At 11 AM Pacific Time today, Microsoft and Motorola will meet in a Seattle courtroom to discuss Microsoft's motion for a temporary restraining order and preliminary injunction against the enforcement of an injunction a German court might order next week. The day before yesterday, Microsoft filed its related reply brief.
Yesterday, Judge James L. Robart entered two orders: a claim construction order and one that outlined issues that the parties should be prepared to address at today's hearing.
Claim construction outcome: Microsoft wins on only one of three disputed terms -- but that could be sufficient for its purposes
The claim construction order ruled on three disputed terms from Motorola's three patents-in-suit. Those three patents are all related to H.264 and closely related to each other, which is shown by (among other things) the fact they all share the same title ("macroblock level adaptive frame/field coding for digital video content") and have consecutive numbers (7,310,374, 7,310,375, and 7,310,376). Each of the three disputed terms appears in the claims of each of the three patents-in-suit.
Microsoft didn't succeed with its efforts to narrow the scope of those claims through the construction of two of the three disputed terms. However, the judge didn't adopt Motorola's proposed constructions either because he felt those were basically just "regurgitation[s]" of the original terminology that wouldn't improve a jury's understanding of the patents-in-suit. He adopted his own constructions that are more explanatory versions of Motorola's proposals.
But Microsoft prevailed on the term "macroblock", the very word with which the titles of those patents begin. Motorola proposed to define it as "a picture portion comprising a 16 x 16 pixel region of luma and corresponding chroma samples", while Microsoft advocated "a rectangular group of pixels". As the judge notes, "Motorola's proposed construction [sought] to add two limitations not found in Microsoft's proposed construction: (1) that the macroblock be specifically 16 x 16 pixels in size and (2) that the macroblock include luma and chroma samples". Motorola's effort to define "macroblock" more specifically, and therefore more narrowly, suggests that these patents could face a serious validity problem if "macroblock" is interpreted more broadly.
In claim construction, the patent holder often needs to win on all counts while it may be enough for a defendant to score only one partial victory that results in a patent being found invalid or not infringed.
Preparation of today's hearing: judge will apply legal standard for an "antisuit injunction", raises questions about the German litigation and interdependencies and overlaps with the U.S. action
Microsoft's motion argued that it only needs to satisfy the general standard for preliminary injunctions in the U.S., but stressed that it also meets the slightly different standard for an "antisuit injunction". Motorola said that only the "antisuit injunction" standard applies, and Judge Robart appears to agree. In his pre-hearing order, he writes: "Microsoft is seeking an anti-suit injunction."
There was some disagreement between the parties over whether the standard for an "antisuit injunction" is higher (as Motorola said in different ways), or merely different, than the general standard for a preliminary injunction. Unless the parties convince him otherwise, the judge believes that the proper standard to apply in his circuit (the Ninth Circuit) is E. & J. gallo Winery v. Andina Licores S.A.. In that case, the defendant (Andina) was barred by the Court of Appeals for the Ninth Circuit from proceeding with litigation in Ecuador.
The judge also posed eight questions that the parties should be prepared to address at today's hearing with a view to the German litigation. Those questions touch on ways in which the outcome of the case pending in one court (Seattle or Mannheim) could affect the one pending in the other court. In the following, I'll quote those questions and comment on each of them right below the quote.
"a. What is the present status of the case?"
The trial took place in early February, and a ruling by the Mannheim Regional Court (the court of first instance) is due next Tuesday at 9 AM local time. It goes witout saying that I'll be there.
At the trial, the judge was rather dismissive of Microsoft's non-infringement arguments and obligated Microsoft to drop its invalidity defense. This leaves FRAND as pretty much the only defense that can still make a difference.
The parties can appeal the Mannheim decision to the Karlsruhe Higher Regional Court. If Mannheim orders an injunction, Karlsruhe has the authority to suspend its enforcement, but under German law such suspensions are granted only under "extraordinary" circumstances. Apple made three such attempts recently, and only one of them succeeded.
"b. Who are the parties to the litigation?"
German court documents aren't publicly available. Based on what I found on the listing of trials next to the door of that Mannheim courtroom and on what I heard at the trial, the plaintiff in each of the four German actions (those are four parallel cases in formal terms; in practical terms, this is a single litigation) is General Instrument Corp., a wholly owned subsidiary of Motorola Mobility Inc., and the defendants are at least three Microsoft legal entities (Microsoft Corp. of Redmond, WA; an Irish company; and its German subsidiary). For a lack of access to documents, I can't rule out that additional parties are involved as well.
"c. What overlap exists between the technology covered by the patents at issue in the German Action and the technology covered by the patents at issue in Cause No. C10-1823JLR, presently before this court."
In both courts it's all about patents that are allegedly essential to the H.264 video codec standard, and either case can have, in different ways, implications for the terms of a worldwide license agreement relating to all of Motorola's H.264-essential patents.
"d. Are the patents at issue in the German Action subject to an Institute of Electrical and Electronics Engineers ('IEEE') agreement, an International Telecommunication Union ('ITU') agreement, or any other agreement, and/or a reasonable and non-discriminatory license requirement?"
Microsoft's claims in Seattle are based on an ITU agreement. In Germany, the Orange-Book-Standard line (which the Mannheim judge said at the trial he would apply here) is based on a defendant's entitlement to a compulsory license under antitrust law.
"e. What issues are presently before the German court, and are these issues the same issues presently before this court in Cause No. C10- 1823JLR?"
As far as FRAND is concerned, the issue really is whether an offer Microsoft made Motorola satisfies the Orange-Book-Standard criteria. If one takes the judge's reference to "the same issues presently before this court" literally, then the answer would be no, but there are important interdependencies that cut both ways.
"f. What impact would this court's ruling on any issues remaining in Cause No. C-1823JLR have on issues currently pending in the German Action?"
Microsoft's motion accurately notes that a license agreement is a complete defense to a patent infringement lawsuit in Germany. Motorola can't deny that but makes other arguments, such as saying that the Seattle case won't create an agreement between the parties.
"g. What [e]ffect would/could the German Action have on the two RAND issues that remain before this court following the court's order on Microsoft's motion for partial summary judgment (Dkt. # 188)?"
If Motorola gets its way, the German dispute will effectively dictate the terms of a license agreement between the parties, which will frustrate the (first-filed) Seattle action.
"h. Pursuant to the German 'Orange Book' procedures, what reasonable steps may Microsoft take to postpone an injunction in Germany?"
The simplest answer is that "Orange Book" just isn't "reasonable", especially not the way it's applied.
Today's hearing should be very interesting. I have been in contact with at least one journalist who apparently plans on attending and hope that there will be some reports afterwards.
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