It is a gamble that did not pay off for Apple. Motorola probably sense something in the pretrial negotiation and managed to execute a legal maneuvere with the effect of forcing Apple to reveal its real intention in pursuing this litigation. Used to get its way in the business market, thinking that it arrogance it has there will translate to its litigations as well, Apple gambled that it is worth tell the court that it will appeal its decision if the court set a FRAND rate of more than one dollar per device. That, if the court had not reacted, would had in effect allowed Apple to unilaterally set the ceiling for the FRAND rate. Court barked at it and started to smoke Apple, Motorola fanned the fire, and finally as reported by Groklaw and elsewhere, the court throws out the unfair (to Motorola) lawsuit, leaving Apple more than scorched by dismissing its claim with prejudice.
In effect, the court had implied that the FRAND rate can be more than a dollar per device.
PJ correctly said that Apple was frantically trying to salvage its case by frantically and compared to what it tells the court in UK on how long it will take to put up a notice on its website, came out with a complex memo in record time. That rightly did not save its bacon. It was asking Motorola to agree to be bound by the same procedures to set a FRAND rate for Apple’s patent, and sensing that Motorola will go for the kill by saying it is not prepare to do so, pleaded to the judge to order Motorola to accept it. Obviously the judge was not persuaded, nor should she be.
I was slightly surprised by the with-prejudice dismissal. I was expecting without prejudice. But as some commentators pointed out, with prejudice is necessary to prevent Apple from filling the same lawsuit in another court in the hope for a more sympathetic judge.
If I am Motorola, I would now apply for cost.
So far, I think the judges in United States, on the whole, did well in FRAND cases. Yes, we have the Microsoft vs Motorola abnormally in Seattle, but by and far, they did clarify this really well. Here is what I had learned: Offering something to Standard Setting Bodies on FRAND means you cannot get an injunction before the case has run its course, as you had admitted that monetary cure will be sufficient. You can and will be forced to license your patent on FRAND terms if you had pledged to do so. If both parties cannot agree, then the court can intervene to set the FRAND rate. However, you cannot use the court as a negotiation strategy. That rate the court sets can be a worldwide rate (at least if both parties are American companies). After the rate is set by the court, by implication, if the prospective licensee still refuse to pay, then an injunction to ban the sales of infringing articles will be back on the table. In short, it upheld common sense and standard business practice. Another thing that the judge had confirmed is agreeing to license your patent on FRAND term will not degrade the value of your patent, as Apple and Microsoft are trying to do. What’s not to like about it?