An Apple v. Motorola Mobility FRAND lawsuit that the media and the general public rarely pay attention to, but which is nevertheless important for the industry, is going to go to trial in about three weeks in the Western District of Wisconsin. In mid-August, Apple made headway with a partial summary judgment ruling. Google subsidiary Motorola Mobility has since tried to put is own spin on the outcome.
The dispute that Judge Posner didn't deem trial-worthy in June was also pending in Wisconsin for most of the time. Some of the claims at issue in that case started in the Northern District of Illinois, and that's where the case returned when Judge Posner volunteered to preside over it by designation and Judge Crabb, in Wisconsin, gladly accepted to transfer the case to Judge Posner's district. Apple then also wanted the FRAND case transferred there, but this didn't happen. In light of this procedural history, and considering that Judge Posner usually (except for the occasional assignment to a district court for the fun of it) sits on the appeals court for the circuit (7h Cir.) that also includes Wisconsin, Motorola Mobility is obviously concerned about the potential impact of the FRAND part of Judge Posner's ruling on the Wisconsin FRAND case.
In a filing made late on Friday in response to an Apple request for judicial notice of Judge Posner's ruling as well as various other decisions and some third-party submissions to the ITC, Motorola wrote this:
"Exhibits 11-19 [a set of third-party submissions on FRAND to the ITC] fail to properly point to any specific contracts potentially at issue in this case, and much like Judge Posner's opinion, are in reality policy papers on what FRAND should or could be."
Downplaying the relevance of Judge Posner's ruling from case law to the next best thing to a policy paper is an exaggeration. But Motorola does have a point nevertheless. It's true that Judge Posner's ruling has a strong policy orientation. As Professor Brian Love told the Wall Street Journal (about Judge Posner's ruling in general, not just the FRAND part), "[t]he ruling was more like a 'what Judge Posner thinks' rather than writing something that can be cited broadly or that other judges can use for their rulings". It speaks to Judge Posner's influence as well as the compelling logic of the positions he advanced that the FRAND part of his ruling has nevertheless already been cited a lot. But it's true that it's very much about "what Judge Posner thinks".
In a strictly formal sense, his ruling would be of limited relevance outside the Northern District of Illinois since he was writing it as a district judge, not as a circuit judge. It also doesn't present any legal theories that really leave other judges in the U.S. no other choice in their adjudication of FRAND disputes. But it's certainly one position that judges have adopted and that more judges will adopt. In my opinion, the really interesting question is whether Judge Posner's thinking, regardless of how much of a binding precedent it represents, should be adopted as good policy. And my position on this is: yes, by all means. I hope very much that the Federal Circuit, to which Motorola appealed, will uphold the FRAND part of his ruling, ideally in its entirety or at least in a materially consistent way.
Judge Posner made a common-sense argument. He couldn't point to case law on injunctive relief based on FRAND-pledged patents because past FRAND cases got settled at an earlier stage. But Motorola Mobility wasn't able to show case law that makes Judge Posner's approach a non-option.
Judge Posner is the U.S. expert on legal economics. He's authoritative on antitrust law. FRAND is mostly about legal economics and antitrust. The patent-specific technical part is much less important. And Judge Posner does know a thing or two about patent law, having presided over patent infringement cases by designation to other courts (the Seventh Circuit doesn't get patent infringement cases, all of which go to the Federal Circuit). It's hard to think of someone who would be in a better position to understand FRAND issues.
Motions in limine indicate contentious issues in Apple v. Motorola FRAND dispute in the Western District of Wisconsin
Unfortunately this dispute is one of the three or four least transparent U.S. lawsuits I'm following at the moment. But the combination of Apple, Google and FRAND is so important that I nevertheless try to glean information from the limited material that is made public.
On September 28, the parties filed a slew of motions in limine (motions to exclude argument or testimony), and on Friday (October 12) they filed their opposition pleadings. All that's available is the headlines. The only related document that is not sealed is Motorola's opposition to an Apple request for judicial notice. The quote above on Judge Posner's writing being more like a policy paper is from that document.
So let's look at all we've got, which is the headlines. I'll list the headlines of both parties' motions in limine before commenting on the most interesting ones of them.
Apple seeks to
Preclude Motorola From Offering Evidence Or Argument That It Was Entitled To Seek Injunctive Relief And/Or That It Did Not Breach Its FRAND Contracts By So Doing;
Exclude Evidence And Argument That Motorola's Patents Ruled Invalid Or Not Infringed Have Value;
Exclude Evidence And Argument That Apple Must Satisfy A Condition Precedent To Trigger Motorola's FRAND Obligation;
Preclude Motorola From Offering Evidence Or Argument That It Had A "Process" For Complying With IPR Disclosure Policies;
Preclude Motorola From Offering Evidence About Why It Purported To Suspend Its License With Chi Mei;
Preclude Motorola From Arguing That Its Cellular Standards-Essential Patent Rights Were Not Exhausted As To The First iPhone;
Preclude Evidence And Argument Regarding Opinions On Alternatives From Motorola's Technical Experts (Sealed Document) by Plaintiff Apple Inc.;
Exclude Improper Motorola Expert Testimony;
Exclude Dr. Leonard From Opining On The Correct FRAND Royalty Rate For Motorola's Declared Standards-Essential Patents (a Daubert motion); and
Exclude Testimony Of Dr. Gregory Leonard Relating To Synergies (another Daubert motion).
Motorola Mobility seeks to
Preclude Apple from Seeking Specific Performance;
Preclude Evidence and Argument Relating to Timeliness to Patent Disclosures to ETSI;
Determine the Terms of ETSI and IEEE Policies;
Preclude [under FRE 408] Evidence and Argument in Support of Apple's FRAND Breach and Estoppel;
Exclude Evidence and Argument Concerning Prior Litigation Judicial Decisions Regarding the Patents-in-Suit;
Preclude Evidence and Argument Relating to Non-Parties (1) CMCS, and (2) Qualcomm;
Exclude Evidence and References to Irrelevant Standards and Standard Setting Bodies;
Preclude the Testimony and Opinions of Dr. Louis Berneman Relating to FRAND on Rule 702 and Daubert Grounds;
Preclude the Testimony and Opinions of Dr. Dennis Carlton Relating to FRAND and Market Power on Rule 702 and Daubert Grounds; and
Exclude Evidence or Argument Related to Allegedly "Non-Infringing Alternatives" to Motorola U.S. Patent Nos. 5,311,516, 6,175,559, and 6,359,898.
Apple's item #2 (value of patents ruled invalid or not infringed) touches on a major problem in FRAND disputes: SEP holders base their demands on the assumption that all of the patents they declared essential are indeed essential (and, therefore, infringed), and that they are all valid (which is what non-SEP holders also do). In this dispute, rulings have come down on some of Motorola's allegedly-essential patents, by Judge Posner and the ITC, and Apple would like the court to consider these decisions in connection with its efforts to argue that Motorola is entitled to a much lower royalty rate than it demands. This is a big issue wherever FRAND matters come up. Some German courts (including at least one appeals court) even force implementers of standards to recognize and refrain from challenging the validity of FRAND-pledged patents, arguing that otherwise there's an incentive for infringers not to take a license but disregarding the public interest in the invalidation of improperly-issued patents, every one of which is an ill-gotten monopoly. But in the United States judges aren't sympathetic to the idea that even improperly-issued patents should have economic value, and that's going to help Apple in this case. Motorola argues that it has appealed all of the related decisions and that "[t]he eight [standard-essential] patents that Motorola has asserted against Apple in the United States are just a portion of the thousands of essential patents held by Motorola", but if Motorola's track record to date is any indication, only a fraction of its SEPs really has to be licensed by implementers.
The "condition precedent" (Apple item #3) that Motorola insists on is most likely that implementers have to "negotiate" (obviously under the threat or immediate pressure of an injunction) before they are entitled to anything. Judge Posner rejected this position of Motorola's. He noted that Motorola had made a FRAND promise without saying that it would grant a license only to those who behave in any particular way.
Motorola's item #1 mentions "specific performance" that Apple may be seeking, but doesn't specify it in the public record. The most likely explanation is that Motorola wants to prevent Apple from seeking the conclusion of a FRAND license agreement on court-determined terms. That is also something Motorola wanted to avoid in its parallel and somewhat similar dispute with Microsoft in the Western District of Washington, but that litigation will result in a FRAND license agreement one way or the other.
Motorola's item #3 about a determination of the terms of ETSI and IEEE policies is consistent with its focus on the particular wordings of the FRAND commitments it made, and especially, the potential loopholes of those commitments. Thus far, however, U.S. courts have interpreted those agreements in light of overarching policy considerations relating to standard-essential patents.
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