Patent License

Los Angeles – A Seattle federal judge on Wednesday denied Motorola Mobility’s bid to dismiss Microsoft Inc.’s claim seeking to hold Motorola to a reasonable and non-discriminatory license agreement to be determined by the court for a set of wireless and video standards-essential patents the companies have been feuding over.

“Without the ability to create (or at the very least enforce creation of) the very license Motorola has promised to grant, Motorola’s obligations would be illusory,” Judge James L. Robart ruled in denying Motorola’s motion for partial summary judgment. “The court finds such a result illogical and declines to adopt Motorola’s position.”

Microsoft and Motorola are both members of international standards settings organizations the Institute of Electrical and Electronics Engineers and the International Telecommunication Union.

These organizations have adopted rules related to the disclosure and licensing of essential patents, which require or encourage their members to license essential patents on RAND terms to anyone who requests a license.

The current lawsuit involves two standards, the IEEE 802.11 wireless local area network standard and the ITU H.264 advanced video coding technology standard. Motorola has submitted numerous communications to the standards setting organizations that it will grant licenses on RAND terms for the patents essential to those two standards.

Microsoft sued Motorola in 2010 claiming that Motorola was seeking unreasonable royalty rates for the patents and so was breaching its obligations to the IEEE and ITU to grant license on RAND terms. Microsoft is seeking a declaration that it is entitled to a license on RAND terms for all of the patents and a judicial accounting of a RAND royalty rate.

In its counterclaims, Motorola is seeking a judgment that it has not breached any RAND obligations and that Microsoft repudiated or rejected the benefits of Motorola’s RAND obligations, thereby sacrificing its entitlement to a license to the standards-essential patents.

Judge Robart previously ruled that Motorola’s statements to the ITU and IEEE did indeed constitute binding agreements to license its essential patents on RAND terms, and that Microsoft has a right to such a license.

“The court has already twice rejected Motorola’s contention that Motorola’s agreements with the ITU and IEEE only require it to negotiate towards a RAND license,” the judge said.

“The RAND license must eventually execute between the parties, and interminable good faith negotiation by Motorola will not uphold its end of the bargain,” he said. “As the court previously explained, any other conclusion would be contrary to the purpose of Motorola’s commitments to the IEEE and ITU, which is to ensure widespread availability to standard essential patents to all implementers on RAND terms.”

Judge Robart said he will conduct a bench trial beginning Nov. 13 to determine a RAND royalty rate, to be followed by a jury trial on Microsoft’s breach of contract claim.

Los Angeles – The Ninth Circuit on Friday affirmed a Seattle federal judge’s decision to temporarily block Motorola Inc. from enforcing an patent injunction it won against Microsoft Inc. in Germany banning the sale of its Xbox 360 gaming system and Windows software.

Motorola and Microsoft are embroiled in ongoing contract and patent litigation in the Western District of Washington that focuses on how to interpret and enforce patent holders’ commitments to industry standard-setting organizations, which establish technical specifications to ensure that products from different manufacturers are compatible with each other.

The case specifically involves the H.264 video coding standard and the 802.11 wireless local area network standard. Motorola holds a number of H.264 standard essential patents, for which it has stated it will grant licenses on reasonable, nondiscriminatory terms.

Motorola sued Microsoft for infringement in November 2010, a day after Microsoft sued it for breach of contract claiming Motorola’s proposed royalty terms were unreasonable.

In July 2011, several months into the domestic litigation, Motorola sued Microsoft in Germany seeking to prevent it from selling allegedly infringing products there, including the Xbox 360 gaming system and some Windows software.

The German court ruled in May that Microsoft did not have a license for the patents, that it did have an enforceable contract with Motorola, and that it had infringe the patents. The court enjoined Microsoft from selling the Xbox 360 and software including Windows 7, Internet Explorer 9 and Windows Media Player 12.

The German injunction, however, is not self-enforcing, according to the Ninth Circuit. To enforce it, Motorola would have to post a security bond covering potential damages to Microsoft in the case that the infringement ruling should be reversed on appeal. Microsoft could then file a motion with the German appeals court to stay the injunction.

While the parties were waiting for the German court to hand down its decision, the Washington district court granted Microsoft’s request for a domestic “anti-suit” injunction blocking Motorola from enforcing any German injunction it might obtain. The domestic injunction led to the current Ninth Circuit appeal.

The district court determined that Microsoft’s domestic contract claims could potentially resolve the German patent claims, and the Ninth Circuit agreed.

Courts should give effect to freely made contractual agreements, the appeals court said. Motorola made promises to license its standard-essential patents worldwide to all comers, and in exchange, it received the benefit of having its patents implicated in the standards, the court said.

“It is clear that there is a contract, that it is enforceable by Microsoft, and that it encompasses not just U.S. patents but also the patents at issue in the German suit,” the Ninth Circuit ruled.

Los Angeles – TiVo Inc. said Monday that it has reached a deal to settle its patent infringement lawsuit against Verizon Communications, under which Verizon will pay $250.4 million and the parties will enter a mutual patent licensing arrangement.

In addition to the guaranteed compensation, Verizon will also pay monthly license fees through July 2018 for each Verizon DVR subscriber in excess of certain pre-determined levels, TiVo said.

“We are pleased to reach an agreement with Verizon which underscores the significant value our distribution partners derive from TiVo’s technological innovations and our shareholders derive from our investments in protecting TiVo’s intellectual property,” TiVo CEO and President Tom Rogers said. “We also look forward to working together on a variety of future opportunities as we continue to expand the content choices available to TiVo subscribers.”

Verizon and TiVo are now exploring future distribution of Internet video services developed through Verizon’s joint venture with Redbox, by making content distributed via that service part of the content accessible to users of TiVo’s retail DVR products, the companies said.

As part of the settlement, TiVo and Verizon agreed to dismiss all pending litigation between the companies with prejudice. The parties also entered into a cross license of their respective patent portfolios in the advanced television field.

“As with prior settlements, we also benefit by being able to operate our business under license from Verizon and by avoiding future legal expenses that we would have incurred during and after trial,” Rogers said. “Furthermore, we believe this settlement positions us well with respect to future enforceability of our patents.”

TiVo sued Verizon in 2009 alleging it infringed TiVo’s patents for digital video recording technology. TiVo asserted three patents, including U.S. Patent Number 6,233,389, entitled “Multimedia Time Warping System,” U.S. Patent Number 7,529,465 B2, entitled “System for Time Shifting Multimedia Content Streams” and U.S. Patent No. 7,493,015 B1, entitled “Automatic Playback Overshoot Correction System.”

Verizon’s FiOS television product offers digital video recording, among other services, that infringe the three patents, according to TiVo. The case had been set to go to trial in October.

Los Angeles – In a surprising twist from an ongoing patent infringement dispute between Microsoft and Barnes & Noble, the two companies have agreed to a new partnership with one another to focus on e-reading and the education market.

The new subsidiary yet to be named will include Barnes & Noble’s digital and college businesses. Microsoft’s Windows 8 program will be included in a Nook e-reading application to be created by the subsidiary.

The largest book retailer in the United States will reportedly own the lion’s share of the subsidiary, with an 82.4 percent stake, while Microsoft will make an initial investment of $300 million at a post-money valuation of $1.7 billion in exchange for a 17.6 percent equity share. The subsidiary will apparently have an ongoing relationship with Barnes & Noble’s retail bookstores, however it is not clear how much of a role the stores will have in promoting it, considering that the subsidiary’s goal is to accelerate the transition from tangible books and publications to e-reading.

The inclusion of its college division in the new subsidiary is said to be a very crucial component of the strategic vision of the partnership. Under the venture, Barnes & Noble’s Nook Study software will offer college students and educators an outstanding technology platform for the distribution and management of digital education materials. The goal of the subsidiary is to revolutionize the way people consume, create, and share digital information.

Back in March 2011, Microsoft sued Barnes & Noble, Foxconn and Inventec (the companies that manufacture the Nook), claiming that the Android-based device infringed several Microsoft patents. Barnes & Noble responded to the patent infringement complaint by counter-suing with the U.S. International Trade Commission.

Neither company has offered much information relating to the settlement details. In the past, Barnes & Noble has been quite stubborn when it comes to paying Microsoft royalties for the patents it allegedly infringed, however it was confirmed that the bookseller will be paying the software giant royalties for every Nook sold as a result of the subsidiary.

Los Angeles – It was ruled a win for Finland’s Nokia and Taiwan’s HTC when the European Patent Office stated its judgment that the IPCom patent ’100A’ was “invalid in its current form.” However this ongoing battle of over five years likely won’t end here as IPCom has stated that it will challenge the ruling.

In 2007, IPCom purchased the mobile telephony patent portfolio of Bosch, which led to licensing agreements with multiple top phone makers. However, Nokia and HTC were not among that list due to the fact that a licensing agreement could not be reached. Therefore, IPCom claimed that Nokia and HTC products were infringing on patents owned by the company and decided to proceed accordingly. While IPCom attacked the two companies for patent and licensing infringement which includes infringement of the ’100A’ patent, Nokia has said that IPCom’s “licensing fee demands are excessive and unjustifiable.”

This five year battle has included mostly victories for IPCom. In 2009, IPCom challenged HTC for infringement and won in a German court. HTC appealed the ruling at first but then decided to put a halt to its pursuit of the appeal. Also, last week a German court ruled that Nokia had in fact committed infringement on IPCom’s intellectual property. Nokia is challenging the ruling.

During the court proceedings and investigation of this particular infringement, a decision was made that the ’100A’ patent was invalid. The patent relates to 3G users access of channels and the assignment in its networks.

Paul Melin, the Vice President of Intellectual Property at Nokia stated, “We are pleased that the European Patent Office has confirmed that this IPCom patent is invalid,” and added that IPCom “needs to recognize its position and end its unrealistic demands for what remains of this significantly diminished portfolio.” A representative from HTC stated, “This ruling undermines IPCom’s license infringement claim against us. We trust IPCom will now reconsider its opportunistic dispute with HTC and withdraw its legal action against us.”

Los Angeles – Motorola was recently granted an injunction by the Mannheim Regional Court in Germany prohibiting competitor Apple from selling mobile devices infringing on two patents owned by Motorola. The lawsuit concerned two European Motorola patents, one covering “a method for performing a countdown function during a mobile-originated transfer for a packet radio system,” as well as a patent for a “multiple pager status synchronization system and method.” Both European Motorola patents in issue are equivalent to current U.S. patents.

Rather than defending its devices, as it has done in countless international patent actions, it appears that Apple defaulted in this case. A default judgment occurs when a party neglects or refuses to take some critical action, such as responding to the complaint or appearing in court to defend against the lawsuit. While Apple’s decision not to defend itself may have been a procedural tactic, the judgment is still in effect barring Apple products from sale.

However, the effect of the injunction is being called into question as Motorola elected to sue Apple rather than its regional subsidiary. The injunction therefore is effective against Apple but is perhaps ineffective against its regional subsidiary, commenters say.

Furthermore, because the case was decided through a default judgment, there was no need for an adjudication on the merits. It may therefore be difficult to predict the potential outcomes of the litigation. In this case, the default judgment is appealable. Certainly, if Apple is prohibited from selling products in Germany, Europe’s strongest economy and largest market, it will be a devastating blow to the company’s international revenue stream. However, even if Apple does eventually lose the case on the merits, it is likely that the mobile devices giant would negotiate some type of license agreement with Motorola, allowing Apple to continue to offer its tablets, smartphones, and computers in Germany.