Yesterday we noted that Microsoft and Motorola are arguing over a couple of issues in the lead-up to the August breach of contract jury trial taking place in Judge Robart’s court in Seattle. The two issues are only tangentially related: Microsoft would like Judge Robart to release the $100 million bond that he previously required Microsoft to post as security for the preliminary injunction that prevented Motorola from enforcing a German standard-essential patent injunction; Motorola argues that Microsoft has failed to produce discovery that supports its claim for RAND breach-related damages that stems from measures Microsoft took to move its German distribution center, in case Motorola did obtain and enforce an injunction.
Judge Robart set an expedited “letter-briefing” schedule on these issues and will hold a telephonic oral argument next week. After the jump, we’ll take a quick look at the parties’ briefs and arguments.
Potential Release of Microsoft’s Bond
From an SEP perspective, the more interesting issue of the two is Microsoft’s request that Judge Robart release the $100 million bond that he previously required it to post to conjunction with an anti-suit preliminary injunction. This dispute appears to hinge over the purpose of the bond itself.
A bit of background may be appropriate first — back in April/May 2012, when Judge Robart imposed a temporary restraining order (later converted to a preliminary injunction, and then to a permanent injunction) that prevented Motorola from enforcing the German SEP-related injunctions that it won (on H.264-essential patents), he required Microsoft to post a $100 million bond. His reasoning for imposing that bond was “to compensate Motorola for its losses in the event that this injunction is reversed or vacated.” (If you need even more background, you can catch up on the MS-Moto case here — or you can take a look at the court’s May 14, 2012 preliminary injunction order.)
But now Microsoft has asked Judge Robart to release the bond, arguing that the bond amount “far exceeds any sum that could ever be due to Motorola” under the court’s RAND royalty determination (around $1.8M/year). Microsoft claims that it has tendered past royalties to Motorola, and that the “$100 million bond is unnecessary to secure Microsoft’s payment.” Microsoft seems to be making the claim that the bond was required as security for RAND royalties, in case Microsoft refused or was unable to pay (the latter obviously being an extremely remote possibility).
Motorola disagrees that the bond should be released, arguing that the bond was imposed not as security for RAND royalties, but for “any damages to Motorola” that resulted from the injunction. Motorola argues that the injunctive relief awarded to Microsoft could still be reversed or vacated in further proceedings (i.e., on appeal), and that harm to Motorola could go beyond RAND royalties (e.g., at least one of the German patents has expired during the pendency of the injunction). According to Motorola, preservation of its rights pending final judgment was the true purpose of the bond — not as some sort of offset for RAND royalties. As such, Motorola asserts the bond should be kept in place until the action in Washington and all appeals are exhausted.
- 13.06.18 Microsoft Letter Brief re Release of Bond
- 13.06.20 Motorola Responsive Letter Brief re Bond
Damages Discovery Dispute
Discovery disputes arise in virtually every patent litigation, and given that this particular dispute isn’t unique to SEP issues, we won’t spend too much time on it here — if you’re interested in the particularities, you can read the briefs for yourselves (links below). But essentially, Motorola is arguing that Microsoft has failed to provide appropriate discovery to Motorola on a contentious damages issue — the question of whether Microsoft’s decision to move its European distribution center from Germany to The Netherlands was based on Motorola obtaining (and potentially enforcing) an injunction in Germany based on Microsoft’s H.264-essential patent infringement.
Motorola argues that Microsoft’s deposition witnesses were either unable or unwilling to provide testimony about the impetus for the move. As a result, Motorola wants Judge Robart either to compel Microsoft to produce more witnesses for deposition, or to preclude Microsoft from relying on this theory at trial (a path they’ve been down before). Microsoft disagrees with Motorola’s characterization of witness testimony, saying that there has been ample testimony that demonstrates that the distribution center move was made to prevent any business disruptions that an injunction could cause.