at CeBIT 1995 (as well as at a TechEd conference the following month) may help satisfy that requirement.

Patent law is a strict liability regime: infringers are liable regardless of whether they actually "stole" anything. Independent creation is not a defense against patent lawsuits. But prior user rights can serve as a defense, and in this case they may very well be outcome-determinative in Microsoft's favor.

Unlike the two H.264 video codec patents over which Motorola won a German injunction against Microsoft last week (an injunction it cannot presently enforce due to a ruling by a U.S. court), this push notification is not a FRAND-pledged standard-essential patent. Therefore, its enforcement doesn't raise any antitrust issues. I've said all along that it's perfectly appropriate for Motorola to pursue injunctive relief based on non-standard-essential patents (of course, provided that there are no other obligations, such as license agreements, that must be honored). Microsoft is also suing Motorola in Germany over non-standard-essential patents. While Microsoft was first to sue in the U.S., Motorola decided in July 2011 to turn Germany into another battleground, primarily because injunctions are more available in Germany, especially (but not only) over standard-essential patents. I listed the four asserted patents in this post back in November 2011. At the time I already predicted that Motorola was heading for EU antitrust trouble because of its pursuit of injunctive relief over H.264-related patents.

A few months after Motorola's German lawsuits, Microsoft brought some German actions of its own against Motorola (in Munich and later also in Mannheim). Yesterday I attended a Munich trial over a multi-part text message (SMS) layer patent, a case that looks fairly promising for Microsoft. Motorola is under even greater pressure from a Microsoft patent on system event management. And I wouldn't write off a lawsuit over a Microsoft patent on multilingual programs yet. There are several more Microsoft cases pending (I'm aware of at least one more action in Munich, and I know that Microsoft also made some filings in Mannheim).

There's now a realistic possibility of Microsoft gaining leverage against Motorola in Germany with a couple of its Munich actions before Motorola gets to enforce its H.264 injunction or wins (if it will ever win) the push notification case. I don't want to jump to conclusions, but in a few months' time it may very well be that Motorola's attack on Microsoft in Gemany will have turned out to be a boomerang -- and further down the road, the European Union may fine Motorola for its abuse of standard-essential patents in violation of its own FRAND pledges.

Even though Motorola has had, relatively speaking, a bit more impact on Apple's German business than on Microsoft's, there are no signs yet of Motorola gaining the kind of leverage in Germany that would bring Apple to its knees.

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