On Friday, Apple and Google's Motorola filed a joint motion with the Federal Circuit to dimiss the "Posner cross-appeal", in which an appellate opinion came down late last month and the deadline for petitions for rehearing was approaching, asking for a mandate to the district court so they can move for dismissal on remand (this post continues below the document):
Reuters quotes an official statement according to which they have not agreed on a license, but they have agreed to withdraw all litigation pending directly between them (which does not include the Apple v. Samsung dispute), and to work together in some unspecified areas of patent reform (presumably trolls, which plague both companies). The dispute had started in October 2010.
While a mere dismissal of lawsuits without a cross-license is only a second-class settlement, let us nonetheless congratulate both companies on this decision, which makes a whole lot of sense and is another step toward sanity concerning patent litigation. Here's my quick take:
The parties have entered into a second-class settlement from a position of mutual weakness. They had to recognize that under the procedural circumstances their patents were not strong enough to give either party decisive leverage over the other, at least not anytime soon.
Ever since Google announced the $12.5 billion Motorola Mobility deal in August 2011, which was meant to be a patent purchase more than anything else, I have commented very skeptically (to say the least) on the strength of that patent portfolio. The deal has not given Google leverage; if it has had any impact, it got Google into antitrust trouble, which at the end of the day also turned out to be pretty inconsequential as Motorola was not fined in any jurisdiction.
I doubted from the beginning that Google could use Motorola Mobility's patents the way it thought back in 2011 it could leverage them: to assert them against major rivals suing Android device makers in order to force a global patent cross-license agreement that would protect all Android OEMs. By dismissing its lawsuits against Apple without a license deal that would also cover third-party Android device makers (such as Samsung, but also dozens of smaller ones), Google has now effectively recognized the failure of the original plan that was all about mutually assured destruction. It's only a matter of time, and possibly very little time, until Google will also withdraw its patent assertions against Microsoft (a company much less likely to be affected by Motorola's patents because the mobile devices business it just acquired from Nokia has a license deal in place with Motorola).
Even though Google's original summer 2011 plan has now officially failed, Google as a company and Android as a platform and ecosystem are winners: since Apple's patents proved to be anything but thermonuclear (at least so far, and with no signs of this changing), the overall outcome between Apple and Android is mutually assured non-destruction. This is a perfect outcome for Android, and Google was able to afford the Motorola deal anyway, even though we all know now that Google way overpaid.
In more than 50 months of patent infringement lawsuits against Android device makers, Apple has not proved its ownership of any feature (in terms of a feature that end users would define as a feature, as opposed to secondary aspects of features) other than rubberbanding. The overscroll bounceback is the only recognizable feature that had to be removed from Android devices as a result of Apple's lawsuits. Google and its device maker partners have been able to work around Apple's patents in ways that don't materially adversely affect demand.
Apart from the limited strength of Apple's portfolio, there is another reason for which Apple would only have wasted time and money by further pursuing the Motorola lawsuis. Google recently entered into an agreement under which Lenovo acquired Motorola Mobility's handset business. Even if Apple had won something against Motorola in the future (for example, a Florida trial was scheduled to take place later this year), it would not have had direct impact on Google's business. By contrast, Google could have continued to use Motorola Mobility's patents against Apple, but those turned out too weak anyway.
What's unclear is whether the agreement to dismiss all pending litigation also involves a covenant not to sue for some time. The joint motion I published further above says that they will move to "dismiss the litigation without prejudice", meaning that technically they could reassert. Presumably their agreement precludes them from bringing new assertions against each other for a certain period of time. This means that Android-related patent assertions by Apple against Google itself are not going to happen too soon, if ever.
At first sight one would assume that this Apple-Google agreement makes a near-term Apple-Samsung settlement much more likely, but this depends on whether Apple's decision-makers have fully realized just how non-thermonuclear their patent portfolio is. If the decision to dismiss all Google lawsuits was primarily driven by Google's Lenovo deal, then Apple may still have unrealistic expectations with respect to the terms of a settlement with Samsung. Apple's 2012 settlement with HTC, which unlike the Google agreement did involve a cross-license (for ten years, in fact), was apparently also driven by the fact that HTC was no longer a priority target, and that settlement changed nothing about Apple's Android-related lawsuits against Samsung and Motorola. If Apple now just decided that Lenovo wasn't worth suing, then this may mean even more of a focus on Samsung -- but I'm reasonably optimistic that Apple is smart enough to know that Steve Jobs was wrong when he thought he could destroy Android with patents. I recently outlined three possible approaches for Apple after the recent Samsung verdict ("the good, the bad and the ugly").
As for patent reform, we'll see what positions Apple will take and what kinds of initiatives it will support. I don't like Apple's participation in an effort to discourage impactful patent litigation reform. Apple won't be able to strengthen its portfolio through lobbying. As the primary target of patent troll lawsuit, Apple should take reasonably reform-friendly positions. It should also do so because that would be the best it can do in the political arena for a constituency that matters to its business: app developers.
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