CyberTech Rambler

November 5, 2012

How a court should react to attempts to short circuit the FRAND process

Filed under: Uncategorized — ctrambler @ 5:34 pm

As we all know, Apple and Microsoft are aiming their guns at Google/Motorola Mobility. In short, they are attempting to short circuit the FRAND process.

While technically the cases are legally speaking, different, the issues appear to be the same, both Apple and Microsoft attempting to use the court for commercial advantage, i.e. by getting the court to set a FRAND rate and use that as the upper limit to negotiating for a license later in the hope that the limit set by the court is lower than Motorola Mobility initial offer. Moreover, both courts have to deal with a bewildering number of issues before it can come to a conclusion of what a fair FRAND rate will be.

Interestingly, the courts in both cases react differently. In the Microsoft case, the court appears to be willing to take up the challenge of wading through all the issues to come up with a FRAND rate. Given the amount of issues the court has to deal with, no amount of filings by both parties can offer any guidance. In other words, the court is not competent enough to settle the issue. That is why I think the court was wrong and therefore it is very likely a higher court will overturn its decision. Some people claims that the court is biased towards Microsoft in this process. All I will say is while it smells this way, I am pretty confidence a higher court will eventually overturn that court ruling. Just a pity that it is going to cost Motorola Mobility  a lot of money to uphold the negotiation convention.

In the Apple case, as can be read from PJ’s reporting, the judge is trying to extricate itself from the process. It is not every day where you see the judge tell both parties to come out with the reason why it should or should not start the trial at the very last minute. It is wary about its competency to decide on a FRAND rate, but most importantly, it noted that it will not be used as a pawn by any party simply to gain a negotiation advantage.

This, I believe, is the right way to deal with a FRAND case or indeed any cases involving negotiation between  two parties: Instead of attempting to direct a negotiation, let both parties negotiate first. That will narrow down the case to issues that both parties cannot see eye to eye with. Then all the court has to do is to focus on these issues to break the deadlock between the parties.

The current mini-saga started with Apple saying that it will not be bind by the court’s ruling on the FRAND rate. One can certainly say that Apple was arrogant and stupid enough to tell the court that unless the court set the rate at lower than one dollar per device, it will certainly not comply with its ruling.  No court will allow one side to unilaterally set a condition to their ruling, and the judge  barked back. Motorola is trying to capitalize on this situation. More about that later.

I cannot see that Apple’s competent lawyers make such a silly mistake of putting the ‘one dollar rule’ on the table now. I can see them being arrogant, but I cannot see them risking the judge’s wrath unless they had planned it. Apple’s legal team (or at least that in the Apple vs Samsung) case, is know to be trying to over-reach itself. May be this is just one attempt too far. They probably figure out there is minimal risk to try this. If they succeed, they more-or-less win the case. If not, then it is back to getting what they want the hard way, i.e., through the trial. As for the judge’s feeling? To hell with it. I am certain they planned the reply to the judge before they even file that ridiculous paper.

PJ sees the reply as backpedaling. To me to backpedal one has to advance into a position then being forced to vacate that position into the position before. Since I believe Apple knows it is overreaching itself originally, I do not see it as Apple advancing its position and than retreating from it. More like dipping its toe into the water  and finding it too cold. I am, however, nagged by Apple statement that it will be bound by the court’s ruling if Motorola is willing to as well. I can see this as something we Chinese call a “face-saving” measure (Getting something inconsequential or trivial in return as an excuse to do something one was will be or was forced into doing). However, American (including a lot of Chinese American) do not believe in saving faces. Thus, I cannot help but believe the lawyers are playing a strategic game here.  I am starting to think that the tabling of the  ‘one dollar rule’ is a deliberate attempt to get Motorola to say it will submit to the court’s decision, stopping it or weakening Motorola’s ability to appeal the court decision.

Let’s return to Motorola. It sensed that the judge might be willing to throw in the towel. Thus, in its reply, it agrees with the judge’s position wholeheartedly, giving it as many excuse as possible to abandon the trial. It even throw in an additional excuse to encourage the judge to do it: Ripeness. In effect, it is telling the court that this is not the time to determine a FRAND rate so it can choose to do precisely nothing.

If you ask me, that is the right thing to do.

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