Today the Federal Circuit (Lourie, Dyk and Reyna) granted Microsoft’s motion to transfer Motorola’s appeal of Judge Robart’s RAND ruling to the Ninth Circuit, settling the parties dispute whether the Federal Circuit or Ninth Circuit has appellate jurisdiction over this particular appeal (see our Dec. 16, 2013 post and prior posts summarizing transfer motion). The Federal Circuit held that law of the case prevailed and required deference to the Ninth Circuit’s prior determination that it had appellate jurisdiction in this case.
Background. Recall that this case was filed by Microsoft against Motorola in W.D. Wash. as a contract-based action alleging that Motorola’s offered license rate on RAND-encumbered patents breached its obligations to standard setting organizations (ITU and IEEE). Motorola then sued Microsoft in W.D. Wis. for infringing those same patents. The W.D. Wis. case was transferred to W.D. Wash. and consolidated with Microsoft’s contract-based action before Judge Robart.
Meanwhile, Motorola had received an injunction against Microsoft in a German patent infringement action directed to the same standards where the German court rejected Microsoft’s assertion of ITU and IEEE standard setting obligations. Judge Robart enjoined Motorola from enforcing that injunction while Microsoft’s case was pending before him to determine what a RAND royalty rate would be and whether Motorola breached its RAND obligations. Motorola appealed Judge Robart’s preliminary injunction decision to the Ninth Circuit. The Ninth Circuit ruled that it had appellate jurisdiction because Microsoft’s complaint “sounded in contract.” The Ninth Circuit affirmed Judge Robart’s injunction.
Judge Robart held a bench trial and issued a first-of-its-kind RAND royalty rate determination (see our May 1, 2013 post) and later held a jury trial that found that Motorola had breached its RAND obligation (see our Sep. 4, 2014 post). Judge Robart then issued a Rule 54(b) final judgment on the RAND rulings and stayed the remainder of the consolidated cases–e.g., Motorola’s infringement claims. Motorola appealed the Rule 54(b) RAND judgment to the Federal Circuit (see our Nov. 12, 2013 post). Microsoft then moved to transfer that appeal to the Ninth Circuit, which had previously ruled that it had appellate jurisdiction in that case based on Motorola’s injunction appeal.
Federal Circuit’s Transfer Decision. The Federal Circuit granted Microsoft’s motion to transfer the appeal to the Ninth Circuit. The Federal Circuit found that the Ninth Circuit’s decision that it has appellate jurisdiction is law of the case, which the Federal Circuit must adhere to “unless there is a showing of ‘extraordinary circumstances such as where the initial decision was clearly erroneous and would work a manifest injustice.” The Federal Circuit found no such extraordinary circumstances, stating that “[t]he requested relief in Microsoft’s complaint plausibly supports the Ninth Circuit’s conclusion that this matter does not arise under the patent laws.”
The Federal Circuit’s decision today is limited to the unique facts and procedural posture of this particular case without the Federal Circuit deciding in its own independent view whether appellate jurisdiction properly would have resided in the Federal Circuit or regional circuit. The issues on appeal are fascinating and complex. This is the first case where a judge has set forth an analytical framework for deciding a RAND royalty rate and, because it was a bench trial, further explained the application of that framework to the facts at hand. Because damages have been deemed a jury issue, the detailed thought process of most patent damages determinations usually reside within a jury black-box royalty rate decision with little insight into what swayed them to a higher or lower royalty rate. This bench trial and written decision provide unique insight into that damages decision process. Further, this is one of the few cases where a patent license royalty rate determination is made as to a portfolio of patents, rather than a typical litigated damages determination based on individually infringed patents.
These complex issues in this particular case will now be decided by an appeals court of general jurisdiction, rather than the specialized Federal Circuit patent appeals court that most likely will hear the bulk of cases raising similar issues — e.g., RAND obligations, damages for portfolio of patents, etc. So there may remain uncertainty on these issues going forward, because the Federal Circuit most likely is not bound in other cases by whatever the Ninth Circuit decides in this particular case. The other bench trial determined RAND rate and judicial analysis by Judge Holderman in the Innovatio case may not see any appellate review, because it appears that the RAND royalty determination may lead to settlement of all parties without determining infringement, validity or other issues in the first instance, much less an appeal (see our Feb. 7, 2014 post). The other two cases so far in which a RAND rate has been determined were both jury trials with black-box verdicts. One of those cases, Realtek v. LSI tried before Judge Whyte of N.D. Cal., most likely will be appealed to the Ninth Circuit that already has heard an interlocutory appeal in that case (see our Mar. 21, 2014 post), though appellate jurisdiction was not contested or expressly decided in that interlocutory appeal. The other case, Ericsson v. D-Link tried before Judge Davis in E.D. Tex., was appealed and briefed at the Federal Circuit and we await the hearing and decision in that appeal.