Apple v. Motorola

Court:

  • Case Number: 3:11-cv-00178

Next Event: The case has been dismissed. All claims dismissed at summary judgment are dismissed with prejudice. All claims dismissed on the eve of trial are dismissed without prejudice.

Summary: This case originated at the International Trade Commission as case 337-TA-745, in which Motorola seeks an exclusion order for Apple’s alleged infringement of six Motorola patents. Apple filed a Counterclaim alleging that Motorola engaged in a pattern of unfair, deceptive and anticompetitive conduct by failing to timely disclose ownership of patents that it now declares are essential to technological standards adopted by the industry and by failing to offer Apple licenses to those patents on fair, reasonable and nondiscriminatory terms and removed the case to the Western District of Wisconsin. Nearly every filing in the docket is sealed, making it difficult to track the events in the case.

Timeline of Important Events:

March 11, 2011 – Notice of Removal filed in the Western District of Wisconsin (Filing #1). Apple also filed a Motion for Preliminary Injunction (Filing #3) and a Brief in Support of this Motion (Filing #6).

  • July 1, 2011 – Motorola files Answer and Counterclaims (Filing #98). Motorola denies liability and alleges that Apple has breached its contract with the standard setting organizations ETSI, 3GPP, and TIA. Motorola also asserts that Apple has anticipatorily breached its contract with Motorola by refusing to negotiate for or accept licenses to Motorola’s declared essential patents.
  • August 10, 2012 – Judge Crabb grants in part and denies in part Summary Judgment for both Apple and Motorola (Filing #194). Motorola is granted summary judgment for Apple’s claims that Motorola violated the Sherman Act, California State Consumer Protection Law, and engaged in tortious interference of contract. Judge Crabb granted summary judgment for Apple in holding that Motorola had entered into a binding contract with ETSI and IEEE to license patents on FRAND terms; that Apple is a third party beneficiary of this contract; that Motorola had an obligation to make a bonafide effort to identify patents that might be part of the standard in question; that Motorola was required to disclose the applications for certain patents; and that Motorola disclosed the applications relating to these patents after the standard had been adopted. Judge Crabb explained that there is not a question as to whether a contract exists, but rather as to whether Motorola or Apple breached this contract. This largely boils down to whether Motorola’s offer of a 2.25% royalty rate and subsequent attempts to negotiate were unfair, unreasonable or discriminatory.
  • October 29, 2012 – Judge Crabb issues Order on Pretrial Motions (Filing #424). This is the first document that lists the patents still pending in this case. The judge denies Motorola’s request that the scope of the trial be limited to determining whether the requested licensing rate was made in good faith, and leaves open the possibility that the court could determine the precise licensing rate for Motorola’s patents, and order Motorola to comply through specific performance. The court rejected Motorola’s three arguments: “(1) Motorola’s obligations under the contracts with the standards-setting organizations are too vague; (2) there is not enough evidence in the record from which the court could determine appropriate license terms; and (3) supervising the performance would not be practicable for the court.” The court also determines that Judge Posner’s ruling regarding invalidity and non-infringement with three patents have preclusive effect, meaning that Motorola will not be able to assert them in this case (patents 5,319,712; 5,572,193; and 6,175,559). Judge Crabb acknowledged the unclear role of conditioning licenses on reciprocal cross-licenses, and instructed both parties to be prepared to address the issue of whether Motorola made a discriminatory or unreasonable offer by demanding that Apple include reciprocal licenses to its SEPs. The court also concludes that Motorola has not breached its contract with ETSI or IEEE by seeking injunctive relief; even though the court agrees with Judge Posner that Motorola was not entitled to injunctive relief. Finally, the court denies Apple the opportunity to introduce evidence of patent exhaustion on the grounds that it would be prejudicial to Motorola.
  • October 30, 2012 –– Motorola Motion for Clarification in which it requests clarification that Apple will also be bound by the court’s order if it 1) determines there is a contract; 2) determines that Motorola breached this contract 3) sets the FRAND rate and 4) enforces specific performance (Filing #444). Motorola argues that if the court does not enforce specific performance against Apple as well as Motorola the court’s opinion and order on FRAND would be “purely advisory.”
  • October 31, 2012 – Apple Response to Motorola’s Motion for Clarification (Filing #448). Apple declares it will comply with Judge Crabb’s FRAND order only up to $1 per phone, but otherwise “reserves the right to exhaust all appeals and also reserves the right available to any party offered a license: the right to refuse and proceed to further infringement litigation.” Apple also says that Motorola should not be allowed to introduce new arguments at this late stage in the proceedings. Finally Apple argues that any FRAND rate set by this court should not carve out Germany as Motorola argues it should.
  • November 2, 2012 – Judge Crabb issues an Opinion and Order in which she states that she has reconsidered, and now believes it would be inappropriate to grant Apple’s request for specific performance (Filing #487). Judge Crabb also determined that it would be inappropriate to declare a FRAND rate. The court pointed to Apple’s October 31 filing (Filing #448) and said that Apple’s position that it would not agree to be bound by the FRAND rate changed the court’s approach to this case. The court noted that specific performance is a positive injunction, and had previously held that the public interest factor weighed heavily towards resolving these disputes. With the information that Apple would not be bound by the court’s determination, and Apple’s acknowledgement that continued litigation is likely, the court now believes that the public interest weighs against specific performance. Judge Crabb indicates that she is considering dismissing the entire case as a result of these events. The court ordered both parties to file responses to this Opinion and Order by Sunday, November 4.
  • November 4, 2012 – Motorola files response to Judge Crabb’s November 2 Opinion and Order (Filing #496). Motorola agrees with Judge Crabb that dismissal of the case is appropriate, and argues that there is no Article III case or controversy, injunctive relief is not appropriate under the eBay standards outlined by Judge Crabb in her Opinion and Order, and the lack of an available remedy makes the case untriable.
  • November 4, 2012 – Apple files response to Judge Crabb’s November 2 Opinion and Order (Filing #497). Apple explained that the reason it placed a condition on its willingness to pay the court-determined FRAND rate was its concern that the commitment would be one-sided, and Apple would still find itself litigating against Motorola concerning Apple’s declared essential patents. Apple offered two proposals to the court: 1) the court proceed and declare a FRAND rate that both Apple and Motorola agree to, thereby eliminating the dispute; or 2) the court defer trial for a small amount of time to enable the parties to develop a record of their standard essential patents. Apple also maintains that specific performance would be appropriate and that it is in the public interest to declare a FRAND rate for Motorola’s standard essential patents.
  • November 5, 2012 – Judge Crabb dismisses the case with prejudice (Filing #498).
  • November 5, 2012 – Apple files Memorandum of Law regarding the dismissal of the case (Filing #499). Apple reiterates that the court has jurisdiction to hear this case and to declare a FRAND rate for Motorola’s standard essential patents. In the alternative, if the court decides to dismiss the case in its entirety, Apple requests that the court dismiss the case without prejudice so that Apple may “assert its SSO-based defenses in Motorola’s infringement suits against Apple, which Motorola argues is the appropriate forum for those questions to be decided.”