On November 29, 2012, Judge James L. Robart of the U.S. District Court for the Western District of Washington issued an order granting Microsoft’s motion for partial summary judgment and dismissing Motorola’s claims for injunctive relief. Judge Robart found that under the circumstances – where the patents-in-suit were subject to a RAND licensing promise from Motorola, and where Microsoft sought enforcement of that promise in Judge Robart’s court – Motorola could not satisfy either the irreparable harm or inadequate remedies at law prongs of the eBay injunction test. But the court’s order is even broader, barring any claims of injunctive relief that Motorola might seek against Microsoft with respect to any patents essential to the ITU H.264 video coding or 802.11 wireless networking standards.
The case before Judge Robart (No. C10-1823-JLR) originated with a breach of contract complaint filed by Microsoft in November 2010, which accused Motorola of breaching contracts to the ITU and IEEE by demanding unreasonable licensing terms from Microsoft. (Please visit our prior post for a more extensive history of the Microsoft-Motorola dispute, specifically the RAND contract case). Shortly after Microsoft filed its contract complaint, Motorola filed a complaint in the Western District of Wisconsin accusing Microsoft’s Windows 7 operating system of accusing three patents that were essential to the H.264 standard. Motorola sought both monetary damages and injunctive relief as remedies for Microsoft’s alleged infringement. The patent infringement claims were transferred to Washington State and consolidated with Microsoft’s breach of contract action in June 2011. In July 2012, the Court granted a joint motion by the parties to stay the patent infringement claims until after the resolution of the contract case.
But before the claims were stayed, back in December 2011, Microsoft moved for partial summary judgment seeking to dismiss Motorola’s claims for injunctive relief. Under the Supreme Court’s decision in eBay Inc. v. MercExchange, a patentee seeking injunctive relief for infringement must demonstrate that (1) it has suffered irreparable harm; (2) remedies available at law (i.e., damages) are inadequate to compensate for that harm; (3) the balance of hardships favors the patentee; and (4) the public interest favors granting an injunction. Microsoft’s motion claimed that, because Motorola had committed to the ITU that it would license its H.264 patents to all implementers on RAND terms, Motorola could not prove that it would be irreparably harmed by any infringement or that monetary damages would be inadequate. Motorola responded that the Supreme Court’s eBay opinion disfavored categorical rules regarding the availability of injunctive relief, such as a finding that a RAND obligation precludes availability of injunctive relief. Motorola claimed that, absent an injunction, Motorola might suffer irreparable harm to its goodwill and reputation through compulsory licensing, which could encourage others to infringe Motorola’s patents and diminish the “intangible and unquantifiable” defensive value of Motorola’s portfolio. Judge Robart heard oral argument on the motion on May 7, 2012, but took no action on the motion for months.
ONovember 29 – about a week after the first phase of the parties’ breach of contract trial concluded in his court – Judge Robart granted Microsoft’s motion. The court found that, because Microsoft is entitled to a license on RAND terms to Motorola’s H.264-essential patents and the court proceedings will result in Microsoft receiving such a license, the remedies paid by Microsoft to Motorola will constitute Motorola’s remedy for any Microsoft infringement. Thus, Motorola could not demonstrate that it would be irreparably harmed by Microsoft’s alleged infringement. Similarly, he found that the royalties would make Motorola whole, so the remedies at law adequately compensated Motorola.
The dismissal of Motorola’s claims for injunctive relief was without prejudice, however. Judge Robart explained that his ruling is based on the specific circumstances of the case, and if these circumstances were to change, Motorola could seek injunctive relief in the future. Presumably, this means that, if Microsoft fails to abide by its representations that it will enter an agreement on RAND terms determined by the court, Motorola may enjoin further infringement by Microsoft.
Finally, the order dissolved the anti-suit injunction previously issued by Judge Robart, which prevented Motorola from enforcing an injunction relating to infringement of its H.264-essential patents in Germany. The court’s order states that its dismissal of injunctive relief is for “Motorola’s entire H.264 standard essential patent portfolio, including the European Patents at issue in the German action” (so the anti-suit injunction is no longer necessary). In a footnote on p. 17, the court also says that its decision bars an injunction for the assertion of any Motorola-owned 802.11 standard-essential patent against Microsoft.
Thus, according to the court, Motorola cannot enjoin Microsoft from practicing any patents that are essential to either the H.264 or 802.11 standards. Because Microsoft’s motion related to Motorola’s claims of infringement for only three H.264-essential patents, it is questionable whether the court’s order reached beyond the scope of the case, or whether this was within the court’s power to grant ancillary relief. If the outcome of the RAND trial does not result in a settlement, this issue might be raised on appeal.