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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

RE: So...
By Tony Swash on 2/28/2012 6:56:42 PM , Rating: 0
quote:
Because this is how everything has worked in software and science and technology for all of history; it's what Apple DOES, and it's how progress happens. The real question is why shouldn't copying be allowed?


I think you may be confusing different things. 'Copying' and 'building on'

In one scenario a company makes a new sort of smart phone that you can email on, surf the web, watch movies, listen to music, manage your photo collection and do it all through a touch interface. It's hugely successful. It's competitors say 'that looks great, obviously all phones are going be like this soon, let's see if we can make our own smart phone using a touch interface'. So they beaver away and come up with their own smart phone design. Let's call this scenario Windows Phone 7.

In another scenario a company makes a new sort of smart phone that you can email on, surf the web, watch movies, listen to music, manage your photo collection and do it all through a touch interface. It's hugely successful. It's competitors say 'that looks great, obviously all phones are going be like this soon, lets copy this smart phone as closely as we can and make out version look just like the first one'. Let's call this scenario Android.

One is all about innovation, taking what came before, being inspired and informed by it, seeing the possibilities it revealed, and then coming up with something distinct and new. This is innovation. The second scenario, the 'me too' product, contributes little or nothing, is not innovative and when pursued with too much enthusiasm constitutes a sort of theft.

quote:
Agreed, but the outcome will have far reaching implications in technology and IP law for decades (essentially all aspects of you and your hypothetical children's lives). So, that outcome is very important, to me, at least.


I think you are over egging your argument. Almost all big waves of innovation involve legal conflicts like this as the inflection point of fundamental change is reached. Then everyone moves on and the whole things is forgotten. Who now can recount the intricate dance of legal cases that developed with the rise of the PC?

All this will have blown over in a few years and be forgotten.


RE: So...
By nafhan on 2/29/2012 10:36:27 AM , Rating: 2
Where do you come up with this stuff? The first step in "building on" something is to copy it. Otherwise, you're not building on anything...


"Google fired a shot heard 'round the world, and now a second American company has answered the call to defend the rights of the Chinese people." -- Rep. Christopher H. Smith (R-N.J.)














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