Motorola Mobility on Thursday won an important injunction against Apple in Germany, which could potentially bar Apple's European sales arm from selling iPhones and 3G-equipped iPads. At issue is a Motorola patent for cellular data transmission, part of wireless data transmission standards that are encumbered by an agreement to license the patent on "fair, reasonable, and non-discriminatory" terms. The ruling suggests that, at least in Germany, raising a FRAND defense against standards-essential patent infringement claims could be a difficult proposition, and may force Apple to accept Motorola's licensing terms—FRAND or not—for "past infringement."
The FRAND defense has worked for Apple elsewhere, including in lawsuits brought by Samsung in The Netherlands and France. The basic argument is that suing over standards-essential patents instead of working out a FRAND agreement amounts to violation of anti-competition laws. Without some legal barrier to suing over such patents, they could potentially be used as a club to thwart any would-be competitors once they have built products incorporating a particular technology standard.
The European patent in suit, EP1010336 (B1) "Method for Performing a Countdown Function During a Mobile-Originated Transfer for a Packet Radio System," is part of the General Packet Radio Service standard upon which 2G and 3G data services operate. Basically, that means that all Apple products that use 3G data—including all iPhones and all 3G-capable iPads—use the patented technology.
Motorola claims that it approached Apple in 2007, after the launch of the original iPhone, to license this and other standards essential patents for FRAND terms. "We have been negotiating with Apple and offering them reasonable licensing terms and conditions since 2007," Scott Offer, senior vice president and general counsel of Motorola Mobility, said in a statement e-mailed to Ars.
Apple apparently didn't consider the terms very fair, and the issue spilled into the courts in October last year, with Motorola filing lawsuits and ITC complaints against Apple over 18 patents. Motorola also filed three separate patent infringement suits in Germany over related European patents, including the patent at issue.
(In Apple's ongoing legal war over Android, Apple has likewise filed patent infringement suits aimed at Motorola's Android-based smartphones.)
In Germany, however, a legal precedent has established that a FRAND defense can only be used under certain conditions. Namely, a company must have made an offer to license the patents in question on FRAND terms and posted a bond for expected future royalties. If a patent holder then refuses the offer and sues, the FRAND defense can be used.
Apple apparently made an offer to license the patent on FRAND terms going forward. But the matter was complicated by the fact that Apple's agreement included a clause that would allow it to try and have the patent invalidated if Motorola tried to seek damages for past infringement over and above the agreed FRAND rate.
Apple is in fact contesting the validity of the patent in suit in another federal court in Germany. Obviously it doesn't want to have to pay for infringing a patent that might not be valid.
Unfortunately, the issue of past infringement of standards-essential patents hasn't previously been addressed in the relevant cases in Germany. As Motorola's legal team successfully argued, if a patent is infringed without a valid license, there should be some punishment in the form of monetary compensation. While competition law may require patent holders to honor FRAND agreements and offer a license going forward, the court agreed that past infringement should be treated differently.
The issue of past infringement gave Motorola a valid reason to reject Apple's FRAND license offer, according to the court, and for that reason it granted the injunction against Apple.
"We are pleased with the court's ruling," Offer said. "Today's decision validates Motorola Mobility's efforts to enforce its patents against Apple's infringement."
Since Apple is contesting the validity of Motorola's patent, it seems likely Apple will appeal the ruling. It may be able to have the injunction stayed until a decision on the appeal is reached. If the injunction remains in force, however, Apple may have to give in to Motorola's demands for damages.
Motorola, for its part, suggested it was willing to make a deal. "We will continue our efforts to resolve our global patent dispute as soon as practicable," Offer said.
UPDATE: Unsurprisingly, Apple will definitely appeal the ruling, according to a statement given to All Things D. "We're going to appeal the court's ruling right away," an Apple spokesperson said.
The company also seems confident that it can get an appeals court to stay the injunction—or at least avoid enforcement for the next couple weeks. "Holiday shoppers in Germany should have no problem finding the iPad or iPhone they want," the spokesperson said.
Listing image by Photograph by 3dom
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