Late last week, Apple Inc. filed a notice of appeal with the United States District Court for the Western District of Wisconsin, announcing its intent to appeal to the Federal Circuit Judge Barbara B. Crabb’s dismissal of Apple’s SEP-related contract and antitrust claims against Motorola Mobility (case No. 3:11-cv-00178-bbc). This presents us with an opportunity to do a brief “catching up on” post on this particular portion of the larger Apple-Motorola dispute.
Unlike the litigation between the parties that took place before Judge Posner in the Northern District of Illinois (the appeal of which is currently pending before the Federal Circuit), the case before Judge Crabb did not include any particular patent infringement issues – in fact, it came about as set of claims (breach of contract, equitable estoppel, tortious interference, and antitrust claims) brought by Apple as counterclaims in the U.S. International Trade Commission in Inv. No. 337-TA-745, which was originally brought by Motorola against Apple back in October 2010 over Apple’s alleged infringement of certain Motorola cellular and Wi-Fi standard-essential patents. Apple filed the counterclaims in March 2011, but because these types of counterclaims fall outside of the ITC’s statutory mandate, the claims were immediately removed to Judge Crabb’s court in W.D. Wis. under two U.S. statutes (28 U.S.C. § 1446 and 19 C.F.R. § 201.14(e)) and captioned as a separate case.
Discovery proceeded before Judge Crabb for over a year. Then, in August 2012, Judge Crabb issued a wide-ranging summary judgment ruling that narrowed the issues for trial. In her ruling, she — like Judge Robart in the Microsoft-Motorola case — found that Motorola’s RAND commitments to ETSI and the IEEE were binding contracts enforceable by Apple as a third-party beneficiary. Judge Crabb also found that the ETSI rules required bona fide efforts to disclose both issued patents and patent applications, an issue of contention between the parties. However, Judge Crabb granted summary judgment in favor of Motorola and dismissed Apple’s tortious interference and antitrust claims, finding, among other things, that Apple could not prove damages.
In September 2012, the Court scheduled a bench trial to begin Nov. 5, 2012 on Apple’s breach of contract and equitable estoppel claims. On October 29, 2012, She denied a motion brought by Motorola to preclude specific performance, finding that in fact, specific performance “may be the only appropriate remedy.” But two days later, in response to a Motorola request for clarification, Apple filed a document with the Court in which it committed to taking a license on terms determined in the bench trial if the royalties do not exceed $1 per device for Motorola’s Wi-Fi and cellular essential patents.
Apple’s statement apparently did not sit well with Judge Crabb, who expressed reservations about her ruling being used simply as a bargaining chip in negotiations. Then, on November 5 – the morning trial had been scheduled to start – Judge Crabb issued an order dismissing the case. In a clarifying order a few days later, she found that on the record before her, determining RAND terms for Motorola’s patents would be unrealistic, stating that “In effect, Apple is asking the court to assess one part of a complex contract that has yet to be negotiated.” In a clarifying order a few days later, Judge Crabb even spoke favorably of the possibility that the parties enter arbitration, saying it “seems to be the best way, if not the only way, for the parties to negotiate a rate that takes into account the many elements of a licensing fee that are . . . critical to the determination of a FRAND rate.” And while Judge Crabb initially indicated that she would dismiss the case with prejudice, her final dismissal of Apple’s breach contract and equitable estoppel claims was without prejudice — in part because she did not want to hinder any arbitration between the parties, and in part because Judge Crabb noted that the claims were not decided on the merits. (The antitrust and tortious interference claims, having been decided on the merits, were dismissed with prejudice).
Because the case was filed back in March 2011 and the issues in this case do not involve injunctive relief, at this point in time it appears as though the appeal will be largely unaffected by the FTC-Google consent agreement announced last week. However, it may be possible for Apple to avail itself of some of the “RAND Determination” procedures set forth in the FTC order, either concurrent with or subsequent to any decision on appeal in this case.