Thursday, June 28, 2012

Google to ITC: don't pay attention to Judge Posner's 'non-final, non-binding' decision

On Monday, Microsoft pointed the ITC to the FRAND part of Judge Posner's dismissal of Apple v. Motorola. On Wednesday, Google subsidiary Motorola Mobility filed a letter with the ITC, in the Xbox case, that just entered the public record. The letter refers to Judge Posner's ruling as "a recent non-final, non-binding district court decision" and basically (though obviously not literally) tells the ITC: "Move on. Nothing to see here."

I interpret the characterization of the ruling as "non-final" as an announcement of an appeal by Google. It was clear to me that Google/Motorola wasn't going to let the FRAND part of the ruling stand. Absent an appeal, the relevant part of the ruling would be totally final: Judge Posner's dismissal with prejudice closed the case. In fact, the header of the PACER entry of the case says:

Date terminated: 06/22/2012

After Microsoft had filed its request for judicial notice, but still on the same day (Monday), the ITC postponed the target date for its decision on the scope of the review of the preliminary ruling on the Xbox by one week. Google/Motorola is presumably concerned that this postponement is more than a mere delay of the crafting of the review questions: at the time of the review notice, certain claims could be dismissed. And that concern may have led Google/Motorola to file a letter denying the relevance of Judge Posner's ruling to the FRAND issues at the heart of the Xbox investigation.

This paragraph (the second one of the letter) states the reason for which Motorola wants the ITC to ignore that landmark ruling:

"This decision does not support Microsoft's [F]RAND defenses in this section 337 action, however. It is instead directed to the availability of an injunction in federal district court under eBay Inc. v. MercExchange LLC, 547 U.S. 388 (2006), not the Commission's statutory authority under 19 U.S.C. § 1337 to issue an exclusion order. It has elsewhere been expressly decided that eBay does not apply to Commission remedy determinations under section 337. See Spansion, Inc. v. Int'l Trade Comm'n, 629 F.3d 1331, 1359 (Fed. Cir. 2010)."

The Supreme Court's ruling on the eBay case affirmed the four-factor test for U.S. patent injunctions, while the Federal Circuit determined in the Spansion case that the ITC, unlike district courts, wasn't bound to it since the ITC is governed by its own statute (called "Section 337"). But it's incorrect that "eBay does not apply to [ITC import bans]" and that this would render Judge Posner's opinion on FRAND ineligible as authority for the ITC in the Xbox investigation:

  1. The holding in Spansion was merely that the ITC is not required to adopt the eBay test. But there's nothing in that Supreme Court decision that would prevent the ITC from applying it if and when it so elected.

    In a recent post I mentioned that there are lawmakers and scholars who would like the ITC to give serious consideration to adopting eBay (or maybe parts of it). And the ITC itself clearly keeps that option open. The review notice issued on Monday in the Motorola-Apple case includes eight FRAND-related questions, seven of which (questions 7-13) contain the term "equity", and two other questions (questions 4 and 5) that don't mention the term but are definitely consistent with what could be, at least in part, an eBay-esque approach.

  2. I published the whole FRAND passage of Judge Posner's ruling, and while Judge Posner makes reference to eBay in his overall denial of injunctive relief in the Apple v. Motorola case, you can read the original text in that blog post and you'll see that Judge Posner's position on FRAND is entirely independent from the four eBay factors: it's a general competition/antitrust and common sense kind of argument. Even the paragraph that starts with the term "Injunctive Relief" stands on its own and doesn't depend in any way on eBay or rely on its four-factor analysis.

In a different paragraph of its letter to the ITC, Google claims that import bans "must be" the consequence of a finding of a violation "because, in the absence of the availability of exclusion order, implementers have little incentive to negotiate in good faith towards the completion of a license on [F]RAND terms". Motorola told the same kind of thing to Judge Posner, who rejected that argument. The Mannheim Regional Court concurred with it, but Germany is, I regret to say, a unique jurisdiction in that regard.

Google/Motorola will make more efforts to downplay the importance of Judge Posner's ruling. Microsoft also submitted Judge Posner's decision to the United States District Court for the Western District of Washington, where it has a summary judgment motion on Motorola's request for injunctive relief pending. In that case, there is no ITC-specific argument: Motorola can just say that a district court decision from a different circuit (7th Circuit) shouldn't matter in Seattle (9th Circuit) -- but Judge Posner's FRAND thinking will be taken very seriously there, I'm sure.

The fact that Google-Motorola argues against the significance of Judge Posner's ruling, implicitly announcing an appeal and belittling it as a "non-binding district court decision" (Judge Posner, a circuit judge who usually only hears apeals, was sitting "by designation" on a district court for that particular case), shows that some people made a mistake (or purposely wanted to mislead) by portraying the ruling as a defeat only, or mostly, for Apple. Apple wanted a better outcome, but the decision on Apple's claims was very specific not only to the four patents at issue at that stage of the litigation but also to the course of events in that litigation (as I pointed out in my detailed analysis). As a matter of fact, Apple just won a preliminary injunction against Samsung, which shows that Apple can still succeed in court post-Chicago. By contrast, Judge Posner's position on FRAND is universally-applicable, and it will be extremely influential, throughout and beyond the United States (including, of course, the ITC). And that's what has Google/Motorola worried.

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