CyberTech Rambler

October 29, 2012

The illogical reason for a two phase trial and did Microsoft forfeited its right to FRAND from Motorola

Filed under: Uncategorized — ctrambler @ 6:33 pm

PJ has a good write up on the latest state of Microsoft “(intentionally) jumped the gun” lawsuit against Motorola. I had been following PJ’s reporting of the lawsuit, focusing on the filings as it give the best picture of what is happening. My belief is the judge should had told Microsoft to go into negotiation first and the more I read his orders, the more I realized that he is trying his very best to ignore the elephant in the room: Microsoft haven’t even negotiated with Motorola. For this fact and this alone, I believe, if the case ever goes to the US Supreme Court, Motorola will win.

Never mind that. PJ highlighted his footnote #9, which in effect, acknowledged, and since I am not feeling charitable, conceded,  that Motorola’s initial offer need not be FRAND. That defeats the whole purpose of his two-phase trial to determine whether Motorola’s offer was indeed FRAND. The two phase trial, as proposed by the judge, is not without problems: Why do we need a first phase to determine what is the appropriate offer? That would not necessarily help the jury to second phase to decide whether Motorola breach its FRAND obligation. If fact, it mislead the jury as it give undue emphasis to the court-decided price point. I would say just let the jury decide both at the same time. I am charitable enough to say the court is free to put the question of what is the fair price for Motorola’s patents ahead of the question whether Motorola breached its FRAND obligation in its initial price even though in my opinion, it should be the other way because if Motorola did not breach its FRAND obligation, there is no need for the jury to determine what is the FRAND price.

Also, by insisting that Microsoft need not go into a negotiation first, the decision on what is a FRAND price point is even more difficult to decide. To derive a FRAND price we need to know what both parties are willing to offer and crucially, we need the final negotiation position of both parties to narrow down the range of potential decision. Breaking the deadlock is just what it says on the tin: It is an attempt to overcome  the one and only one narrow point that both parties cannot agree on. Right now the court (and jury) has no such guidance and is in effect mediating the negotiation, which it is not entitled to do.  That’s why it is running into difficult. For example, Motorola’s licensing offers include discount for Microsoft’s patent, should the jury now evaluate the worth of Microsoft’s patent that it is willing to put on the negotiation table? In fact, whatever the court comes up, I think there is a fair chance that if the  case goes to the Supreme Court, the court’s decision will be struck down.

From PJ’s article, I went back and re-read the Judge’s Oct 10 order. For reasons unknown, I was fixated on the judge comments that eventually Motorola will have to grant Microsoft a RAND license. Does it? I had always think so. That was the reasoning behind me supporting Judge Posner decision that he cannot give injunction banning the sales of infringing devices even if the patentee prevail. Now I am not sure. With the hindsight of this case, I think anyone who had decided to abuse the FRAND process should run the risk of forfeiting its right to a FRAND license.

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