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  (Source: DeviantArt/Tenesbrosa)
The ban-happy EU giant is making no friends in the electronics industry

The patent war has claimed another victim -- Microsoft Corp. (MSFT).  As bad as things are in the U.S. with respect to abusive, vague patents, and punitive litigation, Germany is much worse.

I. Microsoft vs. Motorola: The Pot and the Kettle

The nation has been a focal point in the three-way fracas between Microsoft, the Android alliance led by Google, Inc. (GOOG), and Apple, Inc. (AAPL).  The players in the battle have targeted Germany with an abundance of lawsuits as the top European Union market has a policy of banning first and asking questions later.

Microsoft vs. Motorola Mobility, Inc. (MMI) (and by proxy its soon-to-be-owner Google) has been a war with plenty of dirt flung by both sides.  Microsoft is accused of threatening Android manufacturers with an undisclosed large portfolio of operating system patents.

Just how good or bad those patents are was illustrated by a recent Barnes & Nobles, Inc. (BKS) case.  Microsoft approached Barnes & Nobles, an Android tablet maker, with licensing demands.  It agreed.  Once it had caved, Microsoft shared information about the patents with it.  Barnes & Noble was shocked to discover that the patents were mostly trivial or seemingly invalid.  In other words, Microsoft's Android extortion was all bluff and no bite.

Barnes & Noble responded by breaking the embargo on Microsoft's secret portfolio and terminating the licensing arrangement.  In hopes of gaining an upper hand in the inevitable legal abuse to follow, the company wrote a letter to the U.S. Department of Justice (DOJ) and U.S. International Trade Commission (ITC) highlighting its complaints about Microsoft's Mafioso-esque tribute scheme.

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]

Motorola faced similar licensing demands from Microsoft, and refused to back down.  It's currently being sued in the U.S. and Germany by the operating system giant, which hopes to terminate EU and U.S. sales of the third-place Android phonemaker.

Motorola has hardly been angelic in its response to Microsoft's demands, though.  It has seemingly violated legally enforceable "fair, reasonable, and non-discriminatory" rules by refusing to license its standards patents to Microsoft, including those pertaining to the h.264 video codec, at a reasonable rate.

Microsoft complains that Motorola has sought a preposterous sum for the h.264 patent -- over $20 -- compared to the typical licensing rate of a couple of pennies per device.

II. Germany is Condoning Destructive International Patent War

In the U.S. the companies' mutual belligerence and patent mongering has been met largely with indifference from the courts, which have refused to implement sweeping preliminary injunctions (product bans) in either direction.

In Germany, though the court has been perfectly happy to go on a banning spree.  The latest casualty is Microsoft's Xbox 360 and Windows 7.

Both products may soon be banned in Germany, after a Mannheim Regional Court judge ruled them to be in violation of Motorola's h.264 patents -- EP0538667, a patent on an "adaptive motion compensation using a plurality of motion compensators" (filed in 1992), and EP0615384 a patent on an "adaptive compression of digital video data" (filed in 1994).

No Soup for You
Germany says "No Windows for you!" [Image Source:Columbia Pictures]

Microsoft still has some hope of avoiding the ban.  It is appealing the ruling to Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court).  That court can suspend the ban if it thinks Microsoft will win an appeal on the infringement claims (e.g. if it thinks Motorola's FRAND abuse is overly egregious).  Likewise the EU could step in, given that Motorola is under antitrust investigation by EU inquisitors regarding FRAND abuse.

Of course it's also entirely possible that the ban may be allowed to stick, as with Motorola's recent successful bid to ban the iCloud.

While a ban on Windows and Xbox sounds bizarre by American standards, it's an example of just how different German intellectual property laws are versus American laws.  In Germany, infringement and validity proceedings are carried out on separate tracks, so it's easy to ban products using patents that are later ruled invalid.  As companies increasingly look to abuse this overly trusting architecture, one must wonder how far things must go before Germans demand their government make drastic changes.

Xbox 360
Appeal is one of Microsoft's last routes available to avoid a costly ban.
[Image Source: Justin Sullivan/Getty Images News]

Motorola also has to deal with a thorny ruling by a Washington state federal judge, who warned Motorola that it could face stiff fines in the U.S. if it tried to enforce a ban on Windows sales in Germany.

In the U.S. Motorola is facing the prospect of a complete ban on its smartphones after Apple won a key ruling, which indicated that Motorola -- and virtually any other Android device for that matter -- infringed on one of Apple's mobile patents.  The decision will likely be appealed meaning that it is unknown when or if a ban might actually materialize in the U.S.

Source: FOSS Patents

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It is like it is
By BabelHuber on 5/3/2012 7:48:54 AM , Rating: 2
At first glance the German process regarding patents looks a little bit weird, but this approach has been implemented on purpose:

A lot of German companies like Adidas, Puma or Stiehl have heavily been copied by other companies in the past, especially chinese ones.

So, if you are e.g. Stiehl and see that your chainsaw-design was taken over 1:1 by a competitor, you can sue him.

The court will look at the 2 chainsaws and say: 'Most likely this is an illegal copy, so we directly ban it from selling until the lawsuit has been decided'.

If it wouldn't be done this way, big companies could illegally reuse patents on purpose, knowing that they fail at court. But also they would know that they can sell their stuff until the court has decided about the issue, which could take months or even a year.

Of course in the end the patent-owning company could sue the patent-violating company afterwards, but then the damage has already been done.

OTOH in cases like Motorola vs. Intel, this approach has its weaknesses since the matter at hand is so complicated.

So banning first creates some problems while solving others. Hence it is not so easy to adjust those laws.

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