The judge in Microsoft's home court in Seattle, the Hon. James Robart, has handed the company a huge win against Motorola regarding injunctions on RAND patents. What a surprise. Not. This is in Microsoft v. Motorola, and the judge is the one who blocked the injunction a German court ordered against Microsoft for infringing Motorola's RAND patents. Now the Seattle judge has
ruled [PDF] that Motorola can't get an injunction for any RAND patents it owns either in the US or in Germany or in fact worldwide, even though this case was about only two patents. Here's his reasoning:
Because Motorola cannot show irreparable harm or that monetary damages would be inadequate, the court agrees with Microsoft that injunctive relief is improper in this matter and grants Microsoft’s motion.... Think this might be appealed?
As a result, this court’s order not only dismisses injunctive relief for the Motorola Asserted Patents, but also for Motorola’s entire H.264 standard essential patent portfolio including the European Patents at issue in the German action.
Actually, the judge says he is granting Microsoft's motion dismissing Motorola's request for an injunction *without prejudice* based on current specific circumstances:
The court’s determination that injunctive relief is no longer available for the Motorola Asserted Patents is based on the specific circumstances and rulings that have developed in this litigation. If, in the future, those circumstances change in a manner to warrant injunctive relief, Motorola may at that time seek such relief.
Joe Mullin at ars technica has more details, although I disagree with him that other judges elsewhere will necessarily be influenced by this ruling. This is an outlier, one might say.
It all happened kind of in the dark, the mechanism being a ruling on a sealed Microsoft motion for summary judgment that was filed a year ago in December of 2011. Of course, we can't read any of it, the motion or the declaration in support or the exhibits. So who knows if the ruling is fair or not?
Well. One might venture a wild guess.
Here are the docket entries about the sealed motion:
Filed & Entered: 12/15/2011 Hilarious. Think this same judge might agree with Microsoft's suggested low-ball price for Motorola's RAND patents? You think?
Docket Text: SEALED MOTION to Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief; re  MOTION to Seal Microsoft's Motion for Partial Summary Judgment and Christopher T. Wion Declaration in Support ; by Plaintiff Microsoft Corporation, Defendant Microsoft Corporation. (Attachments: # (1) Proposed Order) Noting Date 1/6/2012, (Harrigan, Arthur)
Filed & Entered: 12/15/2011
Docket Text: SEALED DOCUMENT Declaration of Christopher T. Wion in Support of Microsoft's Motion for Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief by Plaintiff Microsoft Corporation, Defendant Microsoft Corporation re  MOTION to Seal Microsoft's Motion for Partial Summary Judgment and Christopher T. Wion Declaration in Support (Attachments: # (1) Exhibit 1, # (2) Exhibit 2, # (3) Exhibit 3, # (4) Exhibit 4, # (5) Exhibit 5, # (6) Exhibit 6)(Harrigan, Arthur)
Anyway, I'll work on the text for you next, so stop back by.
Update: I goofed. There is a redacted version available, which is better than nothing:
Filed & Entered: 12/15/2011
Here's the introduction section from Microsoft's motion. Note the noxious first paragraph:
Redacted MOTION for Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief by Plaintiff Microsoft Corporation, Defendant Microsoft Corporation. (Attachments: # (1) Proposed Order) Noting Date 1/6/2012, (Harrigan, Arthur)
Filed & Entered: 12/15/2011
Redacted DECLARATION of Christopher Wion in Support of Microsoft's Motion for Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief filed by Plaintiff Microsoft Corporation, Defendant Microsoft Corporation re  Redacted MOTION for Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief (Attachments: # (1) Exhibit 1, # (2) Exhibit 2, # (3) Exhibit 3, # (4) Exhibit 4)(Harrigan, Arthur)
Filed & Entered: 01/03/2012
RESPONSE, by Defendants General Instrument Corporation, Motorola Mobility, Inc., Motorola, Inc., to  Redacted MOTION for Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief. (McCune, Philip)
Filed & Entered: 01/03/2012
DECLARATION of Kevin J. Post filed by Defendants General Instrument Corporation, Motorola Mobility, Inc., Motorola, Inc. re  Redacted MOTION for Partial Summary Judgment Dismissing Motorola's Claim for Injunctive Relief (Attachments: # (1) Exhibit 1, # (2) Exhibit 2, # (3) Exhibit 3, # (4) Exhibit 4, # (5) Exhibit 5, # (6) Exhibit 6, # (7) Exhibit 7, # (8) Exhibit 8, # (9) Exhibit 9a, # (10) Exhibit 9b, # (11) Exhibit 10, # (12) Exhibit 11, # (13) Exhibit 12, # (14) Exhibit 13)(McCune, Philip)
Motorola is seeking to enjoin Microsoft from developing software, products, and product components that are compliant with the H.264 standard, claiming that Microsoft infringes patents that are essential in practicing that standard. Motorola has no right to this injunctive relief as a matter of law.
So that's the game. Motorola offers to license its standards-essential patents, and Microsoft spins it as an attempt to prevent Microsoft from being compliant with the standard.
Motorola contracted to license its H.264 standard-essential patents to all comers on reasonable and non-discriminatory (“RAND”) terms. By agreeing to license (and accept royalties for) these claimed standards-essential patents, Motorola has admitted that it has an adequate remedy at law for the use of its patented H.264 technology. It has thereby admitted that it has no right to injunctive relief.
Motorola has made the same admission in this case: it has made a written demand that Microsoft accept a license in return for a royalty payment of 2.25% of end product prices for products that include H.264 functionality. That demand was unreasonable--far outside RAND parameters--for reasons that Microsoft has explained in its pending Motion for Partial Summary Judgment (Dkt. No. 77, re-noted for Sept. 30, 2011). But, however unreasonable, the demand is an admission that Motorola deems some amount of money to be adequate compensation for the very patents underlying its claim of injunctive relief in this Court, from the very party that it is seeking to enjoin.
Under 35 U.S.C. § 2831 and eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 390, 126 S.Ct. 1837, 1839 (2006), traditional equitable rules apply in patent cases. Under these rules an admission that there is an adequate remedy at law is fatal to a claim for injunctive relief for infringement just as it bars such relief for a breach of contract.
Motorola is improperly using a threat of injunctive relief to exploit Microsoft’s competitive need to market H.264-compliant products. This threat to bar sales of Windows and any other implementation of the H.264 standard is based on three claimed essential patents among the many included in the standard. The claim for injunctive relief should be dismissed because Motorola’s demand for royalties from Microsoft and its contract to license its technology to all comers on RAND terms are admissions of the adequacy of monetary relief and the absence of irreparable harm.
So what is redacted? Two exhibits of documents attached to the motion that Motorola produced to Microsoft. Oddly, the docket doesn't show that there are missing exhibits. You have to read the Declaration of Christopher Wion to find out about it.
Here's part of what Motorola said back:
Defendants Motorola Mobility, Inc. and General Instrument Corporation (collectively, “Motorola”) respectfully submit this Opposition to Microsoft’s Motion for Partial Summary Judgment (Dkt. 139) (“MSJ”).1 Microsoft’s motion contradicts Supreme Court and Federal Circuit precedent and seeks summary judgment based on an incomplete and contested factual record. For these reasons, Microsoft’s motion should be denied.
And indeed that may explain the judge carefully noting that this is a sui generis ruling, based on these specific facts and that should the facts and circumstances change, Motorola can still ask for an injunction, because that is the law.
A determination of whether an injunction should issue is a fact-intensive analysis that requires careful balancing of competing equitable and factual concerns. Despite this, Microsoft asks the Court to rule, as a matter of law, that Motorola cannot obtain an injunction for infringement of the three H.264 patents asserted in this case based on just two facts to the exclusion of all others: (1) Motorola’s RAND assurance for its H.264 patents and (2) Motorola’s letter to Microsoft offering a license for Motorola’s H.264 patents.2
In relying on these two specific facts, Microsoft argues for a categorical, blanket rule that providing RAND assurances for patents and then offering a license for those patents precludes a patentee – under any and all facts – from obtaining an injunction. Although Microsoft’s motion purports to rely heavily on the Supreme Court’s decision in eBay v. MercExchange, Microsoft ignores that Court’s explicit rejection of such categorical rules when considering the availability of injunctive relief. Indeed, the Supreme Court made clear that a patentee’s willingness to offer a license to its patents – one of the very facts Microsoft points to – does not provide a basis standing alone to deny an injunction categorically. See eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393-94 (2006). The circumstances here are a prime example of why there can be no categorical rule: Microsoft never bothered to apply for a RAND license even though it designed its products knowing that Motorola had patents essential to those products and then, after Motorola offered to negotiate for a license, Microsoft brought this lawsuit rather than negotiate.
Not only do Microsoft’s arguments contradict the holding of eBay, they also directly contradict the submission Microsoft made in a non-litigation context to the Federal Trade Commission. In a June 2011 letter to the FTC, Microsoft stated explicitly that:
[T]he existence of a RAND commitment to offer patent licenses should not preclude a patent holder from seeking preliminary injunctive relief or commencing an action in the International Trade Commission just because the patent holder has made a licensing commitment to offer RAND-based licenses in connection with a standard.
1/3/12 Post Decl. Ex. 3, FTC Letter, infra note 8, at 13 (emphasis added).3 Moreover, post-eBay cases make clear that a patentee can obtain an injunction notwithstanding the very two facts upon which Microsoft relies. For example, in Commonwealth Scientific & Industrial Research Organization v. Buffalo Technology Inc., the Court granted an injunction despite RAND assurances to the IEEE regarding the asserted patent. 492 F. Supp. 2d 600 (E.D. Tex. 2007) (“CSIRO”). And in Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1328 (Fed. Cir. 2008), the Court found that a patentee’s willingness to offer a license to its patent is not sufficient per se to establish lack of irreparable harm. In light of this, Microsoft’s motion – and the categorical rule it seeks to impose – is improper.
1 Although Microsoft’s motion is directed generally to “Motorola,” Motorola, Inc. (now Motorola Solutions, Inc.) currently has no right, title or interest in the asserted H.264-essential patents. Accordingly, Motorola Solutions, Inc. takes no part in this opposition.
2 Motorola’s H.264-related patents are United States Patent Nos. 7,310,374; 7,310,375; and 7,310,376.
3 “1/3/12 Post. Decl.” refers to the Declaration of Kevin J. Post in Support of Defendants’ Opposition to Microsoft’s Motion for Partial Summary Judgment Dismissing Motorola’s Claim for Injunctive Relief, dated January 3, 2012 and submitted concurrently herewith.
Update: Here is the order as text:
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
MOTOROLA, INC., et al.,
MOTOROLA MOBILITY, INC., et al.,
CASE NO. C10-1823JLR
CLAIM FOR INJUNCTIVE
This matter is before the court on Plaintiff Microsoft Corporation’s (“Microsoft”) motion for partial summary judgment dismissing the relief of an injunction sought by Defendants Motorola, Inc., Motorola Mobility, Inc., and General Instrument Corporation (collectively, “Motorola”) for patent infringement of Motorola-owned H.264 standard essential patents subject to reasonable and non-discriminatory (“RAND”) commitments. (Mot. (Dkt. ## 139 (sealed), 141 (redacted))).
1 Having considered Microsoft’s motion, Motorola’s response (Resp. (Dkt. # 143)), Microsoft’s reply (Reply (Dkt. # 152)), all attachments to the briefing, and the governing law, and having heard oral argument on May 7, 2012, the court GRANTS Microsoft’s motion (Dkt. # 139).
A. The IEEE and the ITU as Standard Setting Organizations
Microsoft and Motorola are both members of the Institute of Electrical and Electronics Engineers (“IEEE”) and the International Telecommunication Union (“ITU”). The IEEE and the ITU, neither of which are parties to the instant dispute, are international standards setting organizations. Standards setting organizations play a significant role in the technology market by allowing companies to agree on common technological standards so that all compliant products will work together. Standards lower costs by increasing product manufacturing volume, and they increase price
competition by eliminating “switching costs” for consumers who desire to switch from products manufactured by one firm to those manufactured by another.
One complication with standards is that it may be necessary to use patented technology in order to practice them. If a patent claims technology selected by a standards setting organization, the patent is called an “essential patent.” Here, Motorola is the owner of numerous patents “essential” to certain standards established by the IEEE and the ITU. (See 10/21/10 Motorola Offer Ltr. (Dkt. # 79-5); 10/29/10 Motorola Offer Ltr. (Dkt. # 79-6) (see list of attachments).) In order to reduce the likelihood that owners of essential patents will abuse their market power, many standards setting organizations, including the IEEE and the ITU, have adopted rules related to the disclosure and licensing of essential patents. The policies often require or encourage members of the standards setting organization to identify patents that are essential to a proposed standard and to agree to license their essential patents on RAND terms to anyone who requests a license. Such rules help to ensure that standards do not allow essential patent owners to extort their competitors or prevent them from entering the marketplace.
B. Motorola’s Statements to the IEEE and the ITU
This lawsuit involves two standards—the IEEE 802.11 wireless local area network (“WLAN”) standard (“802.11 Standard) and the ITU H.264 advanced video coding technology standard (“H.264 Standard”).2 (See generally Compl. (Dkt. # 1); Am. Compl.
(Dkt. # 53).) The IEEE’s standard setting process is governed by its Intellectual Property Rights Policy (the “IEEE Policy”). (See generally IEEE Policy (Dkt. #79-1).) The IEEE Policy provides that “IEEE standards may be drafted in terms that include the use of Essential Patent Claims.” (Id. at 18 (Section 6.2).) The IEEE Policy defines the term “Essential Patent Claim” as one or more claims in an issued patent (or pending patent application) that are “necessary to create a compliant implementation of either mandatory or optional portions of the normative clauses of the [Proposed] IEEE Standard . . . .” (Id.)
If the IEEE learns that an IEEE standard or a proposed IEEE standard may require the use of an essential patent claim, the IEEE requires the patent holder to either state that it is not aware of any patents relevant to the IEEE standard or to provide the IEEE with a Letter of Assurance. (Id.) Any such Letter of Assurance must include either (1) a disclaimer to the effect that the patent holder will not enforce the “Essential Patent Claims,” or (2):
[a] statement that a license for a compliant implementation of the standard will be made available to an unrestricted number of applicants on a worldwide basis without compensation or under reasonable rates, with reasonable terms and conditions that are demonstrably free of any unfair discrimination. . . .
(Id.) If the IEEE cannot obtain a Letter of Assurance, it refers the essential patent to the IEEE Patent Committee. (Id.)
Motorola has submitted numerous Letters of Assurance to the IEEE in connection with the 802.11 Standard stating that it “will grant” or “is prepared to grant” a license under RAND terms for its patents essential to the 802.11 Standard. (See generally IEEE
LOAs (Dkt. # 79-2).) A typical Motorola Letter of Assurance to the IEEE provides, in relevant part:
The Patent Holder will grant [or is prepared to grant] a license under reasonable rates to an unrestricted number of applicants on a worldwide, non-discriminatory basis with reasonable terms and conditions to comply with the [Proposed] IEEE Standard.
(See generally id.) Such Letters of Assurance are irrevocable once submitted and accepted by the IEEE and apply from the date the standard is approved until the date the standard is withdrawn. (IEEE Policy at 19.)
Like the IEEE, the ITU has established a policy (the “ITU Policy”) with respect to holders of patents “essential” to implementing a standard. (See ITU Policy (Dkt. # 79- 3).) Such patent holders must file with the ITU a “Patent Statement and Licensing Declaration” declaring whether they (1) will grant licenses free of charge on a RAND basis; (2) will grant licenses on RAND terms; or (3) are not willing to comply with either of the first two options. (See id. at 9-12.) If a patent holder is not willing to comply with either of the first two options, the ITU standard will not include provisions depending on the patent. (Id. at 9.)
Motorola has sent numerous declarations to the ITU stating that they will grant licenses on RAND terms for its patents essential the H.264 Standard. (See generally ITU Declarations (Dkt. # 79-4).) A typical declaration by Motorola to the ITU provides, in relevant part:
The Patent Holder will grant a license to an unrestricted number of applicants on a worldwide, non-discriminatory basis and on reasonable terms and conditions to use the patented material necessary in order to
manufacture, use, and/or sell implementations of the above ITU-T Recommendation | ISOC/IEC International Standard.3
(E.g., id. at 2.)
C. Motorola’s Offer Letters to Microsoft
On October 21, 2010, Motorola sent Microsoft a letter (the “October 21 Letter”) that read in pertinent part:
This letter is to confirm Motorola’s offer to grant Microsoft a worldwide non-exclusive license under Motorola’s portfolio of patents and pending applications having claims that may be or become Essential Patent Claims (as defined in section 6.1 of the IEEE bylaws) for a compliant implementation of the IEEE 802.11 Standards. . . . Motorola offers to license the patents under reasonable and non-discriminatory terms and conditions (“RAND”), including a reasonable royalty of 2.25% per unit for each 802.11 compliant product, subject to a grant back license under the 802.11 essential patents of Microsoft. As per Motorola’s standard terms, the royalty is calculated based on the price of the end product (e.g, each Xbox 360 product) and not on component software (e.g., Windows Mobile Software).
(10/21/10 Offer Ltr. at 2.) Then, on October 29, 2010, Motorola sent a similar letter (the “October 29 Letter”) regarding the H.264-related patents, stating:
Motorola offers to license the patents on a non-discriminatory basis on reasonable terms and conditions (“RAND”), including a reasonable royalty, of 2.25% per unit for each H.264 compliant product, subject to a grant back license under the H.264 patents of Microsoft, and subject to any Motorola commitments made to JVT in connection with an approved H.264 recommendation. As per Motorola’s standard terms, the royalty is calculated based on the price of the end product (e.g., each Xbox 360 product, each PC/laptop, each smartphone, etc.) and not on component software (e.g., Xbox 360 system software, Windows 7 software, Windows Phone 7 software, etc.)
(10/29/10 Offer Ltr. at 2.) Motorola attached to its October 29 Letter a non-exhaustive list of patents it offered to license to Microsoft. (See id.)
On November 9, 2010, Microsoft filed its complaint initiating this action, and on February 23, 2011, Microsoft filed an amended complaint. (Compl.; Am. Compl.) Microsoft contends that the October 21 and October 29 Letters seek unreasonable royalty rates and therefore breach Motorola’s obligations to the IEEE and the ITU to grant licenses on RAND terms. (Am. Compl. at 21, 22.) Microsoft alleges claims against Motorola for breach of contract and promissory estoppel.4 (Id.) In its prayer for relief, Microsoft seeks, inter alia, (1) a declaration that it is entitled to a license on RAND terms from Motorola for all patents subject to Motorola’s commitments to the IEEE (through Letters of Assurance) and to the ITU (through declarations), and (2) a judicial accounting of a RAND royalty rate for Motorola’s patents subject to these commitments. (Id. at 25 (Prayer for Relief).)
In response, Motorola asserted affirmative defenses and counterclaims. (See Motorola Answer (Dkt. # 68).) Motorola’s counterclaims seek, inter alia, a declaratory judgment that (1) it has not breached any RAND obligations, and (2) Microsoft repudiated and/or rejected the benefits of Motorola’s RAND obligations, and therefore Microsoft is not entitled to a license to Motorola’s patents related to the H.264 and 802.11 Standards. (Id. ¶¶ 61-75 (Counterclaims).)
Additionally, on November 10, 2012, Motorola filed suit against Microsoft in the Western District of Wisconsin, alleging that Microsoft’s Windows 7 operating system infringed three patents relating to the H.264 standard—U.S. Patent Nos. 7,310,374; 7,310,375; and 7,310,376 (collectively, the “Motorola Asserted Patents”). (Motorola Compl. (C11-0343JLR, Dkt. # 1).) Each of the Motorola Asserted Patents is included in its portfolio of H.264 standard essential patents, which Motorola offered to Microsoft via the October 29 Letter. (10/29/10 Offer Ltr. at 4-5.) Based on its allegation of patent infringement, Motorola seeks injunctive relief against Microsoft’s alleged infringing activities—the making, using, offering for sale, selling, and/or importing the Windows 7 operating system, or inducing others to infringe the Motorola Asserted Patents. (Motorola Compl. ¶¶ 16, 23, 30.) The action in the Western District of Wisconsin was transferred to the Western District of Washington on February 18, 2011 (Transfer Order (Dkt. # 44)), and consolidated with the action initiated by Microsoft on June 1, 2011 (Order to Consolidate (Dkt. # 66)).
D. The Court’s Prior Rulings
In a February 27, 2012, order, the court ruled that Motorola’s Letters of Assurance to the IEEE and Motorola’s declarations to the ITU create enforceable contracts between Motorola and the respective standard setting organization to license its essential patents on RAND terms. (2/27/12 Order (Dkt. # 188) at 10.) Additionally, the court found that, as a member of the IEEE and the ITU and a prospective user of both the H.264 Standard and the 802.11 Standard, Microsoft is a third-party beneficiary of the contract. (Id.)
Following the court’s February 27, 2012, order, the parties moved for summary judgment. Microsoft moved for summary judgment that Motorola breached its agreements to license its standard essential patents on RAND terms by offering to license its standard essential patents at 2.25% of Microsoft’s end product price (a blatantly unreasonable offer according to Microsoft) in the October 21 and October 29 Letters. (Microsoft Mot. for SJ (Dkt. # 236).) Motorola moved for summary judgment that Microsoft had repudiated its rights as a third-party beneficiary to a RAND license by initiating this lawsuit without first applying for, and negotiating towards, a patent license for Motorola’s standard essential patents. (Motorola Mot. for SJ (Dkt. # 231).)
In its June 6, 2012, order on the parties’ respective motions, the court again examined the obligations of both Motorola and Microsoft originating from Motorola’s statements to both the ITU and the IEEE regarding its standard essential patents. In this order, the court reaffirmed its conclusion that Motorola’s statements to the ITU and IEEE did indeed constitute binding agreements to license its essential patents on RAND terms. (6/6/12 Order (Dkt. # 335) at 13.) The court also reaffirmed its decision that Microsoft was a third-party beneficiary to those agreements and has a right to a RAND license for Motorola’s standard essential patents.5 (Id. at 14.) With respect to Microsoft’s motion
for summary judgment, the court determined that although Motorola’s agreements with the ITU and IEEE required initial offers for its standard essential patents to be made in good faith, issues of fact existed as to whether Motorola’s October 21 and 29 Letters complied with its good faith obligations. (Id. at 21-28.) The court further explained that before a jury could decide whether Motorola’s offers for its standard essential patents breached its duty of good faith, the court would need to determine a true RAND royalty rate for purposes of comparison. (Id. at 25.) Accordingly, the court denied Microsoft’s motion. (Id. at 28.) The court also denied Motorola’s motion for summary judgment and held that applying for a patent license and negotiating towards a patent license were not conditions precedent to Motorola’s obligations to grant licenses on RAND terms. (Id. at 16-21.)
After its June 6 order, with input from the parties, the court adopted a two-part approach to adjudicate Microsoft’s breach of contract claim. The court would first determine a RAND royalty rate and RAND royalty range for Motorola’s standard essential patent portfolios at a November 13, 2012, bench trial; and second, with this determination as guidance, a jury would hear Microsoft’s breach of contract claim.6
Prior to the November 13 trial, Motorola filed a motion for summary judgment on “Microsoft’s request that the court make” a license agreement for Motorola’s standard
essential patents. (Motorola Mot. (Dkt. # 362).) In other words, Motorola sought summary judgment that Microsoft could not obtain relief from this court in the form of a license agreement between Motorola and Microsoft for Motorola’s H.264 and 802.11 standard essential patent portfolios. In an October 10, 2012, order, the court denied Motorola’s motion, reasoning that “having previously determined that Microsoft has not repudiated or revoked [its right to a RAND license], . . . Motorola must grant Microsoft a RAND license to its standard essential patents.” (10/10/12 Order (Dkt. # 465) at 14.) The court further reasoned that, because Motorola must grant Microsoft a RAND license, it could not “dismiss from Microsoft’s possible remedies the very license agreement to which the court has already determined it is entitled.”7 (Id. at 17.) In holding that Motorola must grant Microsoft a RAND license, the court ipso facto dismissed Motorola’s counterclaim that Microsoft had repudiated its rights to a RAND license.
From November 13-21, 2012, the court held a multi-week trial to determine the appropriate RAND rate and range for Motorola’s H.264 and 802.11 standard essential patent portfolios. During the trial, among other things, the court heard evidence of the importance of Motorola’s patent portfolios to the respective standards as well as the importance of Motorola’s patent portfolios to Microsoft’s Xbox and Windows products.
At this time, the court has taken the matter under submission and will issue a written order adjudicating a RAND rate and range for Motorola’s relevant patents.
In the motion presently before the court, Microsoft seeks to dismiss Motorola’s request for injunctive relief for patent infringement of the Motorola Asserted Patents. Because Motorola cannot show irreparable harm or that monetary damages would be inadequate, the court agrees with Microsoft that injunctive relief is improper in this matter and grants Microsoft’s motion.
A. Injunctive Relief
A district court “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.” 35 U.S.C. § 283. “According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). To obtain an injunction, a plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id.
1. Irreparable Harm
Harm is irreparable when it cannot be remedied except through injunctive relief. See Metro–Goldwyn–Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1210 (C.D. Cal. 2007). Economic damages are not traditionally considered irreparable because the injury can later be remedied by a damage award. As the Supreme Court explained, “the temporary loss of income, ultimately to be recovered, does not usually constitute irreparable injury . . . . The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.” Sampson v. Murray, 415 U.S. 61, 90 (1974).
At this stage in the litigation, and based on this court’s prior rulings, the court concludes that Motorola cannot demonstrate irreparable harm. Here, the court has previously ruled that Microsoft is a third-party beneficiary of Motorola’s commitments to the ITU (and the IEEE) such that Microsoft is entitled to a RAND license agreement for Motorola’s H.264 (and 802.11) standard essential patents. The Motorola Asserted Patents, at issue in this litigation, are standard essential patents of the H.264 Standard and are included in Motorola’s H.264 standard essential patent portfolio. Thus, Microsoft is entitled to a license to the Motorola Asserted Patents on RAND terms. As Microsoft has committed to accept a license on RAND terms for Motorola’s entire H.264 standard essential patent portfolio, and the litigation is continuing to determine the details of such a license, it is now clear that at some point in the future (either by agreement of the parties or by court adjudication) a license agreement for the Motorola Asserted Patents
will become a reality.8 Because Microsoft will pay royalties under any license agreement from the time of infringement within the statute of limitations, this license agreement will constitute Motorola’s remedy for Microsoft’s use of Motorola’s H.264 standard essential patent portfolio to include the Motorola Asserted Patents. Accordingly, Motorola cannot demonstrate that it has been irreparably harmed.9
2. Adequate Remedy at Law
For similar reasons, Motorola cannot show that it has no adequate remedy other than injunctive relief. As the court explained, Motorola’s remedy is a RAND license agreement for its H.264 standard essential patent portfolio, which includes the Motorola Asserted Patents. This remedy will make Motorola whole for Microsoft’s use of any and all of Motorola’s H.264 standard essential patents.
Although the court is aware that injunctive relief often accompanies a finding of patent infringement, this is not a simple patent infringement action. After hearing
testimony at the November 13, 2012 trial, it is clear that, from the time Motorola committed to license its H.264 standard essential patent portfolio on RAND terms, Motorola was under the obligation to grant RAND licenses to all implementers (including Microsoft) of the H.264 standard. Motorola’s obligation to grant such a RAND license to Microsoft far preceded the onset of this litigation, meaning that at all times during this litigation, the issue was not if, but when and under what terms, a license agreement would be established between Microsoft and Motorola. Thus, because Motorola has always been required to grant Microsoft a RAND license agreement for its H.264 standard essential patents, as a matter of logic, the impending license agreement will adequately remedy Motorola as a matter of law.
In sum, Motorola has not shown it has suffered an irreparable injury or that remedies available at law are inadequate to compensate for its injury. As such, the court need not reach the other elements of the standard for permanent injunctive relief. See eBay, 547 U.S. at 391; Hadel v. Willis Roof Consulting, Inc., 2008 WL 4372783, at *3 (D. Nev. Sept. 23, 2008). Accordingly, the court grants Microsoft’s motion dismissing Motorola’s request for injunctive relief in this action. The dismissal is without prejudice. The court’s determination that injunctive relief is no longer available for the Motorola Asserted Patents is based on the specific circumstances and rulings that have developed in this litigation. If, in the future, those circumstances change in a manner to warrant injunctive relief, Motorola may at that time seek such relief.
B. The Anti-Suit Injunction
Earlier in this litigation, the court issued an anti-suit injunction enjoining Motorola from enforcing any injunctive relief Motorola may receive through a separate German lawsuit also involving Motorola and Microsoft. (See 5/14/12 Order (Dkt. # 318).) The lawsuit in Germany, initiated on July 6, 2012 by Motorola, involved two Motorola- owned European issued patents—European Patent Nos. 0615384 and 0538667 (the “European Patents”). (Id. at 9.) Similar to the situation here, in the German action, Motorola asserted that Microsoft infringed the European Patents and sought injunctive relief. (Id.) Like the Motorola Asserted Patents in this litigation, the European Patents were declared essential to the H.264 Standard, were subject to RAND commitments to the ITU, and were included on the list of patents offered to Microsoft in the October 29 Letter. (Id. at 9-10.)
In issuing the anti-suit injunction, this court explained that the issues before it in this litigation were dispositive of the question of whether Motorola could enforce an injunction for patent infringement of the European Patents that are essential to the H.264 Standard. (Id. at 17.) In other words, a judicially-determined RAND license encompassing all of Motorola’s H.264 essential patents would necessarily dispose of Motorola’s request for an injunction in Germany based on Motorola-owned, H.264 standard essential patents. (Id.) In an effort to limit the impact on comity, the court limited the scope and duration of the anti-suit injunction. The scope of the injunction was limited to Motorola’s enforcement of an injunction in Germany but not to further prosecution of the Germany action or the receipt of damages of the non-injunctive form.
With respect to duration, the court stated that it would remove the anti-suit injunction after adjudicating the propriety of injunctive relief. (Id. at 20, 25.) That time has now arrived. The court’s decision dismissing Motorola’s request for injunctive relief for the Motorola Asserted Patents logically extends to all of Motorola’s H.264 standard essential patents. This is so because the RAND litigation in this matter involves not only the Motorola Asserted Patents, but all of Motorola’s H.264 standard essential patents on a worldwide basis. Indeed, the basis for the court’s dismissal of injunctive relief for the Motorola Asserted Patents is in no way specific to those patents, but instead is the very fact that litigation in this matter has progressed to the point that it is now clear that a license agreement will result for all of Motorola’s H.264 standard essential patents.10
As a result, this court’s order not only dismisses injunctive relief for the Motorola Asserted Patents, but also for Motorola’s entire H.264 standard essential patent portfolio including the European Patents at issue in the German action. In short, the dismissal of injunctive relief in this order takes the place of the court’s prior anti-suit injunction that enjoined Motorola from enforcing an injunction in the German action. At this time, having had the opportunity to adjudicate the issues in this matter that were dispositive of the propriety of injunctive relief in the German action, as promised, this court dissolves the anti-suit injunction.
Based on the foregoing, the court GRANTS Microsoft’s motion for partial summary judgment dismissing without prejudice Motorola’s request for injunctive relief for alleged patent infringement (Dkt. ## 139 (sealed), 141 (redacted)). Additionally, the court hereby dissolves the anti-suit injunction (Dkt. # 318) related to the German action. The anti-suit injunction is deemed no longer necessary in light of this order which enjoins Motorola from seeking injunctive relief against Microsoft with respect to Motorola’s H.264 and 802.11 standard essential patent portfolios.
Dated this 29th day of November, 2012.
JAMES L. ROBART
United States District Judge
1 While the parties in this action have both filed affirmative claims in this matter, because Microsoft filed the complaint initiating the instant action, for purposes of this order, the court names Microsoft as the “plaintiff.”
2 The ITU developed the H.264 Standard jointly with two other standard setting organizations—the International Organization for Standardization and the International Electrotechnical Commission. (Partial S.J. Order (Dkt. #188) at 3.)
3 The declaration to the ITU also states that “negotiations of licenses are left to the parties concerned and are performed outside the ITU-T | ISO/IEC.” (ITU Declarations at 2.)
4 Microsoft’s action against Motorola also included claims for waiver and declaratory judgment, but the court’s June 1, 2011 order dismissed both of those claims, leaving only the breach of contract and promissory estoppel claims. (Dkt. # 66 at 12.)
5 Subsequent to this court’s June 6, 2012 order, the Ninth Circuit issued an opinion on Motorola’s interlocutory appeal of this court’s grant of an anti-suit injunction of Motorola’s enforcement of a German injunction against Microsoft for patent infringement regarding two of Motorola’s standard essential patents. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012). In its opinion, the Ninth Circuit held that the “district court’s conclusions that Motorola’s RAND declarations to the ITU created a contract enforceable by Microsoft as a third-party beneficiary (which Motorola concedes), and that this contract governs in some way what actions Motorola may take to enforce its ITU standard-essential patents (including the patents at issue in the German suit), were not legally erroneous.” Id. at 884.
6 The parties agreed that a bench trial was appropriate for adjudication of a RAND royalty rate and range. Motorola, however, sought a jury trial for the breach of contract issue. (7/9/12 Tr. (Dkt. # 359) at 5.)
7 Critical to the court’s October 10, 2012, order was Microsoft’s representation that it believes it needs a license and that it is ready and willing to accept a license to Motorola’s essential patents on RAND terms. (See, e.g., Reply (“The indisputable evidence is that Microsoft is seeking a license on RAND terms—in this very action.”).) As previously stated, the court will hold Microsoft to its representation throughout the course of this litigation. (See 6/6/12 Order at 20, n.7.)
8 As stated, the court recently held a trial to determine the RAND rate for Motorola’s H.264 and 802.11 standard essential patent portfolios.
9 The court is unconvinced by Motorola’s argument that it has or will suffer irreparable harm to its goodwill and reputation because a compulsory license agreement would encourage others to infringe Motorola’s standard essential patents. (Resp. at 19.) This is not the case. The court’s prior rulings have made clear that Microsoft, as an implementer of the H.264 Standard, must accept a RAND license to Motorola’s standard essential patents. Indeed, Microsoft, or any other implementer, is not free to infringe Motorola’s standard essential patents, and were that to occur, this court’s ruling with respect to injunctive relief may be different. The nature of Motorola’s RAND commitments, however, obligates Motorola to grant RAND licenses to any and all implementers of the H.264 Standard. As the court has explained, in the situation where a standard essential patent holder and an implementer reach an impasse during negotiations of a RAND license, the courthouse may be the only forum to adjudicate the rights of the patentee and the third-party beneficiary of the RAND commitment. Certainly, easily measurable litigation costs to enforce one’s rights cannot constitute irreparable harm.
10 Likewise, it is clear that a license agreement will result between Microsoft and Motorola for Motorola’s 802.11 standard essential patents. Thus, the effect of this court’s decision would also bar an injunction for the assertion of any Motorola-owned 802.11 standard essential patents against Microsoft.