The Microsoft v. Motorola breach-of-FRAND-contract jury trial will start today in Seattle (Western District of Washington). On Sunday, Judge James Robart ruled on the parties' right to refer to his famous 207-page Findings of Fact and Conclusions of Law (FFCL) concerning a FRAND royalty for Microsoft's alleged use of various standard-essential patents (SEPs) held by Motorola. There was a dispute because Microsoft proposed a variety of references to the rate-setting FFCL, which was issued in April, while Motorola wanted the jury to learn only about the FRAND range and specific rate within the range that the court determined, but not about any of the findings and conclusions underlying the determination. In other words, the Google subsidiary wanted to limit this to a very few references of the purely numerical kind.
Judge Robart has given this quite some thought and arrived at the conclusion that references to the FFCL are allowed, though only within reason. This is good news for Microsoft but also means that Google's (Motorola's) various concerns about potential prejudice weren't just shrugged off. Here's his related order (this post continues below the document):
The first trial in this case was a bench trial (a trial without a jury), and the order quotes transcripts of court hearings that leave no doubt that the parties agreed that the rate-setting decision should be left to the judge and could be too difficult for a jury. They didn't agree on a whole lot of things throughout this process, so this particular agreement is rather significant. (For example, they disagreed on how to handle the second trial.)
The most important issue here is now whether Google's Motorola could broadly exclude Microsoft's intended references to the rate-setting opinion. The order makes clear that the court doesn't simply put judicial efficiency (not requiring the jury to reinvent any wheels) above Motorola's right to a jury trial ("this is not to suggest that concerns about conserving resources somehow trump the Seventh Amendment--they do not"). But the parties were driven by efficiency considerations when they stipulated to a bench trial on rate-setting, which is now going to be followed by a jury trial on the breach issue. And Judge Robart wants to hold the parties to their commitments and representations to the court. That's why references to the FFCL will be allowed, within reason.
The net effect of the court's rate-setting determination back in April was that Motorola is considered entitled to less than one-twentieth of a percent of its initial demand, and even compared to the demand it made at a later stage, it received but a very small fraction of what it was shooting for. There was an unusual degree of consensus in the media that Microsoft had won this battle (for headlines/quotes see this post). Judge Robart felt that "Motorola seeks to recast its prior representations, having not achieved the results it hoped for in the first phase" and goes on to say that "[t]he court must be mindful not to allow the parties to re-litigate issues that they agreed to have the court decide, and that the court did decide, simply because they do not like the court's findings". Judge Robart also holds Microsoft to all of its commitments and representations, including its commitment to take a license on court-determined FRAND terms. He's principled.
The record apparently doesn't contain any indications that Motorola previously stated that it would want the jury to redetermine things the court has already determined at the parties' joint request, and that's why the jury will be informed not only of a FRAND rate and range but also of some of the factual context of that determination. There appear to be indications to the contrary, such as submissions to the court that show Motorola wanted a wide range of issues to be decided by the judge alone.
Judge Robart says he "spent a substantial amount of time on the FFCL" and he doesn't want "[t]his whole effort to spare the jury a difficult task [to] be wasted" now by letting Motoola reargue the court's findings. After all, the parties always knew that the two trials in this case were going to be on closely-related issues, with the second trial quite obviously building on the results of the first phase.
The judge also says he was mindful of the fact that certain issues would have to be left to the jury and took great care "not to include anything [in the FFCL] that would infringe Motorola's right to a jury trial on the breach of contract issue". But what's very important to Judge Robart is that "[i]f each of [the] building blocks [of the court's rate-setting decision] could be challenged in front of the jury, Motorola would in effect be allowed a second bite at the apple on the [F]RAND rate and range".
All of this still doesn't mean that Microsoft can make totally unfettered use of the rate-setting FFCL in its argument to the jury. Section III of yesterday's order provides "guidance for the parties on the using the FFCL". I'm now going to quote the nine pieces of guidance in a slightly reformatted but otherwise unchanged form (using numbered paragraphs and changing capitalizations accordingly):
The FFCL will not be admitted in its entirety.
The court will not specifically instruct the jury on particular findings of fact, with the exception of the [F]RAND rate and range. Instead, the findings must come in through witness testimony.
Conclusions of Law in the court’s orders may be freely used and referred to.
The use of the court’s findings are subject to Federal Rules of Evidence 401, 402, and 403. In particular, the court is unwilling to allow the parties to go into excessive detail about the specifics of non-essential issues explored in the previous trial and will exclude attempts to do so under Rule 403.
If a witness testifies on direct examination concerning a subject covered by the FFCL and the underlying finding is challenged on cross, the court will not permit evidence in an effort to re-litigate issues the court has already decided.
The parties should minimize their use of phrases like "Judge Robart said" and "the court has ruled." The parties also should not attempt to improperly use the imprimatur of the court to imply that the jury should reach a certain result or view the evidence in a certain way.
Witnesses may not simply read from the FFCL. Instead, they must testify to the underlying facts, and may, if necessary, use the court's findings as a basis for those facts. As a corollary, counsel may not display excerpts from the FFCL to the jury using [P]owerpoint or any other display mechanism.
If a witness testifies to a fact contrary to something contained in the FFCL, the opposing party may use the FFCL to impeach that witness.
Last, the court will obviously entertain legitimate objections to the use of the court's FFCL during trial and will address these issues on a case by case basis as they arise.
These principles governing what kind of information to use and how to present it seem fair and balanced to me, but there's obviously going to be room for debate over specific references. In particular, words like "excessively", "improperly" and "legitimate" are interpretable and sort of an invitation to trial lawyers to raise numerous objections. But those will be resolved on a case-by-case basis.
The philosophy here is clearly that the FFCL are law of the case, but at the same time they should not be used in a way that would somehow suggest to the jury that there's only one way left in which can decide the issues before it. Obviously, the unbelievable discrepancy between the court's rate-setting decision (amounting, in effect, to less than $2 million a year) and Motorola's original demand (amounting to approximately $4 billion a year in a conservative estimate) is enough of a challenge for Google in this trial. It means that Motorola wanted $54 million for a standard Ford Taurus.
By providing an elaborate rationale for his decision to admit the FFCL, and by limiting their use so as not to mislead the jury, Judge Robart has just upped the ante for Google's (Motorola's) potential claim of prejudice (due to references to the FFCL) in a subsequent appeal.
Finally, I'd like to mention that I'm going to follow this trial as best as I can, and I hope that some of the presentations and exhibits will appear on the Internet and that reporters will tweet from the courtroom. I'm more than 5,000 miles (approximately 8,500 kilometers) away from the venue, and I don't have an inside track, so I'll depend on publicly-available information, but I've followed this process for almost three years by reading virtually every publicly-available court document in the case, enabling me to provide some rapid analysis of what's going on.
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