Friday, August 16, 2013

Google flip-flops on scope of Judge Posner's FRAND ruling, now agrees with Microsoft

The highest-profile appellate hearing scheduled in the ongoing smartphone patent dispute for September is undoubtedly the Federal Circuit hearing on the Apple-Motorola cross-appeal of Judge Posner's June 2012 dismissal of a two-way lawsuit. Two weeks ago I reported on a request by three amici curiae -- Verizon, the American Association of Advertising Agencies, and the Ford Motor Company -- to participate in the September 11, 2013 hearing in an effort to defend both parts of Judge Posner's ruling: the one relating to Motorola's FRAND-pledged standard-essential patents (SEPs) as well as the one relating to Apple's patents-in-suit, all of which are non-SEPs.

As a litigation watcher I'm accustomed to inconsistencies, contradictions, and shifting positions, and to some extent that's obviously legit. But every once in a while I see a degree of self-contradiction that is really difficult to understand. This morning I had such an experience again when I read Google's (Motorola's) opposition brief to the request for participation by Verizon and friends (this post continues below the document):

13-08-15 Google Opposition to Participation in Hearing by Verizon Et Al.

Considering that Verizon et al. said clearly that they support Judge Posner's ruling all the way, there are actually reasons for which both parties might object. Apple takes no position as long as it doesn't affect the allotted time for its own argument. Google now claims that Verizon et al. "styled their brief as in support of 'neither party,' but every argument made in their brief supports Apple". This is Google's summary of the amicus brief submitted by Verizon et al. (reformatted and citations omitted):

  1. injunctive relief is inappropriate for [F]RAND-encumbered Standards-Essential Patents;

  2. injunctive relief is inappropriate when the patent at issue covers a minor component in a multi-component device; and

  3. reasonable royalty damages should not exceed the value of the patented technology over alternatives at the time of design.

While it's true that items 2 and 3 can be understood to relate to SEPs, they aren't exlusively relevant to SEPs. Item 2 is primarily about non-SEPs since item 1 takes care of SEP injunctions all by itself, making item 2 only a secondary argument in the SEP context, but the primary one in the non-SEP context. And item 3, even the way Google summarizes it, is at least no less of a non-SEP-related argument than a SEP-related one. In the context of the FRAND part of Judge Posner's ruling, the emphasis would usually not be on the time of design but on the time of adoption of a standard.

Moreover, Verizon's concerns about the availability of injunctive relief (such as ITC import bans) over patents of all sorts -- particularly non-SEPs, such as the ones at issue in Apple's original ITC complaint against HTC -- are long-standing and well-documented. Verizon may have played a key role in explaining to the Obama Administration the issues raised by the ITC ruling on Samsung's complaint against Apple. But about a year before it took a position on that SEP issue, it spoke out against Apple in a non-SEP context.

Anyway, rather than try to get mileage out of whatever Verizon et al. say, Google is afraid that the effect of letting Verizon et al. participate would be to "give another voice and more time for presentation of Apple's positions than of Motorola's".

And now we're getting to an unbelievable contradiction. Google (Motorola) says the Federal Circuit "need not necessarily reach the policy 'issues of patent remedies' that Amici claim 'will have considerable effect on patent litigation for years to come.'" This is how Google now, all of a sudden, describes the scope of the SEP injunction part of the appeal:

"The parties dispute whether the district court failed to consider pertinent facts and properly apply the eBay standard in dismissing Motorola's claims for equitable relief. The Court can fully address these issues and resolve this appeal without reaching the sort of broad policy pronouncements that Amici seek to support."

This position that the FRAND injunction part of the appeal of Judge Posner's ruling is just about case-specific facts to be considered under eBay is not new. Microsoft said this much in its amicus curiae brief:

"Whether the holder of a standard-essential patent with a [F]RAND licensing commitment should be unable to obtain an injunction under all circumstances is an interesting question—but not a question presented in this appeal. First, the district court's straightforward application of eBay provides an adequate and independent basis for its decision. [...] Second, [...] the district court was not considering and did not apply a blanket prohibition on injunctions[.]"

But Google did not previously agree with Microsoft. Let's take a look at its opening brief in this appeal. Here's issue 4 raised by Google's cross-appeal:

"Did the district court err in applying an automatic rule that injunctions are never available for patents declared essential to SDOs, and thus in declining to consider evidence that Apple was an unwilling licensee?" (emphasis mine)

Here's another interesting passage:

"The district court failed to apply the four-factor eBay test to evaluate Motorola's claim for injunctive relief. Instead, the district court improperly enacted a bright-line rule permitting continued infringement not only of Motorola's '898 patent, but all FRAND-committed patents in Motorola's portfolio irrespective of the terms of those commitments, and even by parties that have consistently refused to take a FRAND license." (emphasis mine)

So Google is now saying in its opposition to the request for participation by Verizon et al. the very opposite of what it said in its opening brief. In March it said Judge Posner "enacted a bright-line rule", or an "automatic rule", prohibiting SEP injunctions, and wanted the appeals court to take a position on that one. That's what Google concedes would be Verizon and friends' preferred outcome. But it doesn't want to let Verizon et al. defend that position because now, five months after Google's opening brief, it's all about the "pertinent facts" and not about "broady policy pronouncements". How could the Federal Circuit opine on Google's issue #4 on cross-appeal (whether Judge Posner "err[ed] in applying an automatic rule that injunctions are never available for patents declared essential [...]"), without addressing the very policy issues Verizon et al. have raised? So either Verizon et al. have a legitimate reason for requesting participation in the hearing, or Google would have to withdraw its issue #4 on cross-appeal because, by its own admission and in accordance with what Microsoft's amicus brief says, the broad question of SEP-based injunctions is not an issue before the Federal Circuit in this case. Google wants to have its cake and eat it. It wants a broad policy pronouncement against Judge Posner's approach, and it doesn't want third-party stakeholders to advocate the policy they support. The circuit judges will easily identify this inconsistency, and it won't enhance Google's credibility in this appeal.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: