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.