April 13 (Reuters) - With a single ruling this week, U.S.
District Judge James Robart of Seattle federal court may have
fundamentally altered the balance of power between Motorola
Mobility and the leading opponents of Motorola's
soon-to-be-parent Google, Microsoft and Apple.
In another indication that the smartphone war is shifting away from individual infringement suits, Robart granted
Microsoft's motion for a temporary restraining order, which
effectively bars Motorola from acting to enforce whatever relief
it's granted in an ongoing German patent case. In that case,
before a court in Mannheim, Motorola has claimed Microsoft
Windows and Xbox products infringe German patents that are part
of Motorola's standard-essential portfolio. The Seattle judge,
according to this transcript of the order he issued in open
court, agreed with Microsoft that the German patents are already
at issue in Microsoft's case before him, which accuses Motorola
of breaching its obligation to offer standard-essential patents
on fair and reasonable licensing terms.
Robart granted the TRO under the Anti-Suit Act, which is
intended to restrict forum-shopping and harassing litigation.
That's how Microsoft and its counsel at Sidley Austin described
Motorola's German suit. According to Microsoft, Motorola first
tried to extract exorbitant licensing fees for a portfolio of
about 100 worldwide standard-essential patents. Then, after
Microsoft filed a Seattle federal-court suit asserting that
Motorola's licensing demand was a breach of its contract with a
European standard-setting body, Motorola sued Microsoft in
Germany for infringing German patents that were part of the
portfolio at issue in Seattle.
The judge agreed that Motorola appeared to have run to
Germany to obtain an injunction there before he could decide the
merits of Microsoft's contract case. Microsoft's U.S. suit, he
said, included the same patents Motorola was asserting in
Germany, because those German patents were part of the portfolio
for which Motorola demanded allegedly improper licensing fees.
Robart concluded that under the Anti-Suit Act, he has the power
to block Motorola from enforcing whatever relief it wins in
Germany until he rules on the larger question of reasonable
licensing fees for standard-essential patents.
"The battleground in this ... is whether the United States
action, or resolution of it, would be dispositive of the foreign
action to be enjoined," the judge said at Wednesday's hearing.
"And I will add, for the edification of the Court of Appeals, so
it knows where I'm coming from, that I consider the preservation
of my ability to resolve this dispute to be something that needs
to be carefully guarded, otherwise we run into the possibilities
of conflicting resolutions, duplicative litigation, and
unfortunate results that don't follow appropriate law."
Why is the ruling so significant? Injunctions are hard to
obtain in U.S. patent litigation, so, as you know, patent
holders in the last five or so years have taken advantage of
easier injunction standards in Germany and elsewhere to gain
leverage in global patent disputes. The Robart ruling holds
that, at least in cases involving worldwide standard-setting
portfolios, U.S. litigation trumps cases elsewhere. That's a
potentially significant shift in the balance of power between
patent holders and licensees.
Expect to see Apple, for instance, point to the ruling in
its own standard-essential litigation with Motorola. Apple sued Motorola in San Diego federal court in February, making
essentially the same argument as Microsoft: It claimed
Motorola's German assertion of standard-setting patents against
Apple violates Motorola's contract with the standard-setting
body. The parallels with Microsoft's case suggest that Apple
will also be able to use the Robart ruling to block Motorola
from enforcing any German injunction it obtains.
The leading authority on standard-setting patents, Jorge
Contreras of American University's Washington College of Law,
told me Robart's ruling is "pretty astounding." He said he's
never before seen a contract case involving standard-essential
patents serve as the basis of an Anti-Suit injunction -- and
said that the U.S. judge's assertion of his authority to block
foreign patent actions is "very surprising." Motorola, he said,
has to offer a worldwide portfolio of patents to licensees of
standard-essential technology. So to conclude that such an offer
precludes litigation over patents in the portfolio outside of
the U.S. "seems like a significant reach...I can see this being a
really important decision."
Microsoft deputy general counsel David Howardtold Reuters
that the ruling means "Motorola can't prevent Microsoft from
selling products until the court decides whether Motorola has
lived up to its promise." Motorola, pointing to the $100 million
bond Robart ordered Microsoft to post, said the ruling means
Microsoft is committed to license its standard-essential
patents. I left a message for Motorola patent counsel K. McNeill
Taylor and outside counsel Steven Pepe of Ropes & Gray but
didn't hear back.
Motorola has not said whether it intends to appeal the TRO,
which is set to last only until a May 7 hearing on Microsoft's
motion for summary judgment. The Mannheim court, meanwhile, is
expected to issue its ruling in Motorola's German injunction bid
on May 2.
(Reporting by Alison Frankel)
Follow us on Twitter: @AlisonFrankel, @ReutersLegal