There are striking parallels and substantial overlaps between the FRAND issues Apple and Microsoft face and raise in their disputes with Google subsidiary Motorola Mobility in the United States and Germany. That's because Motorola employs the same tactics against both of them with respect to standard-essential patents, and both disputes started in early October 2010.
In February 2012, Apple and Microsoft filed near-simultaneous EU antitrust complaints against Motorola Mobility, which resulted in the launch of two formal investigations in early April. Last week, the FTC and a number of major industry players and associations filed statements on the public interest in support of Apple and Microsoft in the parallel ITC investigations of Motorola's complaints against those companies. Apple and Microsoft also filed briefs in support of each other.
But there isn't always simultaneity. In Germany, Motorola sued Apple in April 2011 and Microsoft only a few months later. As a result, Motorola had already begun enforcing its first SEP injunction against Apple (and Apple had already won a stay from an appeals court) before Motorola obtained a similar German injunction against Microsoft. In the United States, Microsoft responded to a blatantly unreasonable Motorola demand letter by bringing a FRAND enforcement action in the Western District of Washington in November 2010 the day before Motorola filed its first infringement lawsuit against Microsoft, while Apple brought a FRAND enforcement action in the Western District of Wisconsin -- formally a removal of FRAND counterclaims from an ITC investigation -- in March 2011.
The procedural schedule of Apple's Wisconsin FRAND action is still a few months behind that of Microsoft's Washington FRAND action, and it comes as no surprise that Apple's lawyers try to replicate the headway that Microsoft makes. That fact is particularly visible in a reply brief Apple filed yesterday in support of a motion for partial summary judgment. Apple asks the court to enter partial summary judgment "(1) that a contract was formed through Motorola's commitments to IEEE and ETSI to license its patents on FRAND terms, and (2) that Apple, as a user of the IEEE and ETSI standards, is a third-party beneficiary of those agreements". In February, Judge Robart in the Western District of Washington ruled on the same questions (just with respect to IEEE and ITU, as opposed to IEEE and ETSI) in Microsoft's favor.
Apple and Motorola filed their summary judgment motions in Wisconsin in April. Unfortunately, the motions were sealed, and so were the reply briefs the parties filed in late March. When the original motions were filed, the administrative motions to file the substantive motions under seal at least provided some indication as to the scope of those motions. Motorola attacked pretty much every one of Apple's claims, while it was clear that Apple focused on a subset of the issues. Fortunately, Apple's reply brief was not sealed, and now it's clear what Apple asks the court to hold. Besides the two contractual claims I just quoted, Apple also raises the issue of untimely disclosures of essential patents to ETSI. Apple makes similar allegations against Samsung in the Northern District of California. At least at this stage I'm not aware of similar accusations by Microsoft. Another difference is that Apple additionally brought antitrust claims in its FRAND enforcement lawsuit.
Microsoft couldn't persuade Judge Robart that the question of whether Motorola breached its contractual obligations was ripe for summary judgment. The judge didn't dismiss Microsoft's theories, but he wants a jury to look at the remaining issues in November. Apple doesn't even make an attempt at this in Wisconsin. It only aims to narrow the issues: "the trial in this case should be about whether Motorola breached its contractual obligations, not whether those contractual obligations exist in the first place."
Out of the six pleadings related to Apple's and Motorola's summary judgment requests in Wisconsin (two motions, two opposition briefs, two reply briefs), I have seen only one -- Apple's reply brief filed yesterday. Some district courts insist on more transparency, and some parties are more forthcoming than others. Under the circumstances I tried to glean as much information as possible from that Apple filing, and I found some interesting stuff in it.
Apple complains that Motorola "contends that FRAND commitments are not intended to be binding" and calls this "simply preposterous". According to Apple, Motorola told the court "that it 'does not dispute that it made commitments to the industry groups,' and 'does not dispute that obligations flow from those commitments.'" But Motorolla allegedly "goes on to argue that no one--not Apple and not even the standard-setting organizations ('SSOs') themselves--can ever require Motorola to honor the written promises it made to obtain incorporation of its patents into the standards at issue in this case". Apple notes that if FRAND commitments were meaningless (in another context, Apple uses the word "feckless"), this "would call into question the integrity and legality under the antitrust laws of the entire standard-setting process". That is consistent with my understanding of U.S. and EU antitrust rules. SSOs are basically cartels, or non-judgmentally speaking, constitute horizontal cooperation among the leading players of a given industry. The thing that sets SSOs apart from illegal cartels is that they pursue a procompetitive agenda on the bottom line: a well-functioning standardization system can actually create more, not less, choice, and lower, not higher, prices for consumers. But in order for standardization to have a positive procompetitive effect on the bottom line, it's key for participants in standard-setting processes to make and honor FRAND licensing commitments.
I really think Motorola is being unreasonable by denying the existence of contractual obligations and Apple's status as a third-party beneficiary. I would totally understand that Motorola didn't want to declare itself in breach of a contract, but arguing that FRAND pledges are unenforceable is a problematic stance and unlikely to succeed. Not only has another district court decided those questions in Microsoft's favor but even Motorola's counsel in the Washington action at times even admitted this much (though he later retracted that concession). Also, a Motorola motion to dismiss Apple's FRAND claims was dismissed by the same court that is now going to rule on the partial summary judgment motions. In the ruling that denied dismissal, the court already showed a pretty good understanding of the issues surrounding standard-essential patents. Apple is in good shape, but it hasn't won this part of the battle yet since it's never easy to convince a court of a matter being ripe for summary judgment.
If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.
Share with other professionals via LinkedIn:
