Apple and Samsung have made their final pitches to Judge Lucy Koh in their latest Silicon Valley patents battle, but other decisions, on both sides of the Atlantic, may have a longer term impact on the thorny web of mobile IPR practice. EU competition authorities have ruled that Motorola Mobility did abuse its dominant market position in its own Apple fight, while the US Supreme Court is doling out judgements which may reduce the power of patent trolls.
The European Commission is conducting a series of probes of how major handset makers, including Motorola and Samsung, have licensed their standards-essential patents (SEP), which should be subject to Frand (fair reasonable and non-discriminatory) terms, ill-defined as these often are. The EC’s competition agency has found that Motorola Mobility abused a dominant market position, acquired through its SEP holdings, when it sought an injunction against Apple devices that alleged violated those patents.
The EC stopped short of a fine, acknowledging the lack of existing case law in this area, but
ordered the firm, now part of Google, to ‘undo the negative effects’ of the product ban, which was obtained from a German court and concerns IPR which is part of the GPRS standard. Motorola had previously pledged to standards bodies such as Europe’s ETSI that is would license these patents on Frand terms. After the German trial went against Apple, the iPhone maker agreed to license the technology on terms set by the court, but nonetheless, Motorola pursued the injunction, which the EC clearly sees as overstepping the mark in aggressive competitive tactics.
The EC also found that Motorola behaved in an anti-competitive way when it threatened to enforce its injunction if Apple did not give up its right to challenge the validity of the offending patents, or appeal against the ruling that it infringed them.
The investigation of Motorola’s practices began in April 2012, sparked by a complaint from Apple. The EC has been taking a tougher line on Frand, especially in the smartphone business, which has been beset by distracting and costly lawsuits round the world for the past couple of years. During that time, standards bodies, courts and regulatory authorities have become increasingly impatient about handset makers’ readiness to attack one another in court rather than with product innovation, and to brandish aggressive weapons such as injunctions, which are seen as a way to cripple rivals, not merely to support legitimate technology rights.
However, this is the first time the EC has enshrined the rising disapproval of injunction claims in an actual ruling against a specific firm, and many expect other such judgements to follow in Europe and elsewhere, clipping companies’ wings in terms of the legal weapons available and setting important precedents.
In the Samsung case, the Korean giant has already agreed not to pursue such injunctions in Europe in future, in order to avoid a ruling like that handed down to Motorola, and potential large fines. It has agreed to pursue licensing deals based on Frand terms, with terms settled in court or arbitration if no agreement can be reached. Google made a similar deal with US antitrust authorities, concerning Motorola Mobility, last year. Although the Android giant is selling most of its handset business to Lenovo, it retains Motorola’s patents, and the accompanying legal battles with Microsoft and others.
Across the pond, the US Supreme Court has issued the latest in a series of reversals of patent courts’ judgements, with rulings which could make it easier for judges to penalize patent trolls. Although these new cases are not mobile-related, they will have broader implications, especially for the smartphone space, where trolls last year gained more US patents than actual manufacturers for the first time ever. The Supreme Court, by reversing rulings in cases called Octane and Highmark, both involving trolls, has effectively made it easier for lower courts to impose fee-shifting ‘ where one side has to pay some or all of its opponent’s legal fees. This fee-shifting is seen as a way to deter weak cases brought by trolls in the hope that a defendant will pay them to go away, rather than incur the legal costs of a trial.
The patent court has made fee-shifting almost impossible to obtain, but that could change with the latest reversals. The Supreme Court, in the Octane case, said that the US Circuit Court for the Federal Circuit, which hears every patent appeal, was mistaken in the way it identified cases that were sufficiently exceptional to justify fee-shifting, and has lowered the bar. In the Highmark case, Supreme Court Justice Sonia Sotomayo removed some of the power of the Federal Circuit judges to review how lower courts decided what was bad conduct.