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Microsoft TRO Prevents Motorola From Enforcing Potential German Injunction
Practical Law Legal Update 6-518-9593 (Approx. 4 pages)
Microsoft TRO Prevents Motorola From Enforcing Potential German Injunction
by PLC Intellectual Property & Technology
| Published on 16 Apr 2012 • USA (National/Federal) |
In Microsoft Corporation v. Motorola Inc., the US District Court for the Western District of Washington granted Microsoft a temporary restraining order enjoining Motorola from enforcing any injunction a German court may order that would exclude certain Microsoft products from Germany based on Motorola's patents.
Key Litigated Issues
The key issue before the US District Court for the Western District of Washington was whether Microsoft Corporation was entitled to an anti-suit injunction preventing Motorola Inc. from enforcing a potential German court injunction in a parallel patent infringement proceeding.
Background
On November 10, 2010, Microsoft Corporation sued Motorola Inc. in the US District Court for the Western District of Washington for allegedly breaching its contractual commitment to license its standard-essential patents concerning certain wireless and video coding technologies under reasonable and non-discriminatory terms (RAND) according to certain standard setting organizations' patent policies. Microsoft alleged in its suit that Motorola instead demanded excessive and discriminatory royalties in its patent license offer letter to Microsoft.
Motorola then filed a patent infringement suit in Germany against Microsoft under some of its standard-essential patents to exclude certain Microsoft products from the German market. The German court is expected to issue a ruling on April 17, 2012, which may allow Motorola to take steps to exclude these Microsoft products from the German market.
On March 28, 2012, Microsoft filed a Motion for a Temporary Restraining Order and Preliminary Injunction in the district court to enjoin Motorola from enforcing any injunction the German court may order.
Outcome
On April 11, 2012, the district court granted Microsoft's motion for a temporary restraining order:
- Enjoining Motorola from enforcing any injunction the German court may order concerning some of Motorola's patents.
- Ordering Microsoft to post a $100 million security bond in connection with its motion.
Although the district court considered the standard preliminary injunction factors as a precaution, the district court relied on the three-factor test set out in E. & J. Gallo Winery v. Andina Licores S.A. to determine if an anti-suit injunction is appropriate (446 F.3d 984 (9th Cir. 2006)). Specifically, the district court considered whether:
- The parties and the issues are the same in the US and foreign litigations.
- The foreign litigation would frustrate a policy of the forum issuing the injunction.
- The impact on comity would be tolerable.
The court determined that each factor favored issuing the anti-suit injunction.
Similarity of Parties and Issues
The district court first noted that the parties are the same in the US and German actions.
The district court then considered the issues in the US and German actions. Specifically, the district court considered whether a resolution in the US action would be dispositive of the German action if enjoined, noting that anti-suit injunctions are appropriate only when the domestic action can dispose of all of the issues in the foreign action.
The court focused on three considerations to resolve this factor in favor of Microsoft:
- If the German court issued an injunction, it would sharply usurp the district court's ability to determine whether an injunction for a standard-essential patent is appropriate.
- If the district court determined that an injunction for any standard-essential patent is improper, it would dispose of this issue in the German action.
- The district court must determine whether Microsoft is entitled to a RAND license and, if so, the RAND rate.
Effect of Foreign Litigation on the Forum Issuing the Injunction
The district court determined that the German litigation would frustrate the district court's policies against:
- Inconsistent judgments if the two courts disagreed about the appropriateness of an injunction.
- Vexatious litigation.
- Forum shopping.
The district court expressed specific concerns about forum shopping. It noted that Motorola selectively chose two patents out of around 100 listed in its offer letter to Microsoft and, based on those patents, sued in Germany to obtain a ruling, on a different legal standard, before the district court could decide those patent issues.
Impact on Comity
The district court determined that:
- Motorola was asking the German court to limit the district court's ability to decide issues properly before it.
- The US has a special interest in this case because the parties initiated the litigation in the US district court on a more inclusive basis.
The district court believed that its need to maintain the integrity of the US case was as important or more important than accommodating Germany's substantially more limited interests.
Practical Implications
Parties should be aware that a court is permitted to issue an anti-suit injunction to limit forum shopping, prevent vexatious litigation and to protect its own ability to adjudicate the issues in a case. Even if a party wins a favorable ruling in a foreign jurisdiction, a US court can still enjoin that party from taking actions to benefit from that ruling.