Even if Germans side with Motorola enforcement using FRAND patent is illegal opines judge

Faced with licensing demands from Microsoft Corp. (MSFT) ($10-$15 per handset) and the threat of a ban from rival gadgetmaker Apple, Inc. (AAPL), Motorola Mobility has been pushing forward with its controversial approach of using its standards-heavy patent portfolio in lawsuits.  That approach currently has it under antitrust investigation in the European Union, but has not dissuaded Motorola from pursuing enforcement.

Motorola, a top Android phonemaker, continues to operate independently -- for now -- after Chinese regulators held up the approval of the company's acqusition by Google Inc. (GOOG).  China appears to be using the delay as a means of bargaining with the search engine provider who has opposed its censorship demands and hacking abuse.  That means that for now Motorola Mobility is forging its own way in court.

I. Judge Appears Skeptical of Motorola's FRAND Enforcement

Motorola's controversial lawsuits against Microsoft, which span several international courts, hit an unusual snag when the U.S. District Court for the Western District of Washington ruled in a special hearing that Motorola could not enforce a FRAND-based ban on Microsoft in Germany.

Microsoft has complained that Motorola is asking for thousands of times the typical "fair, reasonable, and non-discriminatory" (FRAND) rate (which typically is around 2 cents per device).  The patent in question is a Motorola patent on h.264 -- a commonly used video encoding standard.

Dusseldorf court
A Washington federal court has forbidden Motorola from banning Windows sales in Germany until a U.S. case advances.
[Image Source: All About Samsung]

The restraining order, put in place by presiding judge Judge James Robart, may be enforceable as Motorola Mobility is a U.S.-based firm.  However, it is unusual in that it is a case where a U.S. federal court is moving to essentially strip a top trade partner of its judicial authority in the short term.

In addition to the pending German case, Motorola and Microsoft are duking it out in a corresponding U.S. case that is currently being heard by Judge Robart.  Until a May 7 hearing in the U.S. case, Judge Robart says that any attempts to enforce a ban on Windows sales in Germany (via preliminary injunction) would be illegal.  He's forcing Motorola to post a $100M USD bond in the interest of compliance.

While the U.S. case has not been ruled on, the decision indicates the presiding Judge is skeptical of the validity of Motorola's FRAND based litigation.

II. What the Ban Might Have Meant to Motorola

Some believed Motorola might pull off a product ban in the Germany ruling, which was set to land on April 17.  Germany's legal system works a bit differently in that patent validity is run in a separate track, meaning that in most cases -- even where there's a strong possibility that a patent is bad or being unfairly enforced -- the German court still enforces a ban on the alleged infringed product for the duration of the trial.  Apple has achieved similar bans of Motorola and Samsung Electronics Comp., Ltd. (KS:005930) Android devices in Germany.

Microsoft said the temporary ban on the injunction was necessary, writing in its motion for a restraining order, "If Motorola's sharp tactics are allowed to unfold, Microsoft will be denied a meaningful remedy in this action. Microsoft seeks a preliminary injunction here to preserve the status quo, to preserve this Court's ability to grant Microsoft meaningful relief, and to prevent irreparable harm to Microsoft and the public in the meantime."

Motorola h.264
Motorola and Microsoft are fighting over 100 patents, but the German case focused on only two, involving the h.264 codec. [Image Source: Joker Blog]

Jess Jenner, a lawyer with Ropes and Gray -- the firm representing Motorola in the U.S. case -- argued that a ban would be acceptable given that Motorola could repay Microsoft if the U.S. court later ruled it to be unfair.  And she said the restraining order would be the equivalent of meddling in foreign justice, stating, "You are being asked to interfere with a German court.  It's an intolerable intrusion on another country's prerogative."

Judge Robart didn't buy that line of logic.

Microsoft claims that the German lawsuit -- which only involves 2 patents out of the 100 being disputed in the U.S. -- is a mere maneuver to gain leverage by Motorola, exploiting Germany's controversial ban-friendly IP enforcement.  As even a temporary ban on Windows sales in the large EU nation would be a financial blow to Microsoft, Motorola could use a ban to try to force a more favorable settlement in the U.S.

A jury trial is scheduled for November in the U.S., if the companies cannot settle their differences before then.

Source: ComputerWorld: TechWorld

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