Wednesday, August 1, 2012

Ninth Circuit schedules Google-Microsoft appeal hearing for September 11, 2012

In early May -- a few weeks prior to being acquired by Google -- Motorola Mobility appealed a temporary restraining order (which was subsequently converted into a preliminary injunction) barring Motorola Mobility's enforcement of a German H.264-related patent injunction against Microsoft.

The appeal was filed with the United States Court of Appeals for the Ninth Circuit. While patent infringement cases go the Federal Circuit, this is a matter of contract law because Microsoft seeks to enforce Motorola's FRAND licensing promise.

The Ninth Circuit treated this appeal from the beginning as a preliminary injunction appeal, and all such appeals are adjudicated on an expedited schedule. But Motorola Mobility wanted to further accelerate this appeal and brought a motion last week that asked for a very near-term hearing. Yesterday (Tuesday, July 31, 2012), the appeals court granted Motorola's motion and scheduled a hearing for September 11, 2012, in San Francisco.

While Google (Motorola) will be pleased with this favorable scheduling decision, its attempt to do damage to Microsoft's Germamn business faces a very significant challenge due to at least three circumstances (in addition to the fact that Ninth Circuit caselaw does allow injunctions that go further than the one Google is appealing):

  1. At the time of the hearing, the FRAND trial in the Seattle action from which the appealed injunction arose will be only two months away. It is scheduled to start on November 13, 2012. From a balance-of-hardships point of view, it would be difficult to let Motorola enforce a German injunction against Microsoft two months prior to a U.S. trial that will resolve the issue (though Motorola tries to narrow the scope of that trial in order to pose the greatest possible risk to Microsoft).

  2. One of Motorola's arguments is centered around the fast-approaching expiration of one of the two German patents it could enforce (if the U.S. preliminary injunction barring enforcement in Germany was lifted). But Motorola's parent company, which directs all of its litigation at this stage, argued just the other way in the Oracle v. Google case. Here's a passage from a Google filing (emphasis mine):

    "Under such a stipulation, Oracle would be assured a recovery without proving damages, but could not obtain an injunction based on these patents. Such a stipulation would significantly streamline the damages phase of the trial, if a damages phase is necessary. Notably, such a stipulation would not constitute a significant concession on Oracle's part. The '104 patent currently stands rejected by the PTO, and will expire on December 22, 2012. The '520 patent is worth very little--only $80,000 through 2011 according to Dr. Kearl before adjusting for failure to mark and nonaccused devices, and $50,000 according to Dr. Cockburn after those adjustments—and Oracle's own engineers ranked that patent in the middle of the pack of 569 Java-related patents owned by Oracle. Based on the pending expiration of the '104 and the low importance of the '520 within Oracle's patent portfolio, Oracle could not satisfy the requirements for an injunction based on these patents. See eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006)."

    The context of the quoted passage was a discussion of the scope of the spring trial and remedies that might be available to Oracle after the trial. Google argued that even if the jury had found Google (a couple of months after that filing) liable for infringement of Oracle's '104 patent (the "Gosling patent"), an injunction would not have been appropriate for a patent that expires more than six months later. In the H.264 context, Google (through its wholly-owned subsidiary Motorola Mobility) now says that a patent that will expire in September must be enforced in Germany shortly before expiration.

  3. Google (Motorola) may have no legitimate basis whatsoever for pursuing or enforcing injunctions against Microsoft over H.264-essential patents due to the terms of a license agreement relating to H.264 that Google signed with MPEG LA. If Google has an obligation to license its own H.264-essential patents (including those of any affiliate, even an entity that became an affiliate only after Google signed the AVC/H.264 pool license agreement) at the per-patent MPEG LA H.264 pool rate, there's no basis for injunctive relief. While this question has not been adjudicated yet, the fact that this issue was one of two reason for which the ITC remanded the investigation of Motorola's complaint over the Xbox to a judge suggests that this is a reasonably serious issue. The implications of Google's license agreement with MPEG LA will likely bear considerable weight with the Ninth Circuit as well as a German appeals court. By the time the German injunction issued, Google had not yet consummated its acquisition of Motorola Mobility, but the situation has changed as a result of the closing of that deal.

In a corporate blog post, Microsoft yesterday outlined a roadmap to patent peace. If the parties reached an agreement in the meantime, the September 11, 2012 hearing wouldn't even have to take place, but I have no idea what Google wants to do next.

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