Saturday, October 13, 2012

Google's Motorola asks Ninth Circuit for rehearing after losing appeal of Microsoft injunction

Two weeks ago, the United States Court of Appeals for the Ninth Circuit threw out an appeal by Motorola Mobility against a preliminary injunction barring the wholly-owned Google subsidiary from enforcement of a couple of German injunctions over H.264 declared-essential patents. The Mannheim Regional court had granted a matrix of four injunctions in May: two patents were asserted in formally separate proceedings against two different groups of Microsoft legal entities. I published certified translations that were filed in the United States. One of the two patents has meanwhile expired as I noted in yesterday's update on the status of worldwide infringement findings involving Android and countersuits by Android companies.

At this stage, Motorola Mobility is not enforcing even one patent against Microsoft anywhere on Earth, while Microsoft has three German patent injunctions in place (two of which have been enforced for a while, contributing to the removal of all of Motorola's Android-based products from the German market; Microsoft told the press a week ago that is working on the enforcement of the third, very recent one) and a U.S. import ban over a meeting scheduler patent. And Microsoft believes that Google infringes many more of its patents, including a geotagging patent over which Microsoft originally sued Motorola Mobility and is now going to additionally go after Google Inc. itself for procedural reasons I explained on Thursday. Most of Microsoft's patent assertions against Motorola have not even come to judgment yet.

Against this backdrop it's obvious that Google needs leverage very urgently, and it's fighting desperately for it. After 11 PM local time, Motorola Mobility's lawyers (Quinn Emanuel) filed a petition for rehearing and rehearing en banc of the September 28 decision by the Ninth Circuit. They would like the entire Ninth Circuit bench to rehear the matter; alternatively, they would at least want a rehearing before the panel of three judges who made the original decision.

According to, an independent lawyers' blog, the Ninth Circuit receives approximately 1,000 petitions for a rehearing on en banc every year, doesn't even vote on 95% of them, and of the 5% that are considered, only 0.25% (1 in 400) are granted. This is the proverbial long shot, especially since there was no dissent that Google could build upon.

With the odds so long against its petition, Google obviously has to present its request as a defense of important principles and the whole matter as something that's going to be key to the reputation of the Ninth Circuit. The argument that Google makes is two-pronged. On the one hand, Google claims that this particular decision goes beyond Ninth Circuit precedent. On the other hand, the petition cites other past decisions in a sentence that comes down to telling the Ninth Circuit that it should not be the Ninth Circuit:

Unless reviewed by this Court en banc, the panel's decision will make this Circuit an outlier in the law of anti-suit injunctions, signaling that such injunctions will issue freely, whether by reversing district courts that declined to issue one (in Gallo and Applied Medical) or by affirming courts that did (in Seattle Totems and here).

The petition also warns against dramatic consequences:

"By paving a new path favoring issuance of anti-suit injunctions in the important and unsettled area of [F]RAND licensing of standard-essential patents, the panel has invited litigants to bring global licensing disputes in U.S. courts to shut down efforts to enforce foreign standard-essential patents in foreign courts."

I agree with them that FRAND licensing of SEPs is an important area, but it's not true that it's "unsettled": it just hasn't been settled in the way that Motorola (and Quinn Emanuel's other major SEP-enforcing client, Samsung) would like. There has actually been a lot of progress in U.S. case law concerning FRAND this year. The Ninth Circuit decision Motorola is fighting against certainly helps clarify the meaning of FRAND. Rulings by Judge Posner in an Apple-Motorola case in Chicago, Judge Crabb in another Apple-Motorola case in Wisconsin, and a couple of summary judgment decisions (1, 2) by Judge Robart in the Western District of Washington litigation that this Ninth Circuit appeal relates to have all contributed a lot to settling the issues. If one argues that nothing is settled before the Supreme Court decides, then this would still take a few years, but given the current procedural state of those litigations, there couldn't be much more clarity than there already is. Based on where these decisions currently stand, SEP holders can't enforce injunctions except under egregious circumstances that don't apply to Apple's and Microsoft's use of SEPs, but third-party beneficiaries of FRAND licensing pledges have enforceable contractual rights -- and can enforce them before an injunction is enforced against them, which would force them to settle on any SEP abuser's terms.

The other claim in the paragraph quoted above that I take issue with is that Motorola talks about companies bringing global licensing disputes in the U.S. to prevent international enforcement. While Microsoft filed this FRAND contract case in November 2010, it only did so after Motorola sent royalty demand letters within the U.S., listing not only U.S. patents but also international patents including the ones at issue here, and wanted a worldwide deal. Also, while the relevant FRAND pledges don't require litigation in the U.S., there's nothing in them that would require two U.S. companies to sort out these issues in another country's courts.

As in the build-up to the September 28 decision, Motorola cries foul over international comity, basically arguing that requiring Motorola to hold off on enforcement in Germany (where injunctions are not self-executing) while the contractual issues are being sorted out in the U.S. (where both companies are based and Motorola made its demands on a worldwide basis) is a diplomatic affront to Germany and looks like distrusting the German courts.

In the comity context, Motorola again complains that the Ninth Circuit is the Ninth Circuit:

"Other circuits give comity considerations far more careful attention than did the panel, reserving anti-suit injunctions for truly rare instances and presuming that foreign courts may proceed in parallel with U.S. courts, notwithstanding overlapping interests and issues."

While it's true that the September 28 ruling doesn't talk about comity for dozens of pages, the reason is not disregard but that it's a pretty simple question here with two U.S. companies having had correspondence in the U.S. about a worldwide deal, and Microsoft's FRAND enforcement action pre-empted Motorola's German infringement lawsuits by roughly eight months. What also made it easy for the Ninth Circuit to find that comity considerations did not weigh (or at least not strongly) against the issuance of the anti-enforcement injunction is the fact that Judge Robart had gone out of his way to limit his injunction to Motorola's own enforcement as opposed to interfering in any way with the German proceedings. Judge Robart's injunction was not a sweeping one; it was surgical. This fact played a key role in the Ninth Circuit's decision.

Toward the end of its petition, Motorola makes it cleare than ever that it likes German SEP enforcement rules better than Ninth Circuit anti-suit (or anti-enforcement) precedent:

"To disallow injunctive relief against a would-be licensee that has yet to negotiate and pay in good faith, as the panel seemingly commends, 'would be handing the patent owner over to every dishonest licensee for whom there would no longer be any incentive to conduct licensing negotiations.' ER 232 (translation of German decision)."

What Motorola quotes from the Mannheim H.264 ruling is a claim that Judge Posner rejected when he basically said that a FRAND patent holder can seek monetary compensation and this fact should be enough of a reason for implementers of a standard to do a license deal on FRAND terms.

My overall interpretation of Motorola's petition is that it doesn't merely want another chance to have Judge Robart's anti-enforcement injunction lifted. Motorola appears to be no less uncomfortable with what the September 28 ruling says about FRAND in general. And it hopes that the Ninth Circuit will now agree that a rehearing is needed because of the importance of those FRAND issues. But the way I read the September 28 ruling, the FRAND-related aspects of the dispute were considered and addressed but the outcome wouldn't have been more favorable to Google's purposes even if the patents at issue weren't standard-essential. If Motorola had sent (in the U.S., but worldwide in scope) demand letters to Microsoft over non-standard-essential patents in October 2010, if there had been any basis on which Microsoft could have argued that these demands were inconsistent with some existing contractual obligation (which could have been something different than a FRAND pledge, such as a license agreement that can be argued to cover those patents), and if Motorola had then started eight months later to seek injunctions over some of those patents in a foreign country and wanted to enforce them while the contract matter is still pending in the U.S., the outcome would have been the same. The SEP context just made Motorola's tactics even more problematic.

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