There was a time when it would almost have been appropriate to rename this blog "FRAND Patents". While there is still a lot going on in that field, the related antitrust investigations have all come to an end and my focus has changed. I heard that the Court of Justice of the European Union (CJEU) recently held a hearing in Huawei v. ZTE, and I plan to report on the decision. In this post here I'd like to share with you the opening brief that Google's Motorola Mobility filed with the United States Court of Appeals for the Ninth Circuit earlier this week in the Microsoft v. Motorola FRAND contract case, in which a FRAND rate was set for Motorola's H.264 (video codec) and IEEE 802.11 (WiFi) standard-essential patents and a jury determined Motorola owed Microsoft $14.5 million in damages for a FRAND breach (this post continues below the document):
Google has not yet given up on the question of appellate jurisdiction. It appealed Judge Robart's decision in the Western District of Washington case that involves Washington state contract law questions to the Federal Circuit, which Microsoft said was the wrong appellate forum. Motorola, which had previously appealed a preliminary injunction decision in the same case to the Ninth Circuit, defended its choice. It was more than obvious that Google simply didn't want to return to the Ninth Circuit after the defeat it suffered there in 2012. Some of what the Ninth Circuit determined two years ago ups the ante for Google in the present appeal. Considerably, in fact.
The Federal Circuit denied a Google motion to transfer the case, but Google is now asking the Ninth Circuit to send the matter back to the Federal Circuit. Despite Google's obvious "forum-shopping" tactics, it wouldn't be a bad idea for any FRAND rate-setting and FRAND breach damages issues to be resolved by the Federal Circuit. Having read Motorola's opening brief I'm more sympathetic than before to its choice of forum. It would even be in Microsoft's interest to have these questions decided by the Federal Circuit (so as to create binding precedent for all patent infringement cases nationwide), and Microsoft is being no less tactical here than Google by insisting that the Ninth Circuit retain appellate jurisdiction.
Motorola's opening brief attacks Judge Robart's FRAND ruling (the rate-setting decision as well as the damages verdict) from all angles. The still-Google-subsidiary says that the district court should never have issued a FRAND rate-setting order in the first place because it was an inadmissible advisory opinion, and it argues that the rationale behind the rate-setting decision runs counter to Federal Circuit law in at least three ways (no date set for hypothetical negotiation; reliance on rates of patent pools Motorola didn't participate in; alleged ignorance of Motorola's "real-world" license agreements). Motorola also says the jury that had to decide on whether Motorola breached its FRAND obligation should not have been instructed on the basis of the court's rate-setting opinion because, among other things, Motorola itself did not have access to such information when it made its offers to Microsoft (note that Judge Robart allowed Microsoft to present argument based on the rate-setting opinion but only with restrictions); it argues that the evidence doesn't support a finding of a breach; it invokes the Noerr-Pennington doctrine under which litigation conduct cannot give rise to damages claims (generally); and so forth.
With respect to evidentiary issues that Motorola says warrant at least a new trial, the Google subsidiary argues, among other things, that the FTC consent decree was inadmissible.
I don't have an opinion on the details of this, but I'll share a high-level view.
There can be no doubt that Judge Robart and the Seattle jury arrived at a result that is correct or, at least, largely correct. The royalty level Motorola demanded in its "offer letters" almost four years ago was just absurd. It doesn't make sense to me to argue that no reasonable jury could have found in Microsoft's favor. It was actually a surprise that Judge Robart didn't enter a breach finding ahead of trial (in which case the jury would only have had to set a damages amount).
But it's also true that Judge Robart entered unchartered territory when he made his decision(s), and that's why it's possible that an appeals court disagrees with one or more parts of his methodology and possibly grants a new trial.
Does this case matter? It's definitely of great interest to the industry at large. As for the dispute between these two parties, it's pretty irrelevant at this stage because Microsoft has not been overly successful (to say it nicely) with its patent assertions against Motorola's Android-based products. Microsoft sued almost four years ago and is presently able to enforce only one of more than two dozen patents-in-suit. Motorola has proven that Android doesn't infringe most of Microsoft's asserted patents that came to judgment (many of them haven't even come to judgment yet), and has proven various Microsoft patents invalid. Therefore, Motorola doesn't even need to gain leverage through SEP litigation anymore. It thought it needed to counterbalance Microsoft's non-SEP assertions. Should Microsoft be more successful in the years ahead, then Google/Motorola may actually need their SEPs. But from today's perspective the most likely outcome is that Microsoft will win the FRAND battle while Google/Motorola will win the Android war.
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