Last week, the Federal Circuit granted a motion by Microsoft for permission to file an amicus brief in the Apple-Motorola appeal (No. 12-1548, Judge Posner edition). Microsoft then filed its amicus brief, becoming the latest in a long time of companies (see, e.g., here, here, here, and here) to weigh in on the case. Today, the public version of Microsoft’s brief became available. In it, Microsoft supports Apple and Judge Posner, but cautions the Federal Circuit against making an overly broad ruling and deciding issues related to standard-essential patents and RAND licensing obligations that are not present before the court.
Microsoft pulls no punches — it argues at the outset that Motorola’s positions “are wrong as a legal matter and terrible as a policy matter.” That should come as no surprise, given Microsoft’s current litigation disputes with Motorola (as well as ongoing competition with its parent company, Google). But Microsoft claims that its interest in this case goes far beyond its adversarial relationship with Motorola, arguing that as an active participant in many SSOs and implementer of many standards, Microsoft wants to ensure that standards are broadly implemented for the benefit of the public.
Perhaps recognizing that the Federal Circuit could rule in a way that might conflict with various district court rulings on similar standard-essential patent issues (i.e., Judge Robart’s RAND-setting decision), Microsoft seems to want the court to tread lightly here. It asserts first that because Judge Posner generally based his decisions on damages and injunction relief without doing deep dives into issues unique to standard-essential patents, the Federal Circuit could resolve this appeal without making sweeping pronouncements regarding RAND or SEP issues. Microsoft argues that with respect to damages, Judge Posner’s Daubert decision to exclude Motorola’s expert testimony “had nothing to do with the valuation of a RAND royalty for standard-essential patents.” As to injunctive relief, Microsoft claims the Judge Posner merely applied the equitable test of eBay and found that monetary relief was adequate — again, no special rules for standard-essential patents.
Microsoft, of course, does omit SEP-specific issues from its brief — should the Federal Circuit consider these issues, Microsoft argues that consideration of the RAND commitment must remain at the forefront. It notes that without the presence of RAND commitments in standard-setting, SSOs and SSO participants would be repeatedly subject to antitrust scrutiny — and that therefore, the RAND commitment has to mean something. That something, according to Microsoft, is that the patent holder agrees to receive monetary relief only as compensation for infringement, and that the value of the compensation be limited to the actual value of the patented invention alone (as opposed to its value when included in the standard).
On the damages/RAND royalty front, Microsoft argues that the patent laws do not require a court is not required to use a “hypothetical negotiation” between the parties (i.e., the Georgia-Pacific factors) as the basis for computing a reasonable royalty — one of the seemingly few points where Judge Robart disagreed with Microsoft in his RAND-setting ruling. Microsoft tells the Federal Circuit that damages should be based on the intrinsic value of the patent itself, not extraneous factors, and the courts need only apply “sound economic and factual predicates” to discern this value. According to Microsoft, Motorola’s past ex post licenses for its SEPs here reflected not just the value of the patents themselves, but also “hold-up value” — the value conferred by their inclusion in the standard. Microsoft asserts that these licenses then should not be considered as part of the damages analysis.
As for injunctive relief, Microsoft disagrees that Judge Posner created a “categorical rule” or “blanket prohibition” on injunctive relief for infringement of SEPs. It calls the question of a RAND-encumbered patent owner’s entitlement to injunction relief “an interesting question — but not a question presented on appeal here.” Microsoft argues that RAND commitments must be considered as part of the eBay analysis, which it says Judge Posner precisely did here.