Judge Posner Dumps Ridiculous Patent Fight Between Apple & Motorola As Contrary To The Public Interest

from the with-prejudice dept

Judge Richard Posner is, perhaps, the most influential judge not on the Supreme Court. Beyond writing a ton of books (and columns and articles and blog posts), his rulings often seem to carry extra weight. On intellectual property, he's been something of a mixed bag. He's written an entire book (which I consult frequently) on The Economic Structure of Intellectual Property Law. While extremely knowledgeable on the subject, he does (too frequently) come down on the side of believing that without IP law, you couldn't have a functioning market for products that are covered by intellectual property. Still, he doesn't just roll over on IP cases (or, really, any case -- though I'm still troubled by his belief that filming the police in public can be a bad thing).

While he normally is on the 7th Circuit Appeals Court, appeals court judges will sometimes "slum it" down at a district court. So Posner was handling a big patent fight: one filed by Apple against Motorola for patent infringement concerning (of course) smartphones, down in the Northern Illinois district court. As we've discussed at length in the past, there are a whole bunch of patent disputes concerning smartphones, with companies suing each other in the courts or seeking injunctions from the ITC. This case was one of the "main events," especially considering Google's purchase of Motorola.

So it's pretty interesting to see that Posner has told everyone he's dumping the case. The trial was supposed to start on Monday, but he released a statement saying that there's nothing worth reviewing at a trial, and that he's dismissing the case with prejudice (meaning it can't be refiled), and effectively saying (in much nicer language) that the whole thing is a joke. The note concerning this says he'll issue a full ruling within a week -- though, he says that "in the course of... preparation I may change my mind" on the reasoning for the dismissal. Still, he lays out the basics, which are that there's simply nothing worth discussing. As he puts it: "neither party can establish a right to relief." Apple has admitted that "it cannot prove damages for the alleged infringement" of two of the patents, that two other patents do "not create a genuine issue of material fact" that would allow a trial to move forward and, with the final patent, Apple's evidence of damages "fails to create a genuine issue of material fact."

This isn't a huge surprise, since Posner's statements in filings from a few weeks ago certainly suggested his annoyance that a lawsuit had been filed over these patents. As quoted by Jeff Roberts at GigaOm, Posner had hit back at claims from both sides with pretty strong language:

[re a slide-to-unlock patent] Apple’s .. argument is that “a tap is a zero-length swipe.” That’s silly. It’s like saying that a point is a zero-length line.

Motorola’s contention that the term has a “plain and ordinary meaning” is ridiculous; Motorola seems to have forgotten that this is a jury trial.

The statement from Posner also rejects the idea that, outside of the damages question, "injunctive relief" (blocking one another from offering the products) was reasonable, stating that it would "impose costs disproportionate to the harm" and "would be contrary to the public interest."

Roberts also notes that, in a bit of interesting timing, Posner had just a few days ago posted a blog post discussing the importance of capitalism, but noting that our version of capitalism is lacking in many ways -- with him specifically calling out the "dysfunctional patent system" as one of a litany of problems with the way we've embraced "capitalism."

Posner has certainly always appeared to recognize that intellectual property law could be abused, but this seems like a strong indication that he's realizing just how widely it is being abused under today's patent system.

Filed Under: damages, itc, richard posner, scotus
Companies: apple, motorola

Cisco Has Enough Of TiVo Patent Claims, Files To Invalidate TiVo Patents

from the offensively-defensive dept

Over the past few years, as competition in the DVR market has become tougher, TiVo has become more and more reliant on using its patents to stop competition and innovation, rather than focusing on competing in the marketplace. its most famous case was the one against EchoStar, which even included TiVo buying a bull (literally) in Eastern Texas, where the district court case was heard. While it won at the district court level, during the appeals process, the Patent Office suddenly indicated that the patents might not be so solid. Not long after that, TiVo and EchoStar worked out a settlement.

TiVo found the process so enjoyable that it apparently started thinking about a second career as a patent troll -- and has already sued Verizon and Motorola. Not surprisingly, it's been pushing some others to license some patents... and at least one large player has had enough. Cisco, owners of Scientific Atlanta, a maker of settop boxes and DVRs, has filed a lawsuit seeking to invalidate four TiVo patents -- or, if the patents are found valid, a declaratory judgment that it does not infringe.

Of course, by filing first, Cisco was also able to file the case in San Jose, rather than letting TiVo try to get the case into Texas (despite the fact that both Cisco and Tivo are located not far from each other in Northern California). As far as I know, TiVo has not purchased a bull in San Jose.

Filed Under: dvr, eastern texas, patent troll, uspto
Companies: cisco, echostar, motorola, tivo, verizon

US Judge Forbids Motorola From Using German Injunction Against Microsoft

from the do-as-you-would-be-done-by dept

Here's an interesting development in the legal battle between Microsoft and Motorola in Germany that we discussed recently. It seems that Microsoft is worried that the German court might award Motorola an injunction against it, and so has asked a US judge to stop Motorola from using it in that case -- and he agreed:

In an unusual case, a U.S. judge ruled on Wednesday that Motorola cannot enforce an injunction that would prevent Microsoft from selling Windows products in Germany, should a German court issue such an injunction next week.

So this is a US judge forbidding a company from applying an injunction that it might be awarded in Germany, by a German court. That sounds rather like one jurisdiction is interfering with another, but Microsoft apparently thinks that's reasonable:

Microsoft argued that if the judge would allow that German injunction to go forward, which ultimately might compel Microsoft to negotiate a license according to German law, the U.S. court would lose its opportunity to make its own ruling on similar licensing issues. The U.S. court should be the one to rule on that issue, Microsoft argued, because Microsoft filed its lawsuit against Motorola over the terms of a licensing deal before Motorola filed its suit in Germany.

It's striking that Microsoft isn't such a big fan of patent courts -- especially efficient ones that produce their judgments rapidly -- when it is on the receiving end of patent lawsuits, rather than the one making the threats.

It's also pretty rich that Microsoft should complain about the possibility of an injunction being granted against it by another jurisdiction when that is precisely what it is trying to do by filing an action against Motorola in the International Trade Commission as well as in a US District Court. If Microsoft says German courts shouldn't get involved in its dispute with Motorola, it's equally ridiculous that an international trade body should be dragged into a domestic dispute between two US companies, as Techdirt has noted before.

Basically, Microsoft is just whining because it thinks it's going to lose in Germany, and has gone running to the US judge in an attempt to subvert that country's judicial system. It's a huge pity that he acceded to this ridiculous request: it creates a terrible precedent that's likely to lead to more such interference in the legal systems of other countries -- including foreign courts ordering companies not to obey US rulings -- and a general weakening of respect for the rule of law around the world.

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Filed Under: germany, injunction, jurisdiction
Companies: microsoft, motorola

As Germany Becomes Europe's East Texas, Microsoft Moves Its Distribution Center

from the makes-you-think dept

Just as companies often try to file their patent lawsuits in East Texas, so Germany is emerging as a favorite forum for patent litigation in Europe -- and for precisely the same reason:

Germany's specialized court system, where cases are ruled on relatively quickly and it can be easier than in other countries to get an injunction, is increasingly leading technology companies to file patent lawsuits there, say patent law specialists.

That ought to place Germany in an enviable position. After all, a common argument from supporters of patents is that foreign companies will be more willing to set up in countries with strong patent regime. So it's curious that the article about Germany's patent-friendly courts quoted above goes on to say:

Motorola sued Microsoft over patents it has on the H.264 video standard, which led Microsoft to move its European distribution center from Germany to the Netherlands even before the German court of Mannheim ruled in the case.

It explains that move as follows:

Apple tried to get an injunction against Samsung in the Netherlands. Samsung's European distribution center is located in the Netherlands, so if Apple would have won, this would have effectively paralyzed Samsung's business in Europe. The judge denied the injunction, meaning Samsung could continue its business in Europe.

This ruling is why Microsoft chose the Netherlands for its distribution center when it decided that Germany was too risky with Motorola's standard-essential patent litigation in mind, said Agé.

This exposes the fundamental flaw in the argument that a patent-friendly legal system will encourage inward investment. However much foreign companies may welcome the ease with which they can sue their rivals and obtain injunctions against them, they also know that they are also more likely to be sued and blocked by injunctions themselves.

Microsoft's hurried decision to withdraw its entire distribution center from Germany shows a possible consequence of this double-edged sword: companies pull out so that patent-friendly courts can't be turned against them. As patent litigation balloons, and more cases head to Germany, other foreign companies may come to the same conclusion as Microsoft, and start taking the same defensive precautions. In which case, Germany will find that far from attracting foreign investors, its patent-friendly courts are actually driving them away.

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Filed Under: east texas, germany, injunction
Companies: apple, microsoft, motorola, samsung

If Google Is Serious About Reforming Patent Mess, It Should Make A Bold Statement And Stop Using Motorola Patents To Demand Cash

from the now's-the-chance dept

We've discussed in the past the fact that Google has never used patents offensively. That is, while it has many patents, it has never (that anyone can point to) used them to threaten another company to force them to pay up. Instead, it has only used them defensively. Over the summer, Google got even more aggressive, speaking out about how patents had become a tax on innovation, rather than enabling innovation. In fact, we pointed out that Google actually seemed to be a perfect example of how innovative companies didn't need to be aggressive on patents -- a feeling that is pretty strong in the Valley.

Of course, about a week later, Google bought Motorola Mobility, almost entirely for its large patent portfolio. Given Google's outspoken viewpoint on patents, the assumption was that the company would continue to use those patents defensively against the increasing number of attacks by patent holders on Google. However, as MG Siegler is reporting, it looks like Google might at least continue Motorola's patent strategy post acquisition (which is about to be approved):

Google is saying that they don’t plan on making any changes to the way Motorola was enforcing their patent pool. This presumably means, among other things, they’ll now be suing Apple and trying to block the iPhone from being sold in certain countries.

This also presumably means they’ll be suing Microsoft and trying to bring down the H.264 video codec — which, by the way, Google created a competitor to (WebM) out of fear that someone would come along one day and try to enforce patents that would kill the H.264 video codec.

How’s that for a mind fuck?

The tables have gotten so turned that it’s now Apple and Microsoft who are complaining about patent enforcement. Specifically, both want assurances that patents licensed under fair, reasonable and non-discriminatory (FRAND) terms, are actually just that — fair.

In Motorola’s eyes, “fair” is Apple paying 2.25 percent on each iPhone and iPad sold. John Paczkowski of AllThingsD did the math: this would mean Apple paying about a billion dollars a year in royalty fees to Motorola.

A billion dollars. The mobile unit that Google is buying lost $285 million for the year last year. Apple would be indirectly keeping them, a competitor, afloat.

Of course, with some of these, the lawsuits are well underway, but Google could seek to dismiss some of the lawsuits if it wanted to. I think Siegler goes a bit far in claiming that Google automatically becomes "the villain" for gaining control over offensive patent moves that it's inheriting with this purchase. The bigger question will be what Google does going forward. However, if Google really does want to send a larger message around patents, it will get itself out of those efforts pretty quickly once taking over the company, reinforcing that the larger picture is more important than being able to extract a tax on competing products.

Of course, there is one other thing that makes this a bit more complicated, which I think Siegler ignores. He mentions how Google had to "make assurances that they would act fairly with patents they were acquiring." But he doesn't quite highlight the possible significance of that statement. If Google does get itself out of some of these lawsuits, and then chooses either to not enforce its patents against others or (better yet!) to freely license its patents to many other players, how long would it take Google's competitors to claim that Google was somehow "unfairly" using the patents to its advantage by giving them away for "free." Google competitors have used Google's free services as a stick against Google in the past, pretending that this meant they were abusing their position. I could definitely see some sneaky and ridiculous legal argument that if Google isn't making companies pay up for its newly acquired patents that it's unfairly abusing its position. This is, of course, a ridiculously stupid argument, but it's the nature of the world these days, where aggressive IP enforcement is seen as the norm.

Either way, I hope that Google stands by its words from last summer and is quick to extricate itself from offensive patent situations. But we'll find out soon.

Filed Under: patents
Companies: google, motorola

Motorola Deal Showing Massive Loss To Innovation Caused By Patents

from the dead-weight-loss dept

In response to Google's deal to buy Motorola mostly for its patents (most people are now saying that the patents represented at least half the value of the deal), we're seeing two responses. The first is that companies with lots of patents are suddenly being re-evaluated for their patent value. Because of the demand, otherwise practicing firms are suddenly being told their patents may be worth more than they are. Such is life in a market where the value of patents is massively inflated due to dangerous thickets, where patents are necessary to play.

But at the same time, more people are finally realizing what a massive economic and innovation loss this represents, entirely contrary to the intentions and purpose of the patent system. That last link is to the NY Times, which quotes Harvard economist Josh Lerner (who warned of this problem years ago) highlighting what a ridiculous economic loss it is when patent values are so ridiculously inflated:

“You’d much rather see Apple spend some of that $4 billion on new inventions, and Google invest that $12 billion to generate new knowledge,” said Josh Lerner, an economist at the Harvard Business School. “It’s a transfer of wealth from innovators to bondholders and stockholders who have no motivation to innovate. It’s disturbing.”

It's beyond disturbing. It's harmful. It hurts these companies' ability to innovate. It hurts our economy's ability to grow. It costs consumers a massive amount in economic rents, and it acts as a massive shift in wealth from consumers and companies that actually innovate... to those who aren't innovating. It's really dangerous, and will open up more opportunities for foreign competitors to focus on real innovation, while we move money away from innovation to lawyers.

So, we can now add the NY Times to the list of mainstream publications highlighting the problem. Why is Congress still focused on a patent reform bill that does nothing to address this problem?

Filed Under: dead weight, innovation, loss, patents, rent seeking
Companies: google, motorola