US Court Says Motorola Can't Enforce Microsoft Injunction In Germany

First time accepted submitter Chris453 writes "A U.S. appeals court on Friday ruled that Google Inc's Motorola Mobility unit cannot enforce a patent injunction that it obtained against Microsoft Corp in Germany, diminishing Google's leverage in the ongoing smartphone patent wars. Motorola won an injunction against Microsoft in May using their H.264 patents. Apparently the U.S. federal justices in California have worldwide jurisdiction over all court cases — Who knew? Maybe that is why Apple keeps winning lawsuits..."

Comments

Re:How does this work?

[larry bagina]

You could try reading the article.

"At bottom, this case is a private dispute under Washington state contract law between two U.S. corporations," the court ruled.

Dangerous precedent

[Solandri]

"At bottom, this case is a private dispute under Washington state contract law between two U.S. corporations," the court ruled.

The legal drinking age in Germany is 14 (for undistilled drinks given by a parent or guardian). By this court's reasoning, if a family went on vacation in Germany for Octoberfest and dad gave his 14 yo son a beer to drink, then it's a Washington State parent giving alcohol to an underage Washington State child, and he would be subject to fines and jail under the drinking laws of Washington State.

Re:Dangerous precedent

[Anonymous Coward]

By this court's reasoning, if a family went on vacation in Germany for Octoberfest and dad gave his 14 yo son a beer to drink, then it's a Washington State parent giving alcohol to an underage Washington State child, and he would be subject to fines and jail under the drinking laws of Washington State.

No. It's more like father and mother get divorced in Washington state. As part of the custody agreement, the father agrees not to provide beer to their son. The father and son go to Germany and the father buys the son a beer. The Washington state divorce court declares him in violation of the Washington state custody agreement. It's not illegal; it's just a contract violation.

If Google and Microsoft have a contract in Washington state, then US courts will have jurisdiction over that contract. This isn't overturning the German decision. The German decision presumably says that Motorola Mobility has a patent and that Microsoft must license the patent from them. The US court decision apparently says that Google (which owns Motorola Mobility) has a licensing agreement with Microsoft. As a result of that licensing agreement, Microsoft has licensed this patent from Google. This is in fact a US contract dispute and should be decided under US law.

The confusing part here seems to be that there are two separate issues. One should be decided under German law. That's whether the patent applies and requires licensing. The other should be decided under US law. That's the question of whether the licensing agreement applies. Germany decided that the patent does apply and the US decided that the licensing agreement applies. This is confusing, but there's nothing wrong with it. Absent an international patent system, this is the way that these things will work.

Re:How does this work?

[Eth1csGrad1ent]

You see, you're sleeping over at a friends place - and your friend's mum said that you could have coke with your dinner even though your mum said you couldn't.
You can "forget" what your mum told you and have the coke anyway, you won't get in trouble at your friends house.

But you're sure gonna get it when you get home and your mum finds out. I mean, you could lie but...

Re:How does this work?

[sg_oneill]

It really doesnt matter if its a US corporation. If its operating in Germany, then its operations in germany are under German juristiction no ifs no buts.

We've had a few instances here in australia where a US court "overrules" an australian one from having juristiction. The australian court, naturally, systematically ignores it. Those clauses of "All disagreements must be heard in x state" you see in american contracts have no validity here. To quote a lawyer friend, "Us lawyers dont actually get to invent laws or nullify them with our contracts, no matter how clever we think we are".

Re:How does this work?

[Grumbleduke]

How can a court in one country overturn a ruling from another sovereign nation's court?

tl;dr; they're not. Under German law, injunctions are enforced by the party, not the court. The US court has ordered that Motorola not enforce it until they've come to a conclusion in their case (which could affect the German court decision).

Long version, based on the CoA's judgment, available here:

Motorola claims to have patents in various jurisdictions covering vital steps of the H.264 video compression standard. When the ITU established H.264 as a standard, Motorola had to agree to license all relevant patents at RAND (reasonable and non-discriminatory) rates.

Back in 2010, Motorola asked Microsoft to licence its H.264 patents (for use in the various Windows and X-Box software) at what MS described as an unreasonable royalty rate. MS sued Motorola for breach of contract, on the grounds that Motorola's agreement with the ITU was a contract, which gave MS third-party benefits (and thus the right to sue to enforce it). [Third-party contract rights are an interesting area of law; some jurisdictions have them (e.g. the US), in some they are optional (e.g. England+Wales) and in others they don't exist (e.g. Germany).] Motorola responded by suing for patent infringement, and the cases were combined.

In 2011, while the US contract/patent case was going on, Motorola then filed a claim against MS for patent infringement in Germany, specifically for the two H.264 patents. As part of their claim, Motorola wanted an injunction banning the sale of Windows and X-Boxes in Germany. In May 2012, the German Court found in favour of Motorola and granted the injunction. However, as noted in the US CoA's judgment:

[t]he German injunction is not self-enforcing. ... to enforce the German patent injunction, Motorola would have to post a security bond covering potential damages to Microsoft should the infringement ruling be reversed on appeal.

Under German law, if a party is given an injunction, they get to decide whether or not to enforce it, and if they do and it is subsequently overturned, they have to pay the other side damages to cover any losses.

So the question before the US CoA was whether or not the US courts could issue their own injunction ordering that Motorola not enforce the German injunction (Motorola, being a US-based company, is obviously within the court's jurisdiction). The District Court said they could, and the Court of Appeal have confirmed this. Their reasoning seems to be that *if* Motorola was in breach of contract by not licensing its patents to MS at RAND rates, then one remedy for MS would be a compulsory licence at such a rate. But such a licence would necessarily include *all* of Motorola's relevant patents, including the German ones. Thus MS would no longer be committing patent infringement in Germany, and the German injunction would be wrongly granted.

The US CoA's options were: allow Motorola to enforce the German injunction, and if the injunction were overturned (due to US rulings on the contract), Motorola would have to pay MS to compensate for any losses, *or* block Motorola from enforcing the German injunction and, if the injunction was not overturned (due to the US ruling), MS would have to pay Motorola to compensate for the losses.

The CoA seems to have sided with MS rather than Motorola, possibly because they felt Motorola had been a bit vexatious by suing in Germany while the US case was happening (it comes across as them trying to "forum shop" for the most friendly jurisdiction). So the CoA upheld the District Court's decision that, as the German injunction is sort of dependent on the US breach of contract case, Motorola shouldn't be allowed to enforce it until that case is over (some time in early 2013, possibly).

But IANAL, nor an expert in US or German patent

Re:How does this work?

[thej1nx]

Negative. At bottom it is a private dispute between Microsoft Germany and Google Germany. The fact that these are in turn, owned by US companies is immaterial. If these were really just "US corporations", they could not have filed a case in Germany in the first place. The judge is a moron.

Re:How does this work?

[hairyfeet]

Look its actually VERY simple: The Germans can do whatever they want and they ruled Motorola can have MSFT products blocked. the US courts have said that if Motorola uses that right then they will lay the smack down on Motorola because they are basically trying to do an end run around the court because the MSFT suit was filed first.

So Motorola can STILL choose to block in Germany, but by doing so they may as well accept they have lost the lawsuit in the USA because the courts will punish them for doing so. It doesn't have a thing to do with the Germans, it has EVERYTHING to do with Motorola and their position in the court.

Re:How does this work?

[Compaqt]

They're not doing an end run around the court. If, according to German law, Motorola is in the right, then they have the right to enjoin (in Germany).

  Many companies have to do a lot of things in foreign jurisdictions because of European (or other) laws. It's out of line for a US court to say that they can't do so because a case in a US court.

Re:How does this work?

[Sique]

So Motorola should go to the Mannheim court where it got the injunction and file a "contempt of court" motion against Microsoft for trying to circumvent the injunction without following proper procedure (filing a motion to lift the injunction in the proper courts in Germany). It won't help Motorola directly, but Microsoft might get some hefty fine for it.