Thursday, September 12, 2013

German appeals court may hand Microsoft another victory but Google saved by the bell

Today Microsoft and Google met in court again, eight days after the jury verdict in the Western District of Washington holding Google's Motorola Mobility liable for breach of the duty of good faith and fair dealing in the FRAND context. Compared to the recent jury trial, today's appellate hearing held by the Munich Higher Regional Court was a low-key event -- and much shorter (only about two and a half hours).

The appeals court heard Microsoft's appeal of a May 2012 ruling by the Munich I Regional Court finding no infringement of EP0669021 on "multilingual computer programs" by Motorola Mobility's Android-based devices. Microsoft has won three German patent injunctions against Motorola Mobility, but this is a you-win-some-you-lose-some game (in which Microsoft has the industry's highest hit rate in German courts), and the lower court in Munich concluded that the way Android arranges and processes multilingual message sets for apps falls outside the scope of EP'021.

After the first hearing held by the lower court (in December 2011), I said that this patent appeared to be difficult for Microsoft to prevail on, though I wouldn't write it off; after the second hearing, held in March 2012, an infringement finding was more of a possibility than before, but ultimately the lower court sided with Motorola on a couple of non-infringement contentions. One of them relates to the place in which certain language-specific message sets are stored, and a couple of related non-infringement arguments depend on the construction of the term "to load".

Circuit Judge Konrad Retzer, who presides over the division of the court hearing patent appeals, indicated that a reversal of the lower court's holdings is possible and said at the very end of today's hearing that the outcome will, more likely than not, depend on the claim construction ultimately adopted by the Bundespatentgericht (Federal Patent Court) at an October 17 hearing on Google's (Motorola's) nullity (invalidation) complaint against this patent in order to ensure that consistent claim constructions be applied in the infringement case on the one hand and the nullity action on the other hand. (For an explanation of the German bifurcation regime for patent infringement and nullity lawsuits, please see this post.) Since the workload of the court precluded an earlier ruling date anyway, a decision has been scheduled for December 19, 2013, and Judge Retzer and his colleagues will be able to review the Federal Patent Court's nullity ruling before deciding on infringement. Simply put, it's not going to be enough for Microsoft to defend the asserted patent claims (claims 1 and 6) at the mid-October nullity hearing, but it must also defend it on such a basis that the Federal Patent Court doesn't uphold these claims only because it identifies claim elements not disclosed in the prior art due to a claim construction of the patent-in-suit that would be too narrow to warrant an infringement finding.

Judge Retzer didn't rule out that his court could reach a non-infringement conclusion regardless of further developments at the Federal Patent Court, but that's the less likely scenario. This shows, once again, that this case is a relatively close call, even though Google's counsel effectively described it as a clear case for a dismissal.

Fortunately for Google, the stakes in the further proceedings involving this patent aren't high. The ruling date is after the expiration date of this patent. In practical terms, injunctive relief is off the table now regardless of whatever the final ruling on the merits will be. But Microsoft could collect damages for past infringement and, under Germany's "loser pays" rule, the decision on the merits will also determine which party owes the other a reimbursement of legal fees (not of the actual fees incurred but an amount relative to the value in dispute set forth by German law). The parties are going to keep fighting over this, but whatever the outcome will be, it's not going to have material impact on the terms of a settlement between these parties, unlike cases in which Microsoft has won or may win injunctions (most of its patent infringement claims against Motorola in the United States haven't been adjudged yet).

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