The Microsoft v. Motorola breach-of-FRAND-contract trial scheduled to commence on August 26 in Seattle is not exactly an event Google (Motorola Mobility's owner) is looking forward to. One of the issues Google is going to face is that its expert witness on German FRAND procedures, a university professor and appellate judge (whom Google is paying for this work on its behalf), has to tread carefully because of the conflicts of interest inherent to any appointment of an active (!) judge as a party's expert witness. Professor Dr. Maximilian Haedicke may already have stepped over the line when he was very forthcoming in a videotaped deposition with respect to a Huawei v. ZTE case pending in his circuit.
Yesterday Microsoft and Motorola filed their reply briefs reinforcing their summary judgment and Daubert motions. Google's Daubert reply brief in support of its motion to strike portions of the expert testimony of Microsoft's expert on German FRAND law, Retired Appellate Judge Professor Dr. Theo Bodewig, places the emphasis on the relevance of the Düsseldorf Regional Court's referral of the aforementioned Huawei v. ZTE case to the Court of Justice of the European Union (CJEU). Google argues that "Microsoft should not be permitted to confuse the jury with irrelevant testimony about Orange Book developments in a later time period in another case". In connection with Microsoft's damages claim relating to the relocation of its European distribution center from Germany to the Netherlands necessitated by Motorola's pursuit of injunctions over standard-essential patents (SEPs), Google says 2013 developments in other cases don't "have any bearing on Microsoft's options in 2011 and 2012" (when the relocation decision was pondered, made, and implemented).
Jury confusion is a pretext here. Microsoft doesn't say that it would have had different options after the aforementioned referral of FRAND questions by a German court to Europe's highest court -- this happened in 2013, and Microsoft relocated its logistics center in 2012. Microsoft's argument is simply that this latest development shows that the German Orange-Book-Standard approach (especially its application by lower courts) is far from the settled and reliable framework Google suggests. Google says Microsoft should simply have avoided a German injunction under the Orange-Book-Standard rules instead of relocating its distribution center. But even Google's expert can't say what this would have cost Microsoft. Maybe it could have avoided an injunction by agreeing to pay royalties determined by a German court, or maybe not. If it had worked, what would the royalties have been? Professor Haedicke doesn't say this, and that's a key part of the reason why Microsoft wants him excluded.
I believe Google's real problem in this context is that it probably won't have an expert to testify at trial on Microsoft's reference to the developments in Huawei v. ZTE. If Professor Haedicke reiterates his claim that Microsoft should have availed itself of the Orange-Book-Stnadard option of a court-determined royalty rate, Microsoft will point to the enormous degree of uncertainty surrounding the highly questionable Orange-Book-standard approach. The referral of the Huawei v. ZTE case shows that even a major German court (more patent infringement cases are filed in Düsseldorf than anywhere else in the whole of Europe, though not with respect to smartphones, where Mannheim and Munich are far more popular because those courts render decisions faster) has realized an inconsistency between the European Commission's preliminary perspective on the application of EU antitrust rules in this context and that of certain German courts. It's not about what has changed since Microsoft was forced to make its decision; it's all about whether Microsoft was right back in 2012 not to rely on what Google's Motorola claims would have been a successful strategy (at unknown costs) under the Orange-Book-Standard framework. If the way German courts have applied Orange-Book-Standard in recent years is inconsistent with EU antitrust rules (that's what I feel very strongly), then it's been like this ever since, and not only since the referral of the Huawei v. ZTE case to the Luxembourg-based European court, which merely demonstrates something that had been the case all along.
Like I said, Professor Haedicke has already testified on Huawei v. ZTE, alleging a "bias" by his lower court. If he does more this, it could get him into trouble. After my previous blog post on Professor Haedicke's work for Google I contacted the press office of the Düsseldorf Higher Regional Court, the appeals court on which Professor Haedicke is serving as a part-time judge (primarily he's a professor). I asked the court whether he has (as I presumed) permission to do paid work for Google. Since this is a delicate issue I'm now going to quote the court's original German-language reply to this question and then provide my unofficial translation:
"Herr Prof. Haedicke verfügt über eine allgemeine Genehmigung zur Erstattung von Gutachten. Diese Genehmigung ist ihm durch das Justizministerium Nordrhein-Westfalen erteilt worden. Sie schließt die Gutachtenerstattung in Fällen aus, mit denen der Senat, welchem Herr Prof. Haedicke als Beisitzer zugewiesen ist, befasst ist oder in Zukunft befasst werden könnte."
"Professor Haedicke has a general permission to author expert reports. This permission was granted by the Ministry of Justice of the Federal State of North Rhine-Westphalia. It rules out the authoring of expert reports in cases that have been or could in the future be put before the panel of judges to which Professor Haedicke has been assigned as a side judge."
If whatever comes out of Huawei v. ZTE at the Düsseldorf Regional Court after the European court has answered the questions is appealed (which will definitely happen unless the parties settle), that case will be put before the Düsseldorf Higher Regional Court, Professor Haedicke's court. There's a technical difference between testifying "on" and "in" a case. Here, he's testified and might have to testify again on Huawei v. ZTE as an expert witness in Microsoft v. Motorola, as opposed to testifying in Huawei v. ZTE. Whether this difference matters will be seen at next month's trial. He may have to decline to speak out on Huawei v. ZTE now. And that's why Google primarily doesn't want Microsoft to raise any argument concerning that Düsseldorf case. But Google simply shouldn't have hired an active judge.
I also asked the court about the measures it would take to ensure the fair, neutral and conflict-free adjudication of certain categories of cases, such as other FRAND cases, other cases involving Google's Android directly (as an accused technology or part thereof), countersuits by Android device makers against non-Android device makes, etc. Again, I'll state the court's original German reply first, followed by my unofficial translation:
"Sollte die Gutachtertätigkeit von Prof. Haedicke aus Sicht der Parteien eines zukünftig vor dem OLG Düsseldorf geführten Verfahrens Anlass geben, an der Unvoreingenommenheit von Herrn Prof. Haedicke als Richter zu zweifeln, so steht den Parteien die Möglichkeit offen, ein entsprechendes Ablehnungsgesuch anzubringen."
"Should Professor Haedicke's expert testimony give rise to concerns about his objectiveness as a judge by the parties to a future proceeding before the Düsseldorf Higher Regional Court, parties are free to bring a challenge on grounds of partiality."
The court's answer is technically correct, but in my opinion a court should avoid such situations in the first place. It's a very difficult decision for a party to challenge the assignment of a judge to a case. It can backfire even if the motion succeeds. If any cases of the categories I outlined before end up before Professor Haedicke as a judge, I'm certainly going to report on it.
One of Microsoft's latest filings contains an excerpt from a transcript of a deposition of Microsoft's expert on German FRAND rules, Professor Bodewig, and that part of the testimony explains how German professors can simultaneously serve as judges (which is also possible in other jurisdictions, with Judge Posner being a great example, except that he's far too principled to do what Professor Haedicke has done and continues to be doing):
Q [by lawyer]. One of the things that you -- you looked at was -- I don't want to get the name wrong again -- Motorola's expert, the deposition of Mr. Haedicke. Correct?
A [by Professor Bodewig, Microsoft's expert, a professor and retired judge]. Yes.
Q. All right. And you looked at this report. Correct?
A. I did.
And one of the things he does in his report is talk about the German legal market. Do you recall that? Let me give you some specifics because --
A. Could you explain what the legal market is?
Q. Yeah. Let me -- let me ask -- that may have been a little broader than I intended. When I look at your resume, one of the things you apparently were, or are, a judge?
A. I was, yes.
Q. Okay. And that was where?
A. In the Court of Appeals in Munich -- Court of Appeals in Munich -- in a Senate [division of the court] dealing with trademarks, unfair competition, copyright, and antitrust law.
Q. How does one become a judge in the Court of Appeals in Munich?
A. Any professor in Germany, law professor at a university, can become a part-time judge, actually it is, at a court in Germany. And so I applied. I wrote to the president of the Court in Munich, if they were interested in having me as a part-time judge over there. And they agreed, so I became a judge there.
Q. What's the difference between a part-time judge and a full-time judge?
A. The full-time judge is full-time, and the part-time judge -- it's -- officially it's one-sixth of the job of a full-time judge.
Q. And -- and how is it different -- how -- what are the different qualifications or -- let me step back. What's the different -- is there a different process one would have to go through to become a full-time judge as opposed to a part-time judge?
A. Well, the part-time judge is only open for professors. So to become a part-time judge in this sense, you have to be a professor as to become -- to become a professor. To be a full-time judge, you have to pass your first and second state exam, and this gives you the qualification to become a judge, which I have also passed. So I would have had the opportunity to join the judiciary in Germany and become a judge there on a full-time basis. I decided to go into academics.
Q. So anyone who passes those exams can be a judge?
No, it depends on the grades you get, because the government will not take anybody with any low grades to become a judge.
Q. Do you have to be appointed to be a judge, or --
Q. Okay. And so who appoints full-time judges in Germany?
A. The Ministry [of] Justice in the state you are becoming a judge in.
I don't have a problem with professors being expert witnesses, nor with professors being judges. I just have a problem with the notion of an active judge (or someone who retired only extremely recently, unlike Professor Bodewig, who left the Munich court a couple of years ago and to my knowledge never handled a Microsoft case) being hired by a company. After the breach-of-contract trial, where Professor Haedicke will face certain restrictions in terms of what he is allowed to say, Google may actually agree with me that this was poor judgment on Google and Professor Haedicke's part and shouldn't have occurred in the first place. Maybe Google has already realized it. But it's too late to replace him now.
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