Thursday, February 27, 2014

Federal Patent Court of Germany declares Microsoft maps patent invalid: immediate appeal

Today the Bundespatentgericht (Federal Patent Court of Germany) held a hearing in the nullity action brought by Google subsidiary Motorola Mobility against the German part of Microsoft's EP0845124 on a "computer system for identifying local resources and method therefor", a patent asserted not only against Motorola Mobility's Android-based devices but also against the Google Maps service per se. The proceedings in the infringement case had been stayed to await this decision on validity, and based on today's court decision to declare the patent invalid (not only in its granted form but also all of the proposed amendments), there won't be an infringement trial until after the appeal (provided that it is successful) that counsel for Microsoft announced would be filed tomorrow. Bardehle Pagenberg's Dr. Tilman Mueller-Stoy ("Müller-Stoy" in German), Microsoft's lead counsel in the related infringement case and co-counsel at today's nullity hearing, told the Federal Patent Court about the immediate appeal shortly after the announcement of the ruling when communicating Microsoft's request that the written ruling issue at the earliest opportunity.

Usually patent holders file an appeal only after the Federal Patent Court's written decision, which comes down a few months after the nullity hearing (where the basic outcome is announced from the bench). But this patent is due to expire in the summer of 2015 and could give Microsoft significant leverage. It became very clear at today's nullity hearing that Microsoft's counsel (its lead counsel today was Bardehle Pagenberg's Peter Hess, a patent attorney) fundamentally disagreed with the court, especially (though not only) as far as their narrowing amendments were concerned. After the introductory remarks by the court's Second Nullity Senate reiterated the key points of a preliminary ruling communicated a few months ago, Mr. Hess, Dr. Mueller-Stoy and their colleagues Dr. Malkomes and Dr. Haupt had to fight an uphill battle against a Quinn Emanuel team led by Dr. Marcus Grosch (who was victorious today but may very well lose three Mannheim cases tomorrow, two against Apple and one against HTC, as counsel for IPCom [corrected; previously said HTC, a typo at the end of a long and tiring day]). Microsoft's lawyers made an admirable effort under extremely difficult circumstances, and it wouldn't surprise me in the slightest if they salvaged this patent (at least in a narrowed form) on appeal. Just statistically speaking, the reversal rate of Federal Patent Court decisions is very high. In nullity cases, it's more than 40% (provided that appeals are filed and actually adjudicated).

While 21 companies have taken royalty-bearing Android patent licenses from Microsoft, Google's Motorola Mobility still refuses to pay. None of Microsoft's offensive claims against Motorola Mobility, all of them filed in 2010, has gone to a U.S. district court trial yet (only its defensive claims involving FRAND issues). A German injunction involving Google Maps would have (had) the potential to bring about a near-term settlement.

While Microsoft and Google haven't been able to settle their patent infringement dispute so far, they do agree that it would be terrible policy for Europe, especially with a view to the growing problem of patent trolling, to allow Europe-wide injunctions to issue prior to ascertaining the validity of asserted patents. These two companies, as well as other industry leaders including the likes of Apple, Broadcom, Cisco and Samsung, reiterated their concerns over potential shortcomings of the rules of procedure of Europe's future Unified Patent Court in an(other) open letter published on Tuesday. It's an interesting coincidence that Microsoft and Google met in court during the same week and that a patent that almost resulted in an injunction last year was, though this could change on appeal, declared invalid. Google couldn't have complained too much if an injunction against Google Maps had issued before its invalidity defense was fully evaluated, given that Google capitalized on such an unfortunate situation against Apple for 19 months and tried the same (over the same patent) against Microsoft. But all of these major players agree that bifurcation (separate tracks for infringement and invalidity cases that can result in the enforcement of patents that shouldn't have been granted in the first place) is a bad idea. I hope the European Union's decision-makers will take their concerns seriously. These companies know what they're talking about.

In all of the smartphone-related patent disputes between major players that I watch, not a single patent has survived a Federal Patent Court hearing in its granted form. Most of them were invalidated entirely; others were narrowed. There could be some interesting developments in some of the related appeals.

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