Up Monday: Crucial hearing in Microsoft v. Motorola RAND case

May 4, 2012

For Microsoft, the last two weeks have brought bad news in its patent war with Motorola Mobility. On Apr. 24, an administrative law judge at the U.S. International Trade Commission issued an initial determination that Microsoft’s Xbox infringes four Motorola patents – rejecting Microsoft’s defense that three of the patents were essential to standard wireless device technology and that Motorola had breached an agreement to license the IP on reasonable terms. Then, on Wednesday, a judge in Mannheim, Germany ruled that the Xbox and certain versions of Windows infringe Motorola patents. He ordered the products removed from sale in Germany.

But Microsoft believes that if it wins its breach-of-contract case against Motorola in federal district court in Seattle, neither the ITC nor Mannheim rulings will have much significance. That’s why Monday’s hearing before U.S. District Judge James Robart is so critical. Robart will hear arguments on two summary judgment motions by Microsoft and one by Motorola. If he ends up agreeing with Microsoft that Motorola was obligated under its contracts with standard-setting bodies to license essential patents to Microsoft on fair and reasonable terms – and that Motorola breached its obligation by demanding unreasonable fees of $4 billion a year from Microsoft – the practical effect will be that Motorola must license the patents to Microsoft. That would spell the end of Motorola’s ITC and German infringement claims on standard-essential patents. (One of the patents in the ITC case isn’t in that category.)

Motorola, meanwhile, has moved for a summary judgment that Microsoft repudiated its licensing rights when it sued Motorola in Seattle in 2010. If Motorola wins, that’s the end of Microsoft’s case. If it loses, however, Robart’s prior rulings would likely lead him to conclude, as a matter of law, that Microsoft is entitled to license the Motorola technology.

That would tee up Microsoft’s two summary judgment motions. In one, Microsoft asserts that Motorola’s licensing demand was so unreasonable that it represents a breach of Motorola’s obligations to standard-setting bodies. Microsoft argues under this theory that Motorola’s patent infringement suits were improperly filed, and so it asserts that it’s entitled not only to license Motorola patents on reasonable terms but also to damages. Microsoft is also asking Robart to rule that Motorola may not seek an injunction based on any patent it is obliged to license to Microsoft on reasonable terms.

Robart has already indicated that he’s very receptive to Microsoft’s arguments. Last month, as I’ve reported, he issued a shocker of a temporary restraining order, ruling that Motorola must not act to enforce whatever relief it might win in Germany. Microsoft said after the Mannheim ruling Wednesday that the Robart injunction will insulate it from any immediate consequences of the ruling.

The Seattle judge said that his temporary restraining order will remain in effect until he rules on the summary judgment motions he will hear Monday. Motorola has appealed the TRO, which it regards as a preliminary injunction. That raises an interesting question of whether Robart or the 9th Circuit Court of Appeals has jurisdiction over the injunction if the trial judge reaches summary judgment rulings before the 9th Circuit decides the appeal.

Robart’s summary judgment decisions will also have a big impact on Apple’s parallel breach-of-contract suit against Motorola in California. The Seattle judge’s rulings won’t be considered binding in Apple’s case, since the parties aren’t the same. But you can be sure that Robart’s opinions will show up on the Apple docket as soon as they’re entered in Seattle.

Motorola’s lead counsel at Monday’s hearing is expected to be Jesse Jenner of Ropes & Gray. Arthur Harrigan of Danielson Harrigan Leyh & Tollefson and David Pritikin of Sidley Austin will argue for Microsoft.

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I honestly don’t want Motorola to win this one. Asking for $4bn yearly is a ridiculous amount to ask, even for microsoft for FRAND patents. I just wished both companies had worked all this out and just avoided the courts.

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