Last year Microsoft obtained in the Western District of Washington an anti-enforcement preliminary injunction that barred Google's Motorola Mobility from enforcing a set of German permanent, provisionally-enforceable injunctions relating to two H.264 standard-essential patents (SEPs) and in late November 2012 was replaced by a summary judgment ruling denying injunctive relief.
In order to enforce the U.S. anti-enforcement injunction Microsoft had to post a $100 million bond to ensure that even in the (no matter how inconceivable) scenario of a Microsoft bankruptcy Google's Motorola would be made whole. Microsoft had even offered Motorola a $300 million bond and indicated a potential willingness to increase the amount, but Motorola wanted to ban Windows and the Xbox in Germany rather than receive security for royalties, so the court had to decide, and Judge James Robart felt that a $100 million bond was easily adequate. That bond was posted on April 13, 2012, and Motorola never got to enforce anything against Microsoft.
In the meantime, a FRAND royalty determination had been made, finding Google entitled to a few million (not several billion) dollars. Last week it became known that, in light of these developments, Microsoft offered Google a payment of $7 million in royalties owed in accordance with the court's rate-setting opinion, but Google refused the payment and insisted on the $100 million bond. The parties couldn't agree, so Microsoft brought a motion for release of the bond (or, in the alternative, adjustment of the amount). Google opposed the motion without presenting any particular derivation that could justify the amount of $100 million. In its reply brief Microsoft said it wants to tell the jury at the breach-of-FRAND-contract trial (scheduled to start in two months) about this conduct, which it considers evidence of Motorola's hold-up tactics.
The court held a telephone conference with the parties on Tuesday. Yesterday a minute entry showed up on the electronic docket for this case and indicated that a decision has been made at the hearing, but didn't indicate which one. This morning Microsoft filed a proposed written order that sheds light on the outcome -- Google lost:
"By motion dated June 18, 2013 (Dkt. #701), Plaintiff Microsoft Corporation moved for release of the $100 million security bond that it was required to post by Order dated April 12, 2012 (Dkt. #261). On June 25, 2013, the Court held a telephonic hearing on the issue at which it ordered the release of the bond. For the reasons stated in its oral ruling, the bond is hereby released."
Between the U.S. and Germany, this is already the third time that a bond Microsoft had to post in connection with its patent dispute with Google's Motorola has been reduced or released. The total amount of all bonds Microsoft had to post in the U.S. and Germany to enforce injunctions (the anti-enforcement injunction to preclude FRAND abuse as well as its own non-SEP injunctions) against Motorola Mobility was in the hundreds of millions of dollars at some point, but one of the German bonds was adjusted in November and Google's Motorola consented to the reduction of another bond (due to the bankruptcy of a Motorola co-defendant, a 38.5 million euro bond has yet to be adjusted to 6.5 million euros).
I said in a previous post on this subject that the way to look at this is not in terms of what Microsoft (or Apple, which also has to give an unreasonable amount of security to Google in Germany) can afford, but to consider the implications for smaller companies who may be tight on cash. There are situations in legal disputes in which security is reasonably required. But the amounts must be reasonable, and bonds must be released when there is no longer a good reason to insist on them. In this case, a U.S. federal judge of worldwide repute (for example, on June 14 he gave several talks on patent damages at a high-profile conference in Munich, Germany) has determined that the bond no longer served its intended purpose. The whole motion process could have been avoided if Google had agreed on this in the first place. I believe Google should also be more reasonable in its German dispute with Apple and release a substantial part of the security Apple had to give based on Motorola's out-of-this-world 2.25% royalty demand, which the Mannheim Regional Court is apparently inclined to consider excessive.
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