Saturday, August 4, 2012

Apple refiles contract lawsuit against Google to protect its latest 3G/4G gadgets

The judicial process rewards a healthy degree of doggedness. No plaintiff is ever beaten unless his lawsuit is dismissed with prejudice. In that spirit, Apple just made its third attempt at bringing a patent-exhaustion-based "antisuit" lawsuit against Google subsidiary Motorola Mobility in an effort to protect, on a worldwide basis, those of its products that come with a Qualcomm baseband chip (the iPhone 4S, the 4G version of the new iPad, and presumably Apple's next products such as the iPhone 5).

Apple originally brought this contract lawsuit in February 2012 in the Southern District of California, where Qualcomm is based. Apple seeks to enforce its rights as a third-party beneficiary of a Qualcomm-Motorola patent license agreement. The original lawsuit had worldwide scope and sought declaratory as well as injunctive relief.

At the time of its filing, Apple's most immediate concern was the situation in Germany, where it was temporarily forced to remove certain 3G-compatible products from its online store, and where Motorola had just started to attack the iPhone 4S. When Apple made its original filing in Southern California, it had won only a temporary stay: a stay for the time it was going to take the appeals court (the Karlsruhe Higher Regional Court) to rule on a motion to suspend enforcement of the injunction for the entire duration of the appellate proceedings. That temporary stay could have been lifted only a few weeks later, but in late February it was extended for the duration of the appeal.

Motorola wanted Apple's California lawsuit dismissed for a variety of reasons, and Apple presumably determined that it was prudent to exclude Germany from the scope of the "antisuit" lawsuit. If Apple had continued to pursue relief in the U.S. with respect to Germany, Motorola would probably have called into question Apple's commitment to the licensing offer it made under the German Orange-Book-Standard procedure. Apple's first amended complaint also laid out a legal basis for bringing a lawsuit in federal court rather than state court.

But Motorola Mobility also challenged the first amended complaint, and two weeks after a hearing that took place in early July, Judge Dana M. Sabraw dismissed Apple's first amended complaint, but allowed Apple to refile until yesterday (Friday, August 3) and provided pretty useful guidance as to how Apple could state justiciable claims that would be more likely (if not certain) to dismiss a future motion to dismiss. Apple did not decline this invitation to pursue its cause, and indeed filed a second amended complaint (its third complaint in this case) late on Friday. As far as I can tell based on the public redacted version of the complaint, Apple adopted the judge's advice.

In the previous paragraphs I linked to several earlier posts on this lawsuit, and you can find further detail on this "antisuit" action in them. There are no fundamentally new facts in the second amended complaint. What's worth noting is that Apple's second amended complaint repeatedly quotes a passage from a filing Motorola made with the Karlsruhe Higher Regional Court:

"Also the further assertions with regard to the iPhone 4S are inaccurate. There is no strategy in place not to challenge these products. The fact that the Plaintiff has not yet challenged the 4S in Wisconsin has tactical reasons of a procedural nature, which the Plaintiff naturally will not expose to the Defendant."

In light of that statement, it's clear that a 3G-related patent infringement lawsuit by Google against Apple in the United States over the iPhone 4S and other products incorporating Qualcomm chips (such as the new iPad 4G), and/or in other jurisdictions around the globe, is only a matter of time unless the Southern California action proves dispositive through a determination that Motorola does not have the right to sue Apple for its use of Qualcomm baseband chips. One of the questions that will have to be resolved in San Diego is Motorola's "termination" of its license agreement with Qualcomm with respect to Apple as a third-party beneficiary, which Apple itself calls "ineffective". A similar strategy has not worked for Samsung so far, with courts in at least three different jurisdictions (the Netherlands, France, and Italy) having determined that patent holders who made a FRAND pledge according to ETSI rules must grant irrevocable licenses.

In a recent filing with the ITC, Apple explicitly stated its willingness to take a FRAND license to Motorola's standard-essential patents:

"Over the last few years, Apple consistently maintained its willingness to enter into a [F]RAND license and has sought to persuade Motorola to accept a [sic] [F]RAND terms. That Apple has refused to accede to Motorola's unfair demands does not make Apple an 'unwilling licensee.' Apple has concluded cross-licenses with many companies in the wireless industry, and stands ready to execute an agreement with Motorola if Motorola were to comply with [F]RAND."

If Apple's Southern California action succeeds, its new 3G/4G products will be safe and Google may bring its royalty demands down to a FRAND level.

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