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German court rules Apple's FRAND licensing proposal is fair enough, would be illegal for Motorola to refuse

A German appeals court has handed Apple, Inc. (AAPL) a major victory this week, at the expense of pending Google Inc. (GOOG) acquisition Motorola Mobility.  The Karlsruhe Higher Regional Court ("Oberlandesgericht Karlsruhe") elected to stay a preliminary injunction by the lower Mannheim Court, an injunction which could have -- at least online -- banned sales of iPhones and iPads in Germany.

I. iPad, iPhone Ban Would be Illegal Says Appeals Court

To understand the ruling you have to understand German patent law.  In the European Union, different member states have different patent court systems, despite sharing a single unified intellectual property registrar.

In Germany, lower federal courts launch cases along two separate tracks -- an infringement track, and a validity track.  The infringement track can ban (via preliminary injunction) a product or service, even if there's a modest prospect that a patent is invalid.  The infringement proceedings are typically only stayed by a lower court if there is a "high likelihood" (70-80 percent) of invalidity.

By contrast, German federal appeals courts can stay the infringement proceedings (and potential product bans) if there's a modest (think 50 percent or greater) chance of invalidity.

In this particular case, the infringement track was paused due to a special type of invalidity concern -- invalidity not based on the patent being invalid, but invalidity based on it being illegal to litigate with the patent under current licensing rules.

Apple store in Germany
German authorities have ruled that it would be illegal for Motorola to seek a sales ban on the iPhone and iPad, given Apple's relatively fair licensing proposal. (Pictured: Munich's Apple store) [Image Source: Apple Insider]

The Karlsruhe court ruled that Apple's latest licensing proposal was fair and reasonable enough that Motorola was legally obligated to license the patent to its rival.  The key point in the case was that the patents in the case (which Apple was found to infringe by lacking a license) were 3G standards patents governed by fair, reasonable, and non-discriminatory (FRAND) licensing terms.

Motorola made it clear it had a lot of issues with Apple's licensing proposal, and for a time the appeals court appeared to be on its side.  But via an "iterative approach", Apple crafted a licensing proposal, which was the appeals court felt was fair enough, according to FOSS Patents.  To refuse to license under the terms of that revised offer would be a clear antitrust violation, the German appeals court stated.

A translated ruling is available here.

II. Growing Headaches for Motorola, Google

Some experts (such as FOSS Patents blogger Florian Mueller) are saying that this loss is especially painful for Google/Motorola as the German court system is relatively friendly to FRAND patent holders using the standards patents to litigate against other FRAND standards holders.  

As Apple is also involved in some FRAND patents, the German court was more receptive to Motorola's claims that other international courts might be; a perspective originally praised by Google.

Cell tower
Motorola Mobility's efforts to litigate with 3G FRAND patents aren't working out very well.
[Image Source: Trak]

The loss adds to the cloud floating over Motorola and Google, as a European Union probe into potential FRAND patent abuse continues.  Motorola is fighting a two-front war against Apple and Microsoft Corp. (MSFT).  Last week Microsoft filed an EU complaint against Motorola, claiming it was committing antitrust violations by refusing to license certain FRAND patents.

III. Battle is Far From Over

While Motorola's litigious efforts against Apple are significantly weakened by the ruling, all is not lost for the phonemaker.  Motorola has a non-FRAND ban on the iCloud's push email in Germany, which is likely to be enforced for at least a year until the appeal is heard.  Unlike the iPhone/iPad ban, the appeal is unlikely to be expedited as the case does not share the same compelling FRAND questions.

Motorola's smartphones could be banned by April if it does not adopt a new unlock mechanism, following a German judge's decision that Motorola's lock graphic violated Apple's pair of patents [1][2] on a swipe unlock.  Motorola stands a good chance of getting this overturned at the appeals level, given the amount of prior art.  Such prior art was used to toss out similar claims in the Netherlands, where invalidity and infringement proceedings are lumped together into a single track.

Motorola unlock
Motorola's forbidden swipe to unlock gesture [Image Source: YouTube]

However, like Apple with the iCloud ban, Motorola must likely wait almost a year to get the decision tossed, as it is a non-FRAND issue.  Motorola will likely be forced to implement alternative unlock gestures.  Samsung Electronic Comp., Ltd. (KS:005930) -- threatened with a similar German ban -- has already done this, putting in place a circular slide to unlock motion.  

While the new unlock is clunky, it is likely to prevent Apple from being able to ban the company's products from the market, and may have the added perk of encouraging customers to use Android's more secure built-in Grid Unlock (which was not found to be infringement in Germany to date).

In the long run it's anybody's guess what could happen in Germany.  An appeal could allow Motorola to (re)enforce its FRAND-based iPad/iPhone ban, if the first appeals court decision is overturned.  Motorola could even invalidate Apple's swipe-to-unlock IP.  Alternatively, Motorola could see its iCloud victory nullified and be forced to maintain painful user interface changes, should things go wholesale in Apple's favor.

Sources: FOSS Patents [1], [2]



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This article is over a month old, voting and posting comments is disabled

Apple knows what they're doing
By Thomaselite14 on 2/27/2012 9:06:00 PM , Rating: -1
They played by the rules, and extended a fair offering. That's why there's the legal system, to resolve conflicts without emotion or bias. Notably, the anti-apple bias here.




RE: Apple knows what they're doing
By anactoraaron on 2/27/2012 9:21:15 PM , Rating: 2
No they (Apple) abused (and continue to abuse) the rules in place using invalid patents that have prior art to prevent competitors from selling a competing product. All Moto/Google needs to do is prove the prior art and invalidate the Apple patent in the appeals court and then sue Apple for X amount of dollars from lost sales from their patent trolling and then add in court costs and legal fees for their trouble. Apple will end up losing a lot of money with this narrow minded, short sided patent war.


By C'DaleRider on 2/28/2012 3:02:59 AM , Rating: 1
quote:
with this narrow minded, short sided patent war.


You meant short-sighted patent war. What you wrote makes absolutely no sense and isn't correct.


RE: Apple knows what they're doing
By testerguy on 2/28/2012 3:14:49 AM , Rating: 2
quote:
No they (Apple) abused (and continue to abuse) the rules in place using invalid patents that have prior art to prevent competitors from selling a competing product. All Moto/Google needs to do is prove the prior art and invalidate the Apple patent in the appeals court and then sue Apple for X amount of dollars from lost sales from their patent trolling and then add in court costs and legal fees for their trouble. Apple will end up losing a lot of money with this narrow minded, short sided patent war.


Companies who own non-FRAND patents are entitled to refuse to license it to their competitors, and are entitled to enforce said patents in a court of law. If prior art is demonstrated and proven, then yes, Apple will have to take the cost. For me, this is perfectly fine. If they have caused another company to lose money without a legitimate reason, the system is working if they get charged for it.

However, it may be that the court cases do not prove that there was prior art, in which case no Android phone will be able to use slide-to-unlock. Which could potentially cost Android and Android manufacturers a lot of money.

Either way, Apple is entitled to try and protect their own non-FRAND patents. Motorola, on the other hand, is NOT entitled to refuse to license Apple a FRAND patent - this is far more severe moral and legal failing.


RE: Apple knows what they're doing
By JPForums on 2/28/2012 10:39:17 AM , Rating: 2
quote:
Companies who own non-FRAND patents are entitled to refuse to license it to their competitors, and are entitled to enforce said patents in a court of law.

I don't think this was in question in the previous statement.

quote:
If prior art is demonstrated and proven, then yes, Apple will have to take the cost...

I agree with this sentiment. Some people forget that this is non-trivial and therefore a big IF.

quote:
However, it may be that the court cases do not prove that there was prior art, in which case no Android phone will be able to use slide-to-unlock. Which could potentially cost Android and Android manufacturers a lot of money.

If the potential rewards weren't great, Apple wouldn't have committed to said litigation whether they felt they were correct or not.

quote:
Motorola, on the other hand, is NOT entitled to refuse to license Apple a FRAND patent - this is far more severe moral and legal failing.

As I stated above, this would be a far more grievous concern. Though a technical difference, it should be stated that Motorola is in fact offering to license its FRAND IP in a non-discriminatory manner. The contention is on the "Fairness" of the licensing terms. Nonetheless, your point still stands. However, it is up to the courts, not me, to decide Motorola's fate.


By testerguy on 2/28/2012 11:41:20 AM , Rating: 2
quote:
I don't think this was in question in the previous statement.


The suggestion that using the patent laws to try and prevent competitors from selling a competing product is 'abuse', does suggest that for some reason Apple isn't entitled to attempt to enforce their patents in a court of law. Even if the patents turn out to be invalid - they still have a right to try and enforce them, which is why I stand by my original reply.

The original quote:
quote:
No they (Apple) abused (and continue to abuse) the rules in place using invalid patents that have prior art to prevent competitors from selling a competing product


I think you largely agree with the rest of what I said. It's refreshing to see a logical person on here.


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