Wednesday, April 24, 2013

German appeals court stays Google v. Apple case over (likely invalid) push notification patent

Two weeks ago I reported on an appellate hearing held by the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court) concerning Google's (Motorola Mobility's) assertion of a push notification patent against Apple and wrote that "[t]he most likely outcome is a stay pending a parallel nullity (invalidation) action before Germany's Bundespatentgericht (Federal Patent Court)". This morning the Karlsruhe-based court indeed announced its decision to stay the appeal.

The appeals court issued a press release on the order to stay the case and published it on its website (in German). According to the official announcement, both parties consented to the stay. Apple wanted a stay (in the alternative to an outright dismissal) all the time. Google apparently changed its position after the appellate hearing, at which the presiding judge had suggested to Google's counsel to stipulate to a stay, but Google's counsel initially declined.

On Friday the Mannheim Regional Court (whose rulings can be appealed to the Karlsruhe Higher Regional Court) announced its finding that Microsoft, which also faces an assertion of this patent, is licensed, ruling out injunctive relief and staying the damages-related part of the case over doubts concerning the validity of the patent.

The law firm of Freshfields Bruckhaus Deringer is representing Apple (at the appellate stage) as well as Microsoft in the push patent cases. Microsoft's lead counsel in the Mannheim case was Professor Peter Chrocziel. Apple's lead counsel before the Karlsruhe-based appeals court is Dr. Markus Gampp, who worked on both cases like his colleague, Matthias Beer. Google is represented by Quinn Emanuel's Dr. Marcus Grosch.

In my post predicting today's decision I had oversimplified the effect a stay of the appeal has on Google's ongoing enforcement of the injunction against Apple. A stay of the appeal is not automatically tantamount to lifting the injunction at issue in the appeal. In a strict sense, it just means that the appeals court won't render its opinion until the validity of the patent-in-suit has been confirmed (which I guess won't happen in this case). Technically, the enforcement proceeding relating to the Mannheim court's decision is separate from the appeal of the ruling on the merits. But in this case the appeals court expressed fairly strong doubts about the validity of the patent at the hearing, and on this basis Apple can bring a new motion for a stay of the enforcement of last year's injunction.

In March 2012 the Karlsruhe-based court had denied such a motion by Apple, but German appeals courts generally lift patent injunctions only if a rather cursory look at the case results in the assessment that the appellant is more likely than not to prevail, which is a fairly high hurdle (only standard-essential patent case raise special issues as defendants can amend their licensing proposals anytime, thereby creating a new set of facts, but this push patent isn't standard-essential). By now the appeals court has fully evaluated Apple's invalidity contentions, and on this basis I believe a renewed motion on Apple's part to seek a stay of Google's enforcement of what appears to be a highly dubious patent will succeed shortly, giving German iCloud users their push notifications of new email messages back. I venture to guess that Apple will bring such a motion shortly, if it hasn't already. In my opinion, the right thing to do for Google would be to immediately stop its enforcement of last year's injunction, but if it doesn't, then the appeals court can lift it anyway.

If it turns out at the end of the proceedings that the injunction should never have been granted in the first place, Google will be liable to Apple for the damages caused by its premature enforcement.

A December 2012 ruling by the England and Wales High Court, which I published a few months later, was a key milestone concerning the invalidation of this patent. The key claim of this patent was found invalid for four different, independent reasons. UK rulings aren't binding precedent for German courts, but they are taken into account. The invalidity contention that apparently impressed the German appeals court the most is based on version 4 of the IMAP protocol, an Internet protocol Google itself has implemented. So it should have known that the push patent it acquired when it bought Motorola was of highly doubtful validity. The Motorola patent acquisition has been so extremely unsuccessful that Google may simply not have thought the deal through before it agreed to pay $12.5 billion. Google wanted to gain leverage against Apple and Microsoft, but apart from the push notification win in Germany, which is now in the process of going away, and standard-essential patent injunctions it can't enforce, Motorola hasn't won anything that would give Google leverage. Nothing. Nada. Zero.

$12,500,000,000 certainly has a lot of zeroes, but $12,500,000,000 is a high price for a lot of zeroes. Zero enforceable injunctions against Microsoft in Germany. Zero enforceable injunctions against Apple in Germany if, as I predict, the push injunction against Apple is now lifted. Zero U.S. import bans (on Monday the ITC just tossed the sole remaining patent-in-suit in Motorola's case against Apple, and Google faces a high hurdle in its attempt to salvage its case against Microsoft after an Administrative Law Judge recommended its dismissal a month ago). Zero offensive wins in U.S. federal court.

Since litigation isn't working out for Google, it should try licensing (Microsoft just announced an Android- and Chrome-related patent agreement with ZTE, its 20th announced Android patent licensee).

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