A German court has found Apple in violation of a Motorola Mobility patent, ruling that Apple’s iPhone and 3G model iPads infringe on cellular communications, patents owned by Motorola Mobility that relate to General Packet Radio Service – GPRS – data packet transfer technology.
The patent-in-suit is European Patent 1010336 [B1] on a “method for performing a countdown function during a mobile-originated transfer for a packet radio system”. This patent is one of the two patents at issue in the action in which a default judgment was entered against Apple Inc. It was declared essential to the GPRS standard. It’s the European equivalent of U.S. Patent No. 6,359,898, a patent against which Apple raised a FRAND defense in the United States and which is being asserted in an action that was just transferred from the Western District of Wisconsin to the Northern District of Illinois.
Motorola said the ruling validated its “efforts to enforce its patents against Apple’s infringement”
The ruling targets Apple’s European sales, but relates only to that Apple’s sale of the related iPhone and 3G iPad to German customers. Although the court in Manheim, Germany granted Motorola’s requests for damages and an injunction banning the importation of iPhones and 3G iPads into Germany, because the ruling only relates to the importation of new devices, Apple has said it already has sufficient existing inventory to ensure German shoppers will be able to purchase the devices in the all-important lead up to Christmas.
The Android smartphone maker had complained that Apple failed to license one of its wireless intellectual properties. Apple uses the technology in its iPhones and 3G iPads. Motorola could now try to force Apple to remove the feature from its devices or halt all sales in Germany. Apple said it intended to appeal.
Motorola said the ruling validated its “efforts to enforce its patents against Apple’s infringement”.
Apple responded: “We’re going to appeal the court’s ruling right away. Holiday shoppers in Germany should have no problem finding the iPad or iPhone they want.”
If Motorola does decide to pursue an injunction blocking sales of Apple’s products the case could result in a clash between the iPad maker and Google – Motorola’s shareholders have approved the search giant’s takeover of their company and the deal is due to be completed in 2012.
The case relates to Motorola’s patent for a “method for performing a countdown function during a mobile-originated transfer for a packet radio system”. Motorola licenses this patent to others on Frand – Fair, reasonable and non-discriminatory – terms.
The owner of a Frand-type patent is obligated to license out its technology to third-parties because the invention has been declared to be essential to an industry standard.
Apple had offered to pay a Frand-set fee in the future and was willing to pay a similar rate for past infringements. But it lost the case because it tried to retain the right to contest the validity of the patent with a view to past damages.
It tried to do this because Motorola had defended its right to charge an above-Frand rate for Apple’s use of its technology over the past four years. This could have been many times higher than the rate Apple was willing to pay and potentially very expensive.
Motorola will have to post a 100m euro – £85m $133m – bond if it wishes to enforce a sales injunction against Apple. The cash would cover compensation to Apple if the ruling was later overturned.
Motorola welcomed the ruling. ”We will continue to take all necessary steps to protect our intellectual property, as the company’s patent portfolio and licensing agreements with companies both in the US and around the world are critical to our business,” said Scott Offer, senior vice-president and general counsel of Motorola Mobility.
A Motorola spokesperson said “We have been negotiating with Apple and offering them reasonable licensing terms and conditions since 2007, and will continue our efforts to resolve our global patent dispute as soon as practicable.”
The ruling includes an injunction that is “preliminarily enforceable” against Apple Sales International, Apple’s Ireland-based EU wholesale subsidiary. The injunction covers a wide range of products, including all iPhones as well as 3G-enabled iPads, since it deals with European patent 1010336 (B1), which describes a “method for performing countdown function during a mobile-originated transfer for a packet radio system.”
In a statement Motorola Mobility said, “we will continue to take all necessary steps to protect our intellectual property, as the Company’s patent portfolio and licensing agreements with companies both in the U.S. and around the world are critical to our business. We have been negotiating with Apple and offering them reasonable licensing terms and conditions since 2007, and will continue our efforts to resolve our global patent dispute as soon as practicable.”
It’s a significant ruling, because although Motorola previously secured a similar injunction against Apple in Germany, that one was based on a default judgment, meaning that Apple never presented a defense in the case. For Friday’s ruling, the court ruled after both sides had the opportunity to present their full arguments.
Lorian Mueller of http://fosspatents.blogspot.com says it could be years before the case is resolved. ”This is really a given between such large players in high stakes disputes,” said Mueller
“In Germany you get a first ruling by a regional court rather quickly – this litigation started in April this year. Usually between companies of this stature the disputes go to the higher regional court and that could take a couple of years,” said Mueller.
Commercially, this would pose substantial risk to Apple. Damages for past infringement could be high if they are not limited to a FRAND rate.
But the Orange-Book-Standard decision didn’t address the issue of past damages explicitly. I have talked to several lawyers who are uncomfortable with its lack of specificity. Motorola’s German counsel found multiple ways to justify a rejection of Apple’s FRAND offer and avoid having to grant a compulsory license, at least at this stage (this will likely be the most important issue on appeal). The one I just described at length is the one that won the day. Therefore, the court didn’t see a need to look into some of the other FRAND questions raised, which include the following ones:
- Motorola apparently argued that it would not have to grant a license for future use only if someone recognizes liability for past infringement in principle. They apparently want to receive a payment for those past damages or at least a bond that guarantees such payment.
- It’s unclear whether such licensing offers as the one made by Apple can be limited to a particular patent, or to standards-essential patents valid in only one jurisdiction (in this case, Germany), or whether a patent holder can withhold a license for the German market unless an offer to take a license covers all standards-essential patents held by the patent holder around the world.
The court also didn’t address the question of whether willful infringement might preclude a defendant from access to a FRAND defense. Motorola claims to have contacted Apple back in 2007 with a demand to take a license to its standards-essential patents.
Any one of the questions raised above might also entitle a FRAND patent holder in Germany to withhold a license and preserve his ability to request and obtain injunctive relief.
Mueller advises Microsoft and others and has campaigned for patent reform in Europe.
He said Apple could try to revise its products, but noted that Frand-type patents were, by their nature, hard to work around. He added that doing so could run the risk of causing communication problems with the mobile networks’ equipment.
The lawsuit is one of many phone and tablet-related legal battles being fought around the world between various technology companies looking to protect their patents and claim licensing fees from competitors. Although Motorola continues to be run as a separate business, in August of this year Google announced that it had agreed to acquire Motorola Mobility for US$12.5 billion, with the company’s portfolio of 17,000 patents seen as the biggest carrot for the search giant.
Apple will no doubt appeal this ruling to the Karlsruhe Higher Regional Court, seeking a stay of the injunction. If it fails in that effort, the Mannheim Regional Court has attached a €100 million ($134 million) bond (much lower than the $2.7 billion Apple was seeking) to the decision, which Motorola would be liable to pay in the event the injunction against Apple is enforced and a later appeal overturns the injunction awarded on Friday.
Although Apple is on the receiving end of this lawsuit it has also been very active in the courts suing HTC, Samsung and Motorola among others for claimed patent infringements.
It temporarily managed to have Samsung’s tablets banned from sale in Australia, although the restriction was overturned earlier today.
The US International Trade Commission is expected to rule on its dispute with Taiwanese smartphone maker HTC on 14 December. The judgement could lead to shipments of HTC’s products being blocked in the US.
Although the targets of Apple’s lawsuits are often firms which use Google’s Android software, the two firms have avoided suing each other. That is set to change when Google’s takeover of Motorola Mobility is completed early next year.
“Google with its pending acquisition will be watching this case with great interest as any victory is an endorsement of Motorola’s patent portfolio that it is seeking to acquire,” said Ben Wood, director of research at the telecoms consultancy CCS Insight.
source: mannheim-ruling pdf
source: mannheim-ruling scribd
source: foss patents
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