Exactly one month before the breach-of-FRAND-contract jury trial scheduled for August 26, 2013, Microsoft and Google filed their proposed jury instructions on Friday. A 45-page document contains and explains the instructions the parties agreed upon; a 140-page statement lays out the disputed instructions and the parties' arguments for or against certain proposals.
The stakes are high, and no one can blame the parties to a dispute like this for fighting for optimizations in their favor. Judge James L. Robart, the ever-more-famous federal judge presiding over this litigation in the Western District of Washington, fully anticipated this. He recently wrote that "the real fight in this is going to be jury instructions".
The parties' filings also reflect various disagreements that have been the subject of dispositive motions (summary judgment, Daubert) or will be the subject of motions in limine (motions to exclude argument or evidence). In order to discuss the 185 pages filed on Friday one would basically have to sum up the whole case. I've read everything in detail, but I believe it will make more sense to go into detail on the jury instructions the court adopts in the weeks ahead than on what the parties propose. It's no surprise that Google's Motorola favors defendant-friendly standards and would like to make the case more complex (for example, by distinguishing between different legal entities, trying to capitalize on the fact that Motorola Mobility was spun off of Motorola after this litigation began and that Motorola was then renamed Motorola Solutions, as well as on the existence of a wholly-owned Motorola Mobility subsidiary named General Instrument Corp., which holds the video codec patents -- but not the WiFi patents -- at issue in this litigation).
Microsoft would like the court to provide to the jury a detailed summary of its findings and rulings to date, which Motorola obviously seeks to avoid.
The continuing fight over the legal standard for the duty of good faith and fair dealing, which accounts for a significant part of the disagreement on jury instructions, is no surprise: the parties already addressed this question at the beginning of this month. The jury instructions suggest to me that the number one issue in this context is whether bad faith will be described to the jury as a requirement for a finding of a breach of contract (which is what Google proposes) or whether the question can be resolved by considering "blatantly unreasonable" the initial demand made by Motorola in 2010. If blatant unreasonableness is sufficient (regardless of the bad-faith issue) for a finding of breach, then the jury may not even have to address it. Microsoft's motion for partial summary judgment said the following:
"No reasonable juror could find a sticker price of $54 million for a standard Ford Taurus commercially reasonable, or a real estate listing of $800 million for an ordinary 3-bedroom house in Seattle commercially reasonable--and those demands exceed the true value of those goods by the same factor as Motorola's H.264 demand did the actual [F]RAND royalty."
The part of the filings on jury instructions that I believe is most interesting to discuss in a blog post like this is found toward the very end of the 140-page file of disputed instructions and involves the parties' proposed verdict forms. That's the most efficient way to learn about the key issues in next month's trial.
Microsoft's proposal comes down to three questions:
We, the jury, provide the following answers to the questions submitted by the Court:Question 1: Do you find that Microsoft has proved by a preponderance of the evidence that Motorola breached its [F]RAND licensing commitment to the IEEE?
YES __________ NO __________
Question 2: Do you find that Microsoft has proved by a preponderance of the evidence that Motorola breached its [F]RAND licensing commitment to the ITU?
YES __________ NO __________
If you answered 'yes' to either Question 1 or Question 2, please answer Question 3.
Question 3: Please write the amount of monetary award to which you find Microsoft entitled for Motorola's breach. If you find that Motorola breached its [F]RAND licensing commitment(s), but Microsoft has not proven a specific amount of damages, please enter a nominal damages amount that is greater than $0.00 but does not exceed $1.00.
The standard at issue in this case that was developed by IEEE is 802.11, the WiFi (WLAN) standard. The ITU standard relevant to this case is H.264 (a video codec standard).
Motorola raises various objections. It's against a single damages award involving both standards at issue in this case; it doesn't want the jury to be told that it can award nominal damages; and it wants the jury to consider its affirmative defenses. Motorola's counterproposal features three times as many questions:
WE THE JURY, in the above-entitled case, find as follows:
IEEE Contract Claim
We have assumed that Motorola has entered into a contract with the Institute of Electrical and Electronics Engineers ('IEEE'), and that Microsoft is a third-party beneficiary to that contract.
Question No. 1.
Has Microsoft proved by a preponderance of the evidence that its claim relating to the IEEE was ripe for decision at the time Microsoft brought this action?
Yes ___ No ___
If you answered yes to Question 1, then answer Question 2. If you answered no, skip to Question 5.
Question No. 2.
Has Microsoft proved by a preponderance of the evidence that in light of the facts and circumstances Motorola Mobility, LLC, Motorola Solutions, Inc., and General Instrument Corp. breached a contract with the IEEE?
Yes ___ No ___
If you answered yes to Question 2, then answer Question 3. If you answered no, skip to Question 5.
Question No. 3.
What are the damages incurred by Microsoft, if any, as a direct and/or foreseeable result of Motorola having breached a contract with the IEEE?
$_____________.
Question No. 4.
Has Motorola proved by a preponderance of the evidence that Microsoft failed to use reasonable efforts to mitigate damages on its claim relating to the IEEE, and the amount by which damages would have been mitigated?Yes ___ No ___
If you answered yes to Question 4, any damages awarded for the claim relating to the IEEE in Question 3 must be reduced by the amount of damages that Microsoft failed to mitigate.
ITU Contract Claim
We have assumed that Motorola has entered into a contract with the International Telecommunication Union ('ITU'), and that Microsoft is a third-party beneficiary to that contract.
Question No. 5.
Has Microsoft proved by a preponderance of the evidence that its claim relating to the ITU was ripe for decision at the time Microsoft brought this action?
Yes ___ No ___
If you answered yes to Question 5, then answer Question 6. If you answered no, do not answer any more questions.
Question No. 6.
Has Microsoft proved by a preponderance of the evidence that in light of the facts and circumstances Motorola Mobility, LLC, Motorola Solutions, Inc., and General Instrument Corp. breached a contract with the ITU?
Yes ___ No ___
If you answered yes to Question 6, then answer Question 7. If you answered no, skip to Question 9.
Question No. 7.
What are the damages incurred by Microsoft, if any, as a direct and/or foreseeable result of Motorola having breached a contract with the ITU?
Attorneys Fees and Litigation Costs $_____________
Distribution Center Relocation Costs $_____________
Total $_____________
Question No. 8.
Has Motorola proved by a preponderance of the evidence that Microsoft failed to use reasonable efforts to mitigate damages on its claim relating to the ITU, and the amount by which damages would have been mitigated?
Yes ___ No ___
If you answered yes to Question 8, any damages awarded for the claim relating to the ITU in Question 7 must be reduced by the amount of damages that Microsoft failed to mitigate.
Unclean Hands
Question No. 9.
Has Motorola proved by a preponderance of the evidence that Microsoft is asserting its claims relating to the IEEE and ITU with unclean hands?
Yes ___ No ___
Microsoft objects to the separate references to different corporate entities. It says the affirmative defenses Motorola wants the jury to address aren't properly before the jury. Microsoft also rejects the burden of proof on ripeness since Motorola has the burden of proof for its affirmative defenses. And Microsoft insists on the possibility of nominal damages.
In the coming weeks various pre-trial decisions will come down, including the ones on jury instructions and the verdict form, and I'll keep an eye on these developments.
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