On January 20 and 27 and February 3, 2012, Apple could experience a series of Black Fridays at the Mannheim Regional Court. At 9 AM on each of those Fridays, the court will hand a decision on a patent infringement suit against Apple (the first two cases were brought by Samsung, the third one by Motorola). And there are at least three more lawsuits going against Apple in Mannheim, with decisions likely to come down not too much later. In one of those cases there's already been a default judgment that is going to be superseded by a substantive decision.
But Apple also has German lawsuits going against Samsung and Motorola, and even against HTC. It appears that Apple brought all of its lawsuits in Düsseldorf, a forum that is also very patent holder-friendly but not nearly as fast as Mannheim. So with a delay of a few months or more, we may also see a series of German patent rulings in Apple's favor.
At the hearing that took place last Friday, Motorola Mobility's counsel complained that Apple's demand for a two-billion euro bail was excessive. But Apple's counsel argued that this amount simply corresponds to what's at stake in the event that MMI enforces a first-instance ruling not only against the iCloud service but also against Apple's products.
Conventional wisdom would suggest that no one enforces non-final, appealable rulings before the process has come to an end (if no further appeal is possible or if an appellate court refuses to hear or a party decides not to bring an appeal). But conventional wisdom doesn't necessarily apply here. This is a high-stakes war for market share, and the German market is one strategic battleground in a global game. Some of the combatants are deep-pocketed and prepared to take calculated risks.
The official Steve Jobs biography revealed the legendary Apple CEO's vow "spend every penny of Apple's $40 billion in the bank, to right this wrong [i.e., to destroy Android]". He didn't mean to spend that amount of money on legal fees. Maybe Apple will spend a few billion dollars on legal fees before all is said and done, but not tens of billions. Where these disputes really get costly -- potentially to the tune of tens of billions of dollars -- are the following two scenarios:
A litigant may forgo short-term revenue opportunities by letting opponents enforce injunctions in certain markets without backing down in the wider war.
A litigant may post billion-dollar bonds and risk liability for major damages by enforcing non-final rulings.
There's no doubt that either one of those approaches will make the financial markets nervous. CEOs presumably need the backing of their boards to do this, and their boards will face huge pressure. But that doesn't mean it can't happen. The mobile handset market is already worth hundreds of billions of dollars, and if you look at the wider revenue base related to those devices (services, follow-on sales of downloadable media and programs etc.), this is essentially a trillion-dollar opportunity. It may indeed cost certain players billions to achieve a result that enables them to own a large piece of the action going forward.
War chests vary from company to company. Apple has the largest one (roughly $80 billion) and stands the most to lose. In a worst-case scenario, Android will marginalize iOS. Google's war chest is only about half as big, but Android is a tool for Google to cement its dominance in search and, generally, online advertising. Samsung's cash reserves are close to $20 billion, and it seems to me that the Korean electronics giant aspires to be the market-leading consumer brand in this field as opposed to merely a supplier of components to the likes of Apple.
Those three companies are all able to spend billions on this fight for market share if they have to. MMI on its own would not be able to take such risks, but if Google is allowed to buy it, liquidity will be a non-issue. HTC is the largest one of those companies that are very unlikely to have such resources at their disposal anytime soon.
Any of the companies poised to win first-instance rulings in Germany next year could also just sit on them and defend them in the appellate courts. In the meantime, each of those rulings would hang above some adversary's head like a Damocles sword. The mere threat of enforcement could already give a party additional leverage in worldwide settlement talks. But if someone wants to build real pressure, he'll have to actually enforce.
Especially in the Mannheim court, first-instance rulings are pretty fast -- about twice as fast as the ITC. But if a party waits until the exhaustion of all options for appeal before it begins to enforce, it wil have to be very patient, and some of the patents-in-suit may already be past, or close to, expiration at that point.
A German regional court (Landgericht) ruling can be appealed to a higher regional court (Oberlandesgericht). Those are slower, and such cases are not too unlikely to end up in the Federal Court of Justice (Bundesgerichtshof). Then those disputes take years. Even the Court of Justice of the EU (commonly referred to as the ECJ) could become involved. Only limited aspects of patent law are under EU jurisdiction (biotechnological inventions and certain enforcement rules), but antitrust law (including cartel law) is European law. As a result, FRAND defenses could result in questions being referred by a German court (theoretically at any level, but most likely by the country's highest court) to the ECJ. In that case, some of these disputse might take very long.
Those who may win German first-instance rulings in 2012 will have to choose. They can wait until there's a final, non-appealable, decision. In that case, they may have to wait until the second half of this decade. Or they can set aside some billion-dollar amounts and start to enforce at the earliest opportunity.
In light of the strategic dimension of all of this, I would be very surprised if no party that wins a first-instance injunction started to enforce next year.
At least Apple and Samsung have demonstrated -- by seeking preliminary injunctions in different jurisdictions -- that time matters more to them than money.
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