On Tuesday, administrative law judge Theodore Essex of the U.S.
International Trade Commission dealt a blow to Barnes & Noble.
As the bookseller heads into trial next week on Microsoft's
claim that its e-readers infringe four Microsoft patents, Essex
dismissed Barnes & Noble's patent-misuse defense. B&N, you'll
recall, has waged an aggressive antitrust campaign against Microsoft, claiming that Microsoft is attempting to squelch the
Android operating system by improperly asserting its patents.
But next week's trial won't consider whatever evidence Barnes &
Noble's antitrust lawyers -- at Cravath, Swaine & Moore and
Boies, Schiller & Flexner -- have amassed. The ALJ will
determine only the validity of Microsoft's patents and whether
Barnes & Noble infringes them.
Florian Mueller of FOSS Patents, who was the first to report on Essex's patent-misuse ruling, interpreted the dismissal as a
broad repudiation of Barnes & Noble's antitrust case against
Microsoft. I'm not so sure about that -- and my understanding is
that when the ITC case is over, the bookseller can and will fire
up its patent-misuse claims in the parallel Seattle federal
court litigation between Barnes & Noble and Microsoft.
The ITC docket is a journalist's nightmare. Just about every
substantive document is confidential, including Microsoft's
brief on patent misuse, the ITC staff's recommendation on the
B&N defense, and Essex's ruling, so we don't know for sure why
Essex ruled the way he did. But there's guidance in the leading
en banc decision on patent misuse by the U.S. Court of Appeals
for the Federal Circuit. In its August 2010 opinion in
Princo Corporation v. International Trade Commission, the
Federal Circuit held that the ITC should construe patent-misuse
defenses narrowly, looking only at the patent-holder's assertion
of the patents at issue in the underlying infringement case.
As a matter of law, that ruling spelled doom for Barnes &
Noble's antitrust case at the ITC. The bookseller's argument,
remember, is that Microsoft is using whatever ammunition it can
pull from its entire patent portfolio -- and not just the four
patents at issue in the ITC case -- to squelch competition from
Android. Barnes & Noble's theory is that Microsoft bullies
Android users into unfavorable licensing deals by asserting
infringement of an array of trivial patents.
Last March the bookseller asked the Justice Department's
Antitrust Division to petition the ITC to dismiss Microsoft's
case based on its antitrust allegations. The Justice Department
didn't. And the licensing and confidentiality agreements
Microsoft has reached with other Android users, which were part
of Barnes & Noble's presentation to Justice, are not relevant
under the Federal Circuit's interpretation of patent misuse at
But they could be important in federal court. At the same
time Microsoft sued Barnes & Noble at the ITC, it filed a
parallel infringement suit in Seattle federal court. Barnes &
Noble filed a patent-misuse counterclaim in the Seattle case
before it was stayed last June. When the ITC case concludes, the
federal court litigation could become active again, whichever
way the ITC comes out. If Barnes & Noble is serious about its
antitrust counterclaims against Microsoft, it can push forward
in the Seattle case even if it prevails at the ITC. If, on the
other hand, Microsoft wins at the ITC, that's all the more
reason for the bookseller to assert its patent-misuse defense in
Microsoft deputy general counsel David Howard said in a
statement: "[Tuesday's] action by the ITC makes clear that
Barnes & Noble's patent misuse defense was meritless. This case
is only about one thing -- patent infringement by Barnes &
Noble's Android-based devices. We remain as open as ever to
extending a license to Barnes & Noble, and invite them to join
the many other major device makers in paying for the
Microsoft-developed intellectual property they use in their
devices." (Microsoft is represented at the ITC by Sidley Austin;
Orrick, Herrington & Sutcliffe; Woodcock Washburn; and Adduci,
Mastriani and Schaumberg.) I reached out to Microsoft's press
office to ask about patent misuse in the Seattle case but didn't
get an immediate response.
Barnes & Noble counsel at Cravath didn't return my calls.
David Boies of Boies Schiller was unavailable for comment. The
bookseller is also represented in the ITC case by Quinn Emanuel
Urquhart & Sullivan and Kenyon & Kenyon.
(Reporting by Alison Frankel)
Follow Alison on Twitter: @AlisonFrankel
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