Samsung paid Microsoft over $1 billion in Android patent royalties in 12-month period: court filing

When Microsoft filed its contract lawsuit against Samsung over Android patent royalties more than two months ago, I predicted that it "[wouldn't] be able to get everything sealed." And yesterday two key pieces of information about the Microsoft-Samsung patent license agreement came to light as Microsoft filed its amended complaint in public (you can find the document at the end of this post):

• The 2011 deal covers seven fiscal years (July 1 - June 30). The last fiscal year it covers will end on June 30, 2018.

• "For Fiscal Year 2 of the License Agreement [July 1, 2012 - June 30, 2013], Samsung reported to Microsoft [...] that Samsung owed over $1 billion in royalties under the Agreement. Microsoft agreed[.]"

  Paragraph 45 of the complaint states the precise number: $1,041,642,161.25 (and interest of $6,991,844.64 that Microsoft claims to be entitled to but Samsung hasn't paid)

So far, Samsung has not yet responded to Microsoft's position on what bearing Microsoft's acquisition of Nokia's mobile devices business has on this contract. Microsoft recalls, as no one would deny, that "[b]oth Microsoft and Samsung, which are highly sophisticated businesses, were represented by skilled counsel throughout the process of negotiating, draft, and executing the License Agreement." And these parties, according to the complaint, agreed to the following clause:

3.2 New Subsidiary License. If a Subsidiary or business unit/division is acquired by a Party after the Effective Date, the Subsidiary or business unit/division shall be deemed a Grantee under Section 3.1 and the License granted under Section 3.1 shall extend to such Subsidiary of business unit/division, but effective only as of the of the acquisition.

Microsoft concedes, however, that "[t]he License Agreement als contains an anti-assignment provision in Section 7.7 [...]," but says "the Nokia Acquisition is precisely the kind of transaction that is explicitly permitted." The dispute also appears to (at least potentially) involve a parallel Collaboration Agreement relating to Samsung's Windows-based devices.

I have a very conservative pacta sunt servanda approach, so I would never downplay the importance of what's at stake in that regard. However, rather than get bogged down in all sorts of contract law details, let's focus on the overarching strategic issues.

There's a non-party to this deal that is still at the center of the dispute: Google. About ten years ago, then-Microsoft CEO Steve Ballmer allegedly (according to a court filing) said this:

"F...ing Eric Schmidt is a f...ing p...y. I'm going to f...ing bury that guy, I have done it before, and I will do it again. I'm going to f...ing kill Google."

As of today, they're both doing well, and if anyone was now going to "bury" the other, Google would be far more likely to do it to Microsoft than the other way round ("far more likely" is an understatement). From a consumer point of view I regret that Google is still superdominant in the search engine business, but I have only myself to blame because every time I install a Windows computer, the first thing I do after the installation process is to set Google as my standard search engine for all browsers, even though I've never been disappointed with the results that Bing delivered on the few occasions on which I used it. (At least I know Google invests more money in very ambitious research projects that can make the world a better place than its rivals, probably more than all of its rivals combined.) Anyway, Google's core business is safe. Meanwhile, Google is actually becoming the new Microsoft in terms of the dominant operating system maker of the future -- just look at this chart:

(You can find more such statistics at Statista)

Google is making fast market share gains at Microsoft's expense, in a field of technology in which Microsoft filed tens of thousands of patents over the last 20 years (becauses it invested tens of billions of dollars in operating system R&D). I would have thought that Microsoft owned a patent thicket that would constitute a lethal entrance barrier even if a new entrant managed to get traction among app developers. I was wrong. I've admitted it before, especially in my October 1 blog post, in which I showed that only about 9% of 222 smartphone patent assertions (by Apple, Microsoft, Motorola, Nokia and Samsung combined, in the U.S., Germany, and the UK) had merit based on final or interim results:

Microsoft has, to put it diplomatically, not outperformed the others so far:

To be fair, Microsoft would also have a 9% "hit rate" in the above chart if a patent with respect to which the Federal Circuit reversed the final ITC ruling had not expired and if, despite some remaining issues on remand, Microsoft had prevailed. But if we look at it in terms of Microsoft patents that are presently (after four years of litigation) enforceable against Android devices, there's only one, and it covers the scheduling of meetings from a mobile device. I always try hard to apply the same standard to all companies (regardless of past or ongoing business relationships), and just like I wrote in the spring that the only feature of which Apple proved ownership in its first 49 months of Android litigation was rubberbanding, it's also a fact that Microsoft's Android patent enforcement is now in its 49th month and the aforementioned scheduling feature is the only one of which Microsoft has proved ownership in court so far. I repeat, so far: it remains to be seen what happens in the years ahead should Microsoft and Motorola not settle before some appeals are resolved and some infringement assertions are finally taken to trial in the Western District of Washington.

The impact of Apple and Microsoft's IP enforcement efforts was and is obviously not limited to the patents they successfully enforce in court. The fact that they do enforce from time to time (though they both haven't filed any new claims against Android devices in years) presumably does have an effect on other companies' decisions. It is very likely that certain features on which Apple and Microsoft hold patents were never incorporated into Android for fear of enforcement. But is Android lacking something today that I as a consumer would miss? No.

In my previous post I also showed the difference between Apple's exclusionary approach on the one hand and Microsoft's licensing focus on the other hand. Microsoft has announced a total of 27 Android/Chrome-related license deals and brought infringement lawsuits against only two device makers, while Apple has started three disputes and extended a license to only one Android device maker (HTC). The following chart shows the difference (click on the image to enlarge):

Unless Microsoft turns its litigation against Motorola around, one can't help but conclude that Microsoft's dealmaking capabilities are stronger than its claims that Android infringes many of its patents. Assuming for the sake of the argument that Microsoft is right and Samsung wants to get out of the existing license agreement, this certainly wouldn't be the case if Microsoft had proven against Motorola (and Barnes & Noble, though not much happened there before a strategic partnership also put the patent dispute to rest) that Android does indeed infringe on valid Microsoft patent claims to a huge extent. (By "huge extent" I obviously mean more than a meeting scheduler feature that I never used, at least not on any mobile device.)

License agreements and FRAND licensing commitments are, besides smart litigation tactics, also the reason for which Motorola hasn't been able to enforce any patent against Microsoft for even one second. It was a contract lawsuit in the Western District of Washington in which a temporary-restraining-order-turned-preliminary-injunction came down and prevented Motorola from enforcing two German H.264 (video codec) injunctions against Microsoft. I guess part of the reason for which Microsoft brought the present contract case against Samsung was so it could seek an "anti-suit injunction" again if Samsung started to enforce any of its patents against the former Nokia devices. Also, it was a contract-based defense (related to ActiveSync) that got Motorola's German synchronization patent case stayed (though Motorola was able to enforce the same patent against the email service of Apple's iCloud for 19 months).

Between Microsoft and Samsung, the amount of money that is at stake (I had no idea before how much it was, though I figured it wasn't chump change) makes a settlement very difficult on the one hand and a very logical outcome on the other hand. If Microsoft prevails on a pacta sunt servanda basis, Samsung will owe it many billions over the years, though this would certainly not contribute to Samsung's enthusiasm as a Windows device maker (think of the operating system market share chart). If, however, the license agreement does not apply anymore, Samsung may decide to simply fend off any Microsoft patent assertions against Android in court and pay Microsoft as much in Android patent royalties going forward as Motorola has paid over the last four years: nothing. (Or it would assert wireless patents against Microsoft's acquired Nokia devices and offset a large part of the royalty revenue stream.) The extreme outcomes are unlikely. A renegotiated license agreement is my best guess.

Finally, here's the amended complaint:

14-10-03 Amended Microsoft v. Samsung complaint.pdf by Florian Mueller

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Setback for Google: German court finds Microsoft licensed to Motorola's push notification patent

Google won't be able to address Android's wide-scale patent infringement issues through litigation over Motorola's patents, which have given it no real leverage so far and probably never will. The fact that 20 royalty-bearing Android-related patent license deals have been announced (most recently, Microsoft's agreement with Foxconn parent company Hon Hai) is reflective of the complete loss of faith of the wider Android ecosystem in Google's ability to deter third-party patent holders such as Apple, Microsoft and Nokia from enforcing their rights. Android device makers have had zero benefit -- precisely zero -- from Google's $12.5 billion Motorola deal. Just like Google's shareholders. Google mistakenly thought that anybody who owns tens of thousands of patents in this industry would be able to settle any infringement issues, no matter their scale, through cross-license agreements that involve little or no money. This doesn't work. Licensing, however, does work.

This morning Google suffered another setback, which I predicted. The Mannheim Regional Court just announced its finding that Google's Motorola Mobility is not entitled to an injunction against Microsoft over its push notification patent because Google owes Microsoft a license under an ActiveSync license agreement. If Google can get anything out of this litigation, it may be able to claim damages for past infringement (for the period prior to Google's acquisition of Motorola Mobility), but the case is now stayed pending a parallel nullity proceeding at the Bundespatentgericht (Federal Patent Court). Apple, against which Motorola won and enforced an injunction that an appeals court will most likely lift next week, and Microsoft are challenging the validity of EP0847654 on a "multiple pager status synchronization system and method". German courts usually stay infringement actions only if there is, in their assessment, a high probability of invalidation, but in this particular Motorola v. Microsoft case the hurdle was lowered substantially by the fact that Microsoft prevailed on its contractual defense against Google under an ActiveSync license agreement that comes with a grant-back obligation, as Judge Andreas Voss ("Voß" in German) indicated at the trial in February.

Not only was the hurdle lower than it usually is but Motorola's patent-in-suit was pretty much dead in the water after Judge Richard Arnold of the England and Wales High Court of Justice declared it invalid for multiple reasons, with the key claim being found invalid for four independent reasons. The London-based court had also found in Microsoft's favor on its license-based defense.

In February I already criticized Google for its repeated failure to honor its grant-back obligations under the license agreements it once concluded with Microsoft and, in another context, MPEG LA. Licensing is key to open innovation, and pacta sunt servanda.

Today's Mannheim holding that Google owes Microsoft a license to its push notification patent demonstrates the diligence and foresight with which Microsoft has been managing its intellectual property licensing for many years. Last month Managing Intellectual Property ("ManagingIP") magazine named Microsoft's licensing department the best licensing team in the world.

The license-based defense that carried the day for Microsoft shouldn't even have been necessary. This patent doesn't withstand even a modicum of scrutiny. It's hard to see how it will survive in any commercially valuable form the nullity proceedings before the Federal Patent Court. Also, this patent will expire in little more than two years, so even if Google surprisingly salvaged this patent and (equally surprisingly) overcame Microsoft's license-based defense on appeal, there wouldn't be much time left, if any, for enforcement prior to expiration.

The Mannheim judges were presumably aware of the position of their appeals court, the Karlsruhe Higher Regional Court, which is particularly skeptical of the validity of this patent in light of verion 4 of the IMAP protocol, an Internet standard Google itself has implemented. The law firm of Freshfields Bruckhaus Deringer is representing Apple (at the appellate stage) as well as Microsoft in the push patent cases. Microsoft's lead counsel in the Mannheim case was Professor Peter Chrocziel. Apple's lead counsel before the Karlsruhe-based appeals court is Dr. Markus Gampp, who worked on both cases like his colleague, Matthias Beer. Boehmert & Boehmert's Christian Appelt is the lead patent attorney challenging the push notification patent on Microsoft's behalf. Google is represented by Quinn Emanuel.

Google really wanted to win this one. Its chief litigator flew over all the way from California for the February trial.

Google cannot currently enforce, and isn't going to be able to enforce anytime soon, an injunction against Microsoft. But Microsoft has already won a U.S. import ban and three German injunctions against Motorola's Android-based devices (1, 2, 3), and is likely to win a fourth one, relating to Google Maps, on June 3. In November Google's lawyers told an appeals court that their client lost four months of German sales as a result of Microsoft's patent enforcement (and, which they didn't say, Google's unwillingness to join the likes of Samsung, HTC, LG and Acer in taking a royalty-bearing Android patent license).

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Published: UK ruling holding Google's push email patent invalid as well as licensed to Microsoft

Google's (Motorola's) push email synchronization patent, EP0847654 on a "multiple pager synchronization system and method", was at issue in Mannheim on Friday, where a second Motorola Mobility v. Microsoft trial over this one was held (here's my report, and is going to be discussed in about two months at an appellate hearing in Karlsruhe, where Apple is trying to get a Mannheim injunction affecting the iCloud's email service lifted. There will also be a nullity (invalidiation) hearing at the Munich-based Federal Patent Court, presumably (though not sure) before the end of the year.

This patent is now in bad shape following a December 21, 2012 declaratory judgment by Justice Arnold of the UK High Court holding the patent invalid on multiple grounds and finding that Microsoft is licensed to it. In fact, of all the patents I've seen in the ongoing smartphone patent disputes there isn't any other that has seen its principal claim (claim 1) declared invalid for four independent reasons and additionally raises a licensing issue that can be resolved as easily as the grant-back obligation Google has under an Exchange ActiveSync license deal with Microsoft. This weekend I voiced my outrage at Google's constant attempts to shirk its grant-back obligations, a kind of behavior that undermines the licensing business.

Yesterday I finally obtained -- from three sources -- the full text of the UK ruling. Here it is:

12/21/12 Microsoft v. Motorola (Google) UK judgment by

It's a 40-page document but you can find the most interesting stuff on the last couple of pages. You can see a summary listing the different invalidity contentions that succeeded, and the reciprocal-licensing part is addressed in detail (though not in much detail because the case is exceptionally clear) right before the summary.

I will talk some more about invalidity issues in connection with some upcoming German hearings and decisions. I've published the document so those who want to do their own research have convenient access.

There's just one thing concerning invalidity that I can't help but point out on this occasion. In early August 2011, less than two weeks before the Googlorola deal was announced, Google's chief legal officer David Drummond wrote a corporate blog post centered around the conspiracy theory of "a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents". Bogus patents. Well, none of those companies' patents-in-suit has, to the best of my knowledge, been found invalid for four different reasons, any single one of which would be enough to take down its main claim (claim 1) -- and especially not in a final ruling (the UK judgment followed a full trial and cannot even be appealed, giving it infinitely more weight than, for example, a first Office action by the USPTO). So how's that for a bogus patent?

Just to be clear: I've been critical of a number of other patents-in-suit, too -- held by a wide variety of companies. As a former anti-software patent campaigner it should come as no surprise that I approach these questions from a rather different angle than the companies Mr. Drummond mentioned in the passage quoted above. But a company that complains about assertions of "bogus patents" only to pay a whopping $12.5 billion for Motorola's patent portfolio, and which presently puts some of its vast litigation resources behind this push patent that is as invalid as it gets should apply a more consistent standard to its assessment of the quality of intellectual property rights. And it should choose to fulfill its reciprocal-licensing obligations because a company that has a reputation for being a reliable partner in licensing will cut more and better license deals going forward than one that signs one thing today and says the opposite in court a few years later.

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Google's attempts to circumvent grant-back clauses are evil, hurt its reputation as a licensing partner

Yesterday I reported on a Motorola Mobility v. Microsoft trial in Mannheim, Germany, where the wholly-owned Google subsidiary desperately tried to argue that a grant-back clause in an Exchange ActiveSync (EAS) license agreement between Microsoft and Google wouldn't apply to Microsoft's implementation of the DirectPush part of EAS. And I mentioned that Google is also disputing that the grant-back clause of MPEG LA's AVC/H.264 license agreement covers Motorola's H.264 video codec patents, even though MPEG LA CEO Larry Horn explained in a declaration that this kind of situation was always meant to fall, and actually does fall, under the agreement.

I don't see Google's litigation strategy working out. From a procedural point of view it undoubtedly has the right to defend its peculiar positions, but the question I want to raise here is whether it's a good business decision to do so. My answer would be no.

Google can try all it wants to soften intellectual property rights through lobbying and litigation, but it will never be able to do away with them altogether. Policy makers may make adjustments in areas where they are really needed. Nevertheless, the technology industry (and the content industry, which is also key to Google's business) will continue to have intellectual property rights, and licensing will continue to be the way tech companies deal with each other (or tech companies deal with content producers). Without licensing, technology and content would never be shared, which is not an option.

In light of the importance of licensing it would be in Google's best interest to prove to the business world that it's a reliable partner who honors license agreements in good faith. This industry is watching closely the current wave of smartphone patent disputes, including the related countersuits. There are companies whose positions on how to comply with FRAND licensing pledges are questionable. Google (as Motorola's owner for the last eight months) is one of them, but far from the only one. Google is, however, the black sheep of the family in the sense of being the only litigant in all these disputes to refuse to honor its grant-back licensing obligations. No one is accusing companies like Apple, Microsoft or Samsung of anything comparable. And Google is behaving like this in connection with not only one technology, but two: the H.264 video codec and the EAS synchronization protocol. It's doing this in two jurisdictions: in the federal Western District of Washington and in Germany. (Even three if we include a declaratory judgment proceeding in the UK.)

The business world has a broader and more general perspective than the legal universe on the question of what conduct constitutes good faith or bad faith:

From a legal point of view, the positions Google takes in its futile efforts to extricate from crystal clear back-licensing obligations border on the frivolous, but I don't mean to say that they necessarily meet the standard of bad-faith litigation. Not everything that fails is an act of bad faith the way the courts define the term. Google has extremely sophisticated lawyers working on these cases, in-house and externally, and the theories they develop sound amazingly good if one considers that there's no real substance behind them. The courts can't dismiss them without adjudging them on substance (or the lack thereof). Google will even have the right to appeal the upcoming rulings, so the United States Court of Appeals for the Ninth Circuit and the Karlsruhe Higher Regional Court may also have the pleasure to deal with them.

The problem I see here -- and which I believe Google's decision-makers should also recognize -- is that a lot of businesspeople involved with licensing (I've done a variety of license deals over the years) may view Google's related conduct as bad-faith behavior. Pacta sunt servanda is not just a legal principle. Let's look at it this way: if you own intellectual property and grant someone a license, and you comply with your part of the deal and make everything available that you've promised to make available, and you don't look for ridiculous ways to accuse the other party of infringement when it's actually relying quite reasonably on the deal it has in place with you -- if all of this is the case, wouldn't you also want your partner to honor his part of the deal? Isn't that what business -- not only but also the licensing business -- is all about?

Grant-back promises are an essential and often indispensable part of license deals. No one wants to extend a license to patents on a given standard without having at least access (even if not an immediate license) to the other party's related patents on fair terms. Someone who refuses to honor his grant-back obligations does something much worse than stopping to pay the agreed-upon royalties. If you stop paying royalties, you'll have to be sued and you'll ultimately have to pay. Make no mistake: it's also pretty bad, but there will be only a few cases in which the licensor will go out of business as a result of a delayed payment. However, a refusal to comply with a grant-back obligation as part of a broader strategy to pursue injunctive relief at all costs means that one party tries to have a destructive impact on the business of the other party, even though the latter always honored its part of the deal. That's terribly unfair.

All sorts of companies may be concerned about Google's conduct and think that if Google does this to Microsoft, it may one day also do it to them. In other words, what Google is doing here comes with a reputational cost. The effect of appearing to be untrustworthy in such deals is going to be that other parties will think twice before they do any deal with Google, and if they do one, they will look at the envisioned terms very skeptically and will in some cases insist on deal structures that provide them with greater upfront assurances that Google is later going to comply.

It doesn't really matter that Microsoft is enforcing certain intellectual property rights against Android, and that it proactively sued Motorola (the year before Google signed an agreement to acquire it). Granted, the lawsuit that went to trial in Germany on Friday or the FRAND determination action in Seattle might not be occurring at this stage (though we'll never know) if Microsoft had not sued Motorola after negotiations following the expiration of a license agreement didn't bear fruit over an extended period of time. But contracts are made to have a reliable basis for dealing with each other even in bad times. No, not just "even in bad times": especially in bad times. Friends who are forever friends will never need a contract: they can resolve everything amicably. But business partners need to be able to count on each other regardless of whether they are friends. No other company who already has some kind of license agreement in place with Google or is contemplating entering into one can be sure that it will always be on friendly terms with Google. Regardless of who sues first and for what reason, someone who grants Google a license today will want Google to honor its part of the deal tomorrow, no matter whatever else may happen between today and tomorrow.

The smartest thing Google could do now is to declare to the court in Seattle that it recognizes the applicability of the MPEG LA grant-back clause, and to withdraw its push notification patent claims in Mannheim well ahead of the April 19 ruling. It would not be the smartest thing in the narrow context of the Microsoft-Motorola dispute: with Microsoft already having won injunctions over four different patents in three different fora in two different countries, there's no question that Motorola badly needs leverage, and even a long-shot attempt to gain leverage may be necessary if seen in that light (and only that light). There are no budget constraints, obviously. But from a more strategic perspective a retreat on this problematic front would be conducive to Google's reputation as a licensing business partner. Google's world-class litigators just want to try anything to win, and that's their job. But this is no different from a general who wants Congress to send ever more troops and money to win a war that may already have been lost: it's obvious that (and why) the general wants this, but political leaders can't always justify giving military leaders what they ask for. I think Google should take a business perspective on this, especially since there's no indication whatsoever that Motorola will gain any advantage in litigation, while the costs to Google's trustworthiness in licensing are not that hard to see.

Just Don't Be Evil.

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Google's ActiveSync license turns German push patent suit against Microsoft into long shot

A year and a half after Google announced the acquisition of Motorola Mobility and declared its intent to force Microsoft (and Apple) into a comprehensive cross-license, there are no indications of Google getting serious leverage in any jurisdiction, while Microsoft continues to sign royalty-bearing license agreements with device makers choosing to address Android's infringement issues on their own.

It was clear from the beginning that Motorola's strongest patents were FRAND-pledged standard-essential patents (SEPs) that would -- and undoubtedly did -- raise antitrust issues, which limited the strategic impact of that part of Motorola's portfolio. In the meantime it has additionally turned out that Google signed certain license agreements long before the acquisition of Motorola Mobility that come with grant-back obligations in Microsoft's favor relating to patents held by companies Google acquired since -- most notably, Motorola.

In a FRAND determination action in the Western District of Washington an H.264 license agreement between patent pool firm MPEG LA (whose contributors include Microsoft and Apple) and Google may result in a finding that Motorola is entitled only to modest royalties from Microsoft for the use of its allegedly H.264-essential patents. This afternoon another license agreement Google once signed was discussed at a trial held by the Mannheim Regional Court over Motorola's German push notification patent lawsuit against Microsoft: a license to Microsoft's Exchange ActiveSync protocol that, like the MPEG LA agreement, comes with a grant-back obligation.

I'd be very surprised if Google won a favorable ruling. As a user of Outlook and Hotmail I don't anticipate being deprived of push notifications anytime soon. I believe the best result Google can realistically hope for is that the case gets stayed over doubts concerning the validity of the patent-in-suit, EP0847654 on a "multiple pager synchronization system and method". The potential implications of a Microsoft-Google ActiveSync license agreement lower the hurdle for a stay, as Judge Andreas Voss ("Voß" in German) told counsel today. In fact, I made a correction earlier today to last week's report on Judge Voss's order to stay a Samsung v. Apple SEP lawsuit: I had originally assumed that the case was stayed because the patent was considered highly likely to be invalid, but a lower probability was sufficient after Samsung withdrew its request for injunctive relief. Similarly, the EAS license agreement may be found by the court to preclude injunctive relief, making the case go away in its entirety or, alternatively, narrowing it to questions of past infringement during the period preceding Google's acquisition of Motorola Mobility.

The lower hurdle for a stay is just one of several reasons for which the Mannheim Regional Court can dismiss or stay Motorola's push notifications lawsuit against Microsoft without having to contradict in any way its order of an injunction against Apple over this patent almost precisely a year ago. In the Apple case, a stay was denied but the hurdle was that Apple needed to prove a high probability of invalidity. Microsoft now has a lower hurdle to meet, which would justify a different outcome (apart from other reasons such as prior art contentions that may not have been considered in the Apple case, the EAS license and prior user rights Microsoft claims because of an Exchange beta version that it says already implemented the claimed invention before the patent's priority date).

A final ruling on this action could have come down on May 11, 2012, following a mid-March trial, but the proceedings were restarted after the court determined that Microsoft had raised at the trial a reasonably credible prior user rights defense. So today's trial was already the second one, which is why it lasted only about an hour. The Mannheim court scheduled its next decision for April 19, 2013 -- interestingly, nine days after a hearing the Karlsruhe Higher Regional Court (whose circuit includes Mannheim) will hold on Apple's appeal against the ruling Motorola has been enforcing against the iCloud for almost a year. The Karlsruhe hearing could have implications for claim construction and the assessment of the probability of the patent being invalidated later this year by the Munich-based Bundespatentgericht (Federal Patent Court), where a nullity (invalidation) lawsuit is pending.

Microsoft has wind at its back in this litigation also because of a December 21, 2012 declaratory judgment decision it won from the High Court of England and Wales. The UK High Court found Google's (Motorola's) push patent obvious for four independent reasons (any one of which would be sufficient on its own to defeat this patent), and it agreed with Microsoft's claim that Motorola's push notifications patent falls within the scope of the grant-back clause of the EAS license. In other words, Google's case is dead in the water as far as the UK court, which denied Google the right to appeal, views this matter.

Microsoft's lead counsel in this Mannheim litigation, Freshfields Bruckhaus Deringer's Professor Peter Chrocziel, cited a paragraph from the Microsoft-Google license agreement according to which all Google patents (including Google's subsidiaries' patents) necessarily infringed by an implementation of the EAS protocol -- in this particular case, its DirectPush part -- must be licensed to Microsoft. Professor Chrocziel also explained that the EAS license agreement must be interpreted in accordance with the laws of the state of New York (he did not mention this, but the profile on his firm's website mentions that he's admitted to practice in New York), which the UK High Court also applied. Google's (Motorola's) lead counsel, Quinn Emanuel's Dr. Marcus Grosch, did not dispute the existence of this grant-back obligation but argued that technically one can implement EAS/DirectPush without implementing the claimed invention. This argument is, however, centered around the suggestion that EAS/DirectPush is limited to communication between only one server and one client -- while some DirectPush functionality (such as status updates marking an email as read on one client if it had been read on another) clearly requires the involvement of a plurality of clients. Judge Lembach, the court's rapporteur on this case, was wondering whether Google's interpretation of the term "necessary" was too narrow.

I have taken detailed notes of the technical and contract-related arguments. I may talk about this in more detail before or after the April 19 decision. I will also try to obtain a copy of the UK judgment. If I find one, I will upload it and discuss it in a separate blog post, in which I will then also elaborate in more detail on the technical parts of the discussion today.

The odds are fairly long against Google. Its infringement contentions in this case and certain passages cited today from the specifications of the ActiveSync protocol appear to match. In that case, the EAS license applies. If the case is narrowed to damages for past infringement, the hurdle for a stay will be lowered substantially, and the case will then be stayed if the Mannheim court concludes that at least one of the four invalidity theories underlying the UK ruling is likely to result in the invalidation of the German part of this European patent by the Federal Patent Court. Judge Voss pointed to differences in the UK court's approach to obviousness and the standard under German law, and he was being consistent with the position he took in other cases, but again, one out of four is all that Microsoft needs to prevail. Christian Appelt of the Boehmert & Boehmert firm, the patent attorney leading Microsoft's challenge to the validity of this patent in Germany, said that it's very unlikely that the German Federal Patent Court (and, in the event of an appeal, the Federal Court of Justice) would disagree with every one of the four theories based on which the UK High Court declared this patent invalid.

Google's use of the Exchange ActiveSync (EAS) protocol has recently been in the news because Google extended its support for new Windows Phone connections via Google Sync until July 31. I'm not familiar with any patent licensing questions that may or may not have a bearing on the Windows Phone/GoogleSync situation. No reference to this EAS-related matter was made at today's trial.

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Microsoft defeats push patent in UK that Google's Motorola is also using against Apple in Germany

Bloomberg reports that Judge Richard Arnold of the UK High Court has today ruled that Google's (Motorola Mobility's) EP0847654 on a "multiple pager synchronization system and method", which is already being enforced against Apple's iCloud email service and over which Google is suing Microsoft (both in Germany), "is invalid and should be revoked".

I've always been skeptical of this patent. The claimed invention was made to address synchronization issues involving pagers and relates to a situation in which a user has different pagers attached to different garments. It's a bit of a stretch to assert it against today's push notification services. If interpreted that broadly, it should be held invalid as Judge Arnold determined today.

The decision comes ahead of a trial scheduled by the Mannheim Regional Court for February 1, 2013, which will be the second trial (after a reopening of proceedings following the first one) in this Motorola v. Microsoft case. There are also two upcoming opportunities (both likely in 2013) for Apple to leverage this ruling in connection with an injunction against the iCloud's push email feature. Motorola won that injunction in early February 2012, started to enforce it only three weeks later, and an Apple motion (brought with the appeals court in Karlsruhe) to stay the injunction was denied in mid-March.

While courts in different European countries decide independently, they do take note of each other's rulings on the same (in)validity and infringement issues. There are no less than three German court hearings (all of them either scheduled for, or about to be scheduled and likely to take place in, 2013) at which today's UK court ruling will be leveraged by Apple and Microsoft:

• The aforementioned Mannheim trial on February 1, 2013. A first trial over Motorola's attempt to enforce this patent against ActiveSync in connection with Microsoft Exchange, Hotmail and Xbox Live (and products implementing the related services) was held in mid-March 2012, and Microsoft raised a multiplicity of defenses. One of those defenses, prior user rights, persuaded Judge Andreas Voss ("Voß" in German), who also presided over the Apple case involving this patent, to reopen proceedings. The court considered it a possibility that Microsoft already made use of the patented technique, in Germany, before Motorola filed its patent application -- not in a way that would necessarily count as prior art, but which might be sufficient to support a prior user rights defense.

  At the time, Judge Voss said the court had proposed that the parties provide further briefing on this defense and that the court would then issue a ruling without another trial. But just this week I found out from the court that a second trial has been scheduled for February 1. A ruling would then likely come down in late March or in April, and the UK ruling supports Microsoft's motion for a stay pending a parallel nullity (invalidation) proceeding at the Munich-based Federal Patent Court. A stay would only have to be decided if an injunction would otherwise be granted.

  German courts stay infringement proceedings only if they are convinced of a high probability of invalidation. Apple was denied a stay, but Microsoft would be able to point not only to the UK ruling but even more importantly to the fact that the Federal Patent Court's decision would come down not much later.

• The aforementioned nullity action before the Federal Patent Court will likely also be decided in 2013. The Federal Patent Court's decision can (and absent a settlement will) be appealed by the losing party to the Federal Court of Justice. In that case, the patent, which has an August 1995 priority date, might expire before a final non-appealable ruling on its validity in Germany.

• At some point in 2013 (I have not yet been able to find out the exact date, and it may not have been set yet) there should also be the hearing at the Karlsruhe Higher Regional Court on Apple's appeal of Motorola's injunction. The fact that the appeals court didn't stay the injunction doesn't mean that Motorola is going to win. The hurdle is reasonably high for German appeals courts to order stays. (It is often underestimated by observers because stays get more attention than denials.) The appeals court could stay the appeal, and simultaneously the enforcement of the existing injunction against Apple, until the end of the nullity (invalidation) action, possibly including its appeal to the Federal Court of Justice.

It is worth noting that the patent which Microsoft defeated today is the only patent over which an Android device maker is presently enforcing an injunction anywhere in the world against Apple. A couple of injunctions that Samsung won in Korea are currently stayed (for the duration of the appeals). HTC never won anything against Apple, and Motorola also won some injunctions over standard-essential patents (SEPs) against Apple (a cellular patent) and Microsoft (two H.264 patents in Germany, one of which has expired), but can't enforce those: Apple is licensed, except that the court has yet to determine the FRAND royalty rate on which the parties can't agree, and Microsoft won an anti-enforcement injunction in the United States that was recently replaced by a summary judgment ruling, both of worldwide effect because Motorola originally offered the relevant patent families on a worldwide basis to Microsoft in a letter sent from the Chicago area to the Seattle area and Microsoft brought a U.S. contract action eight to nine months before Motorola's German lawsuits.

The push notification patent is not essential to an industry standard set by a consortium (and not subject to the FRAND contract case in the U.S.), but there might be a licensing issue because of Google's assertion of this patent against ActiveSync given that Google at some point took an ActiveSync patent license. So did Motorola, a fact that was discussed at the first Mannheim trial.

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