On Friday (December 14, 2012), Microsoft and wholly-owned Google subsidiary Motorola Mobility had a filing deadline for post-trial briefs relating to the implications of Google's grant-back obligation under a license agreement with MPEG LA. The filings were made in the FRAND contract lawsuit pending in the Western District of Washington, but the issue could also be dispositive of the last two patents left over from Motorola's ITC complaint against Microsoft after the withdrawal of Motorola's IEEE 802.11 (WiFi, or WLAN) patent.
Also on Friday, Reuters reported on a motion the parties brought to protect the confidentiality of certain documents, particularly settlement proposals. Nevertheless, Microsoft's post-trial brief on Google/MPEG LA was filed publicly. It contains useful information, some of which validates assumptions I made when I previously reported on this issue in June and July.
In particular, I assumed that Google had signed either the standard MPEG LA license agreement (a copy of which I already received in 2010) or a materially consistent one. Microsoft's brief states the following about what Google signed:
"A company seeking a license to the patents in the H.264 Patent Pool must execute MPEG LA's standard 'AVC Patent Portfolio License' agreement (of which the Google License is a representative example) to become a 'Licensee.' [...] Google is among more than 1100 such Licensees."
A footnote additionally clarifies:
"The agreement in the same format is executed by each of the licensees of the MPEG AVC Patent Pool."
AVC and H.264 are synonyms for the purposes of that patent pool.
I previously stated my interpretation of the grant-back clause of the MPEG LA AVC/H.264 license agreement and concluded that Microsoft was very clearly entitled to a reciprocal license at a royalty rate consistent with the MPEG LA H.264 pool rate. It was pretty clear to me from the agreement that licensees make a firm grant-back commitment without any loopholes, and that it includes subsidiaries, not only those companies that are subsidiaries at the time of signing the agreement but also entites that subsequently become subsidiaries (the contract refers to "Affiliates", and wholly-owned subsidiaries are the clearest case of an affiliate).
Microsoft's brief states that a Google licensing executive expressed, at the recent FRAND rate-setting trial in Seattle, his "understanding that [the Google License] does not apply to the Motorola patents" but "was unable to provide any explanation" for this. However, Microsoft then dismantles the arguments Motorola Mobility made in the ITC investigation. None of Motorola's interpretations of the agreement, as summarized in Microsoft's brief, appear even remotely convincing to me, but I would have preferred to also read Google's (Motorola's) own argument in the Seattle case. I would encourage Google (Motorola) to make its brief, or at least a public redacted version available to the general public. Since I have a copy of the MPEG LA standard AVC/H.264 license agreement, I doubt that anyone can come up with a convincing interpretation of the agreement to the effect that Google could shirk its grant-back obligation, but again, I'd like to read Google's arguments.
Toward the end, Microsoft's brief explains inhowfar the existence of that agreement is relevant to the FRAND rate-setting issues in the Seattle case:
"For procedural reasons and in light of the importance of a timely resolution of the issues pending in this case, Microsoft has not yet sought to take the steps necessary to enforce against Google its rights to a grant-back license, which would at a minimum have created a distraction from the key issue for trial in November and could potentially have delayed that trial. But, wholly apart from Microsoft's contract right to license [Motorola's] H.264 Essential Patents under the Google License, that license is compelling, if not conclusive, evidence of the appropriate RAND royalty to be applied to Defendants' H.264 essential patents."
At an earlier stage of this litigation, Microsoft had stressed the relevance of that agreement to the question of injunctive relief, but that is no longer an issue after Judge James L. Robart entered summary judgment (after the rate-setting trial) in favor of Microsoft, determining that Google's Motorola Mobility would not be allowed to seek (or enforce) sales bans against Microsoft's products anywhere in the world over its H.264 and IEEE 802.11 (WiFi, or WLAN) declared-essential patents.
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