On Thursday I blogged about an Apple filing in Southern California seeking to prevent Google (Motorola Mobility) from spying on high-level negotiations between Apple and Qualcomm. That particular litigation is all about whether Motorola Mobility is barred by a patent cross-license agreement with Qualcomm from suing Apple for infringement of standard-essential patents (SEPs) implemented by Qualcomm baseband chips. Starting with the iPhone 4S, Apple's cellular communications devices are equipped with Qualcomm baseband chips.
Apple is a Qualcomm customer, and patent protection is a key differentiator for Qualcomm's chips. Therefore, it's in Qualcomm's business interest that Apple win the Southern California case.
At the same time, strong SEP enforcement is also in Qualcomm's interest. It is, in fact, absolutely key to its business. And in this area, its positions are largely at odds with Apple's, though they both dislike, for disparate reasons, arbitration as a dispute resolution mechanism for FRAND rate-setting.
Companies prefer not to antagonize and alienate their customers. In December 2012 this surprisingly happened, but Qualcomm withdrew an Apple-bashing submission to the ITC, saying that it lacked "appropriate authorization".
Last week Qualcomm filed an amicus curiae brief in connection with the Federal Circuit appeal of last year's dismissal of an Apple v. Motorola FRAND contract action in the Western District of Wisconsin. Officially, that letter to the court was filed "in support of neither party", but it does support Motorola on the most basic issue on appeal: whether the court was right to dismiss Apple's request for a FRAND determination because Apple had not committed to bound by its outcome no matter what royalty rate the court might have arrived at. It does not support Apple on any of the issues that it is appealing. So this is a brief in support of Google (Motorola), but limited to one issue. Qualcomm does not take a position on other, more case-specific issues.
Here's Qualcomm's brief (this post continues below the document):
Just like Google (Motorola), Qualcomm doesn't want a legal framework under which an implementer of a standard can obtain a FRAND determination by a court, requiring the patent holder to offer a license on certain terms ("specific performance"), but under which the implementer can choose to pursue infringement litigation prior to, possibly at some point, accepting that court-ordered offer.
I actually thought already during the district court proceedings that Apple's theory of an enforceable options contract made sense. Let's look at it this way: if Motorola had not made a FRAND promise (i.e., a licensing pledge on FRAND terms that weren't stated in the form of specific amounts of money or percentages or particular royalty bases) but instead promised to license its cellular patents to all comers at a rate of, for example, $5 per device, then it wouldn't be reasonable to require Apple to accept that offer if some or all of the related patents are invalid and/or not infringed. I consider it extremely important that infringement/essentiality and validity can be challenged. Otherwise participants in standard-setting would be rewarded for overdeclaration.
Google's Motorola obviously argues that the court was right and that it should have gone even further: through its cross-appeal, the Google subsidiary tries to have the dismissal without prejudice changed into a dismissal with prejudice (barring Apple from bringing the same claim again, which is what Judge Crabb in Wisconsin originally intended).
Google (Motorola) filed its opening brief the week before last. I haven't reported on it yet, but I was planning to publish it, and now, in light of Qualcomm's amicus brief, it's time to do so (this post continues below the document):
I don't want to go into detail here on Google's defense of the Wisconsin decision and its push for a dismissal with prejudice. You can find everything in the document above. I just wish to highlight two things, one of which is in the document and the other one of which is notably absent.
Right at the start of these appellate proceedings Google asked the Federal Circuit to terminate Apple's appeal or transfer it to the Seventh Circuit, but the Federal Circuit decided to hear the case and said it would decide on this jurisdictional question later. Google's brief repeats its arguments for why this case is not related to patent infringement. In certain FRAND cases, Google engages in forum-shopping. Last week it appealed Microsoft's FRAND breach ruling to the Federal Circuit even though it had previously appealed a preliminary injunction decision in that action to the Ninth Circuit. Having lost once at the Ninth Circuit, the burnt child appears to dread the fire. But at the same time it doesn't want the Wisconsin case to be heard by the Federal Circuit: it wants that one transferred to the Seventh Circuit, for reasons that one can only speculate about. There is another reason now that didn't exist when Google first questioned the Federal Circuit's jurisdiction over the Apple Wisconsin appeal: it's on the losing track before the Federal Circuit with respect to the "Posner appeal", and Chief Judge Rader repeatedly called Motorola's royalty demand for one cellular SEP "crazy".
The one thing I was hoping to find in Motorola's appellate brief is missing: a response to Apple's allegation (made in Wisconsin as well as in its Federal Circuit opening brief) that Motorola demanded from Apple more than 12 times the rate it charged others for the same patents. Motorola's brief defends its 2.25% demand but doesn't specifically deny Apple's claim that this was more than 12 times the rate others paid Motorola for the same patents. While limited passages of Motorola's brief are redacted, the context of the redactions makes it very unlikely that Apple's "more than 12 times" argument was addressed.
Google's brief complains about "hold-out" by "infringers", but interestingly, Google doesn't want Apple's appeal to succeed, though Apple is simply seeking a remand in order to finally get the FRAND rate-setting dispute adjudicated. Google doesn't actually want a FRAND royalty from Apple. It's looking for an excuse to pursue injunctive relief.
The FRAND rate-setting dispute in the U.S. is not the only one of its kind between these parties. A German case over a similar issue was stayed earlier this month.
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