Today the United States Court of Appeals for the Federal Circuit held its hearing on the Microsoft-Motorola cross-appeal of last year's ITC ruling on Microsoft's complaint against the device maker that has meanwhile become a wholly-owned Google subsidiary. Recordings of the two hearings -- one on Microsoft's attempt to broaden the import ban, the other on Google's efforts to get it lifted -- are available, and I've listened to them.
It's difficult to figure out based on a court's questions where it stands because tough questions may be a way of giving a party an opportunity to make its strongest arguments, but the way I interpret these recordings, there were some clear indications, especially in the court's discussion of the ITC's domestic industry requirement in light of this year's InterDigital ruling, and in connection with evidentiary requirements in connection with invalidity theories and claim construction.
I've linked to those recordings and encourage everyone to form his or her own opinion based on them (if you do listen to the recordings, it will come in handy to know that Mr. Liberman defended the ITC's ruling, Mr. Trela argued for Microsoft, and Mr. Verhoeven for Motorola). If you don't have the time to listen to the recordings yourself, or are interested in my opinion regardless, here's what I think:
I'd be surprised if Google could prove the patent underlying the import ban (U.S. Patent No. 6,370,566 on "generating meeting requests and group scheduling from a mobile device") invalid. It makes an anticipation argument, which appears weak, and an obviousness argument, for which it still needs to overcome the hurdle of clear and convincing evidence. Motorola argues that the invention is obvious because it's merely about making a previously-existing feature available on a mobile device, but it's not that simple. There's prior art for synchronization, but the court wanted to see evidence that the prior art explicitly made the mobile device (such as the Apple Newton) the component that triggers the scheduling of a calendar event.
Motorola had conceded infringement of this patent in the proceedings before the ITC. Today's recording reminded me of something I had forgotten about: initially Motorola did dispute infringement, but at some point well ahead of the Administrative Law Judge's initial determination it stipulated to it. Either way, it's still not clear to me how Microsoft "abandoned" its claims with respect to Google Calendar, which is a key issue in the dispute relating to the enforcement of that import ban. Enforcement was not at issue today, but it's obviously closely related. In this context I'd also like to mention that Google believes the new Moto X smartphone does not fall within the scope of the ITC's jurisdiction because it's "assembled in the United States".
These appellate hearings are short, so there wasn't enough time for a detailed discussion of all of the theories based on which Microsoft could prevail on up to four more patents.
One issue relevant to multiple patents is the domestic industry requirement. Microsoft argues that "the production and sale of domestic products that embody the patented invention" is too strict a requirement. There must be a way to protect a domestic industry that creates software while others build devices incorporating that software. The aforementioned InterDigital decision was about satisfying the domestic industry requirement through licensing, which Motorola argues makes it irrelevant to the issue before the Federal Circuit in the Microsoft-Motorola ITC case, but it appears that the court is more likely to side with Microsoft on this one.
If the focus of today's discussion is any indication, U.S. Patent No. 7,644,376 on a "flexible architecture for notifying applications of state changes" is Microsoft's best shot for broadening the technical scope of the import ban. I think a reversal of the ALJ's claim construction of "notification broker" is reasonably likely. It appears that the ALJ injected an additional limitation (a direct connection) for which there's no support in the specification (and the word "direct" does not even seem to come up in the related expert testimony). It will be harder (though not impossible) for Microsoft to also achieve a reversal of the claim construction of "client applications", or to prevail under the ITC's claim construction.
One possible (and not unlikely) outcome is that the Federal Circuit overrules the ITC on parts of its reasoning, particularly the domestic industry requirement and the construction of "notification broker", but not to an extent that results in a broader import ban. The ITC is afforded a lot of deference in some respects. It is, however, also possible that Motorola is found to have violated one or more additional patents based on the parties' written argument.
In the dispute between Microsoft and Google, an additional infringement finding, such as with respect to the '376 patent, could make a difference and result in a near-term settlement. But from a strategic point of view, I think this will have been an extremely successful appeal for Microsoft if the existing exclusion order is affirmed and the domestic industry requirement clarified in such a way that Microsoft can satisfy it even if it "only" provides the software that runs on other companies' devices. This would benefit not only Microsoft but also other software makers.
It's hard to tell when the appellate ruling will come down. This can take time. A hearing on Apple's appeal of the ITC's dismissal of its three-patent complaint against Motorola Mobility was held five months ago, and there hasn't been a decision yet. If it takes that long in the Microsoft-Motorola case, then the ruling will be handed down in early 2014. But it might happen sooner than that.
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