Yesterday Apple filed a summary judgment motion with the United States District Court for the Southern District of California (where Qualcomm is based) that is a major threat to Google's (Motorola Mobility's) ability to seek U.S. patent injunctions or import bans against Apple over cellular standard-essential patents (SEPs) regardless of what will or will not happen on the FRAND contract front between these companies. In practical terms, if its products using Qualcomm chips (and those which used other baseband chips, such as the iPhone 4, have been discontinued) were found licensed (which involves multiple considerations including the one relevant to Apple's motion), Apple wouldn't even have to win its appeal of a dismissed Wisconsin FRAND obligations case or (in the alternative to a successful appeal) bring a new FRAND determination action to preclude Google from the pursuit of injunctions under the framework laid out by the FTC-Google settlement. Motorola would be unable to seek any remedy (injunctive or monetary) based on cellular SEPs against Apple products coming with Qualcomm baseband chips if Apple succeeds with a patent exhaustion defense.
The Southern California case in which the latest motion was brought is very secretive because it's centered around the benefits a Qualcomm-Motorola patent cross-license agreement Apple claims as a Qualcomm customer, and that license agreement is highly confidential, as are at least certain aspects of Apple's supply chain. Yesterday's filing is heavily-redacted. But at least it's clear what Apple is trying to achieve here ahead of trial.
Initially Apple filed this anti-suit action (a lawsuit seeking to bar someone from filing or pursuing other litigation) in early 2012. It had to rework its complaint twice. Currently, the case is scheduled to go to trial in the spring of 2014. There's no trial date per se, but a date for the final pretrial conference: March 21, 2014. The trial itself will then likely start in April.
The limited information that the general public is allowed to see indicates that Apple seeks to prevail on Count Two of its complaint (in which case the court would find ahead of trial that Motorola's partial termination of a patent cross-license agreement with Qualcomm was ineffective with respect to Apple), defeat seven of Motorola's affirmative defenses, and have the testimony of a Motorola expert (Charles Donohoe, according to his published CV "expert witness for Motorola on license issues in the telecommunications industry" in this matter) excluded. The noted hearing date in the San Diego court is February 7, 2014.
Two public exhibits are dictionary entries defining the word "customer". Patent exhaustion is about a licensee's customers being safe from litigation. I'm not sure if patent exhaustion in a narrow sense applies here, but whatever the contractual basis is, it's a well-known fact in this industry that Qualcomm strives to protect the downstream when it signs patent cross-license agreements. That's a cornerstone of Qualcomm's strategy. It is considered to offer superior protection against third-party lawsuits over cellular SEPs. Even though Qualcomm is much closer to Google/Motorola when it comes to SEP injunctions, which Apple opposes, it is in this exhaustion type of context in Qualcomm's strategic interest that the court find its customer, in this case Apple, protected.
The fact that Apple shows dictionary entries for the word "customer" means that it considers Google's (Motorola's) interpretation of the word, which presumably appears in the Qualcomm-Motorola contract, to be inconsistent with how the word is commonly understood.
For those interested in further detail (and I guess that includes a significant number of my loyal readers in industry circles) I'm now going to publish the full text of Count Two of Apple's second amended complaint as well as the affirmative defenses (by Motorola) that Apple wants to be thrown out.
COUNT TWO
(DECLARATORY JUDGMENT THAT MOTOROLA'S ATTEMPT TO TERMINATE APPLE'S RIGHTS UNDER THE QUALCOMM LICENSE WAS INEFFECTIVE)
67. Apple incorporates paragraphs 1-66 as if fully set forth herein.68. An actual and justiciable controversy exists between Apple and Motorola with respect to whether Motorola’s attempt to terminate Apple's rights under the Qualcomm license agreement was effective. This is based, inter alia, on (1) Motorola's ineffective attempt to terminate Apple’s right to use Qualcomm components; (2) Motorola's statements in German proceedings that '[t]here is no strategy in place not to challenge [the iPhone 4S]. The fact that the Plaintiff has not yet challenged the 4S in Wisconsin has tactical reasons of a procedural nature, which the Plaintiff naturally will not expose to the Defendant.'; and (3) Motorola's refusal to stipulate that it will not sue Apple for infringement based on Apple’s use of the Qualcomm components outside of Germany.
69. Absent a declaration that Motorola’s attempt to terminate Apple's rights under the Qualcomm license agreement was ineffective, Motorola will continue to wrongfully threaten to assert its patents against Apple’s iPhone 4S, the new iPad, and other Apple products, and thereby cause Apple irreparable harm and injury. The object of this litigation--Apple's ability to continue selling the iPhone 4S, the new iPad, and other Apple products worldwide--exceeds $75,000 in value to Apple.
70. Motorola was not entitled to terminate Apple's rights [REDACTED] It was Motorola who first sued Apple for patent infringement on October 6, 2010, in the United States District Courts for the District of Delaware and the Southern District of Florida, and in the International Trade Commission. [REDACTED] Motorola's purported termination of Apple's rights was ineffective. 71. This is an exceptional case entitling Apple to an award of its attorney's fees incurred in connection with this action pursuant to 35 U.S.C. § 285.
Now Motorola's seven affirmative defenses targeted by Apple's summary judgment motion:
FIRST AFFIRMATIVE DEFENSE
(Laches)
Apple's claims are barred in whole or in part by the equitable doctrine of laches.
SECOND AFFIRMATIVE DEFENSE
(Waiver)
Apple's claims are barred in whole or in part by the equitable doctrine of waiver.
THIRD AFFIRMATIVE DEFENSE
(Equitable Estoppel)
Apple's claims are barred in whole or in part by the doctrine of equitable estoppel.
FOURTH AFFIRMATIVE DEFENSE
(Acquiescence)
Apple's claims are barred in whole or in part by the equitable doctrine of acquiescence.
FIFTH AFFIRMATIVE DEFENSE
(Unclean Hands)
Apple's claims are barred in whole or in part by the equitable doctrine of unclean hands.
SIXTH AFFIRMATIVE DEFENSE
(Judicial Estoppel)
Apple is judicially estopped from proceeding with its claims because of conflicting positions taken in litigation against Motorola in other courts and administrative proceedings.
ELEVENTH AFFIRMATIVE DEFENSE
(Res Judicata and Collateral Estoppel)
Apple's claims and/or some of the underlying factual or legal issues it seeks to prove in support of its claims are barred by the doctrines of res judicata and/or collateral estoppel to the extent that such issues were litigated and decided in other suits or administrative proceedings between or involving Apple and Motorola.
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