Things are getting interesting in Seattle in the FRAND case between Microsoft and Motorola. At the hearing the other day, our reporters mentioned that the judge had asked for cases to support Motorola's position that the time frame to consider Motorola's good faith in making its initial offer was back when it happened:
Judge asks when duty of good faith bargaining begins and ends. Motorola says it is ongoing. But each breach complaint is pinned to a specific date -- not tied to the progress of the litigations. Mentions FTC order re Google acquisition of Motorola. FTC did not say that *prior* injunctive relief requests had to be dropped.And our second report added this:
The German action was filed July 2011, MS didn't say they would accept a RAND offer until Sept 2011, and as such breach can't be a moving target. MS is stuck with the facts at the time of the complaint. Robart seemed skeptical of this, "Do you have authority for that?" answer about getting back with more briefing "I think you're wrong, but I'll be happy to read your brief." Sullivan says they have an ongoing duty, but a new breach action would be required, and the litigation in this case can't be included in this current breach action.So this is about the German action, which Microsoft claims caused it financial damages it would like to recoup, and I'll tell you more about that, because Microsoft is very upset about it all. Motorola has followed up [PDF] with two cases, and Microsoft has provided an excerpt [PDF] from the Daubert hearing that we didn't attend the day before, so that's nice to have.
On Microsoft's side, it naturally immediately filed the USTR's letter [PDF] blocking the injunction against Apple by Samsung, although its cover letter is misleading as to what the USTR said. You knew they would do that. And they are in quite a tizzy [PDF] over the fact that Motorola continues to proceed in the German case, where it already got an injunction against Microsoft, which this Seattle judge purports to have the authority to block. However, Microsoft had already made a financial offer of royalties to Motorola in that case, and Motorola, to Microsoft's horror, accepted them. The rate is higher than what this Seattle judge set, so Microsoft has smoke coming out of its ears about how unfair it is that Motorola accepted its original offer. So Microsoft is asking [PDF] the court to "to renew and expand its anti-suit injunction to curtail Motorola’s ongoing efforts in Germany to undercut the jurisdiction of this Court and to attempt to procure inconsistent rulings."
As for the judge, he's maybe starting to realize that some of his assumptions about FRAND requirements conflict with what the experts are now telling him. He expresses a measure of confusion about it in an order [PDF] on what the experts for both sides can tell the jury. Here's what he won't allow Motorola's experts to tell them: that being willing to negotiate is sufficient to meet a FRAND obligation. That contradicts what this judge has already ruled in this crazy case, so he doesn't like that, I suppose. The "reason" they can't say that to the jury is, he says, because he gets to decide what is or isn't a fulfillment of a RAND obligation, in that he's Da Law on Microsoft's obligations under Washington state law which he believes the world must go along with, Germany included. Experts can't opine on legal conclusions. However, Motorola has now informed him via this route that he's been getting some things seriously wrong on what FRAND obligations are and what good faith requires. Perhaps it will influence him. He says that the Motorola experts can input how the jury instructions read. I wouldn't put much faith in that if I were Motorola, and I gather they don't. This German prong is getting interesting, I must say.
Jump To CommentsLet me show you how Microsoft misleads the court on the USTR letter [PDF]. Keep in mind that Microsoft in this litigation is alleging that it's a violation of FRAND obligations to seek an injunction at all, ever. Here's the wording of Microsoft telling the court what happened regarding the injunction the ITC had ordered against Apple over a FRAND patent of Samsung's, which Motorola had told the court about, but which the USTR just overruled, the Microsoft version:
Microsoft respectfully submits as additional supplemental authority in support of its Opposition (Dkt. No. 740) to Defendants’ Motion for Summary Judgment (Dkt. No. 733) the United States Trade Representative’s August 3, 2013 Disapproval of the U.S. International Trade Commission’s Determination in ITC Investigation No. 337-TA-794, attached as Exhibit 1.Might it appear to the judge that the USTR was saying that no injunctions should be allowed for FRAND patents? I think that was their intention, to give that impression. But that is specifically not what the USTR letter said. It said you can seek injunctions over FRAND patents, but in that particular case, without in any way overruling what the ITC had said regarding the merits, there were public policy reasons to overrule the injunction. Here's how Matt Rizzolo at The Essential Patent Blog put it: "The letter clearly states that exclusion orders may be available as a remedy for FRAND-encumbered SEPs in some circumstances, so this does not appear to represent a complete bar on SEP cases at the ITC." That is what Microsoft left out, probably because it directly contradicts Microsoft's position in this litigation, and it would prefer that the judge accept its contrary position. It's a hometown court, so it's conceivable, but the appeal would be certain. Because no other court or regulatory body has accepted Microsoft extreme position that it's a per se violation of FRAND obligations to seek an injunction. Apple tried that too, and the ITC shot it down, and the USTR letter doesn't change that. And obviously the German court didn't view it as a violation either, since it granted Motorola an injunction against Microsoft. And now the Motorola experts have told this court that Motorola acted in good faith.
The ITC’s determination in the 794 Investigation involving Samsung and Apple was submitted by Motorola as supplemental authority in support of its summary judgment motion on July 11, 2013. (See Dkt. No. 738.) Motorola stated that the ITC had rejected the argument “that an exclusion order should be unavailable for a standard essential patent” and directed the Court to a particular passage of the determination “finding that Samsung is entitled to an exclusionary remedy because 19 U.S.C. §§ 1337(a)(1)(B) allows the Commission to issue exclusionary orders for any patent, regardless of whether it is an SEP.” (Id. at 1.)
The ITC’s exclusion order on SEPs has been overruled. Acting on the authority of the President to “disapprove an order[of the ITC] on policy grounds,” Ex. 1 at 1, the U.S. Trade Representative states: “I have decided to disapprove the USITC’s determination to issue an exclusion order and cease and desist order in this investigation.” Ex. 1 at 3. The exclusion order on SEPs that was the subject of Motorola’s prior submission, as well as its briefing and argument at the July 31, 2013 hearing, will not go into effect.
No wonder the judge is confused. But in my experience, when you present clear and irrefutable facts to someone with a strong belief that contradicts the facts, they don't change their position. They say they are confused, and that means they don't like the facts. That's my life experience, but we'll wait and see how the jury instructions on the law read.
And Microsoft is not budging off its dime that it's a violation of FRAND obligations to seek an injunction. From its tizzy letter:
Motorola’s letter takes the position that “the relevant time period for any assessment of a breach of the implied covenant of good faith and fair dealing [is] when Motorola sent the October 2010 letters and when Motorola filed the November 2010 patent infringement suits,” and cites two cases. That assertion is no answer to the question the Court raised, which addressed Microsoft’s claim that, by its continued pursuit of injunctions, Motorola further breached its RAND obligation and the covenant of good faith and fair dealing, especially because it did so well after the Court accepted Microsoft’s commitment to the license on RAND terms determined by the Court. As Microsoft explained in its summary judgment briefing, that conduct constitutes a straightforward breach of the RAND licensing commitment (see Dkt. No. 740 at 3–8) as well as a breach of the duty of good faith and fair dealing by constituting hold up in frustration of the purposes of the contracts (see Dkt. No. 729 at 19–21). Motorola’s counsel’s response suggests that Motorola now believes these claims are somehow not part of the case.As you can see, Microsoft is very upset. That's because this is about money, but it's also because this is the only court where it seems to have a chance to establish its extreme position, at least until an appeal. It's never been the case that you can't seek such an injunction, and frankly you can't take away someone's possessions without compensation, not even in Seattle. And IP rights are possessions under the law. Nowhere in patent law is it written that FRAND obligations include giving up your enforcement rights. That would be a penalty on those who contribute to standards. And if we are going to go by contract law, which this case is doing since Microsoft is alleging breach of contract, then you have to go by contract law, which would require Motorola to waive its rights, which it has never done. ITC pointed that out in its opinion, rejecting Apple's identical extreme position on injunctions: ""Apple has not identified the basic elements necessary to prove a contract: the parties, the offer, the acceptance, the consideration, and definite terms." The judge can't rob Motorola as a favor to Microsoft, and that is what that would be.
Motorola is wrong. Microsoft’s February 23, 2011 Amended Complaint alleged that Motorola’s pursuit of injunctions on its SEPs constituted a breach of its RAND licensing commitments. (Dkt. No. 53 ¶ 85.) Microsoft asked the Court to “[p]reliminarily and permanently enjoin Defendants . . . from seeking enforcing, or seeking to enforce, patent infringement claims in the Motorola Patent Actions (or elsewhere) in breach of their RAND obligations as alleged above.” (Id. at 24–25 (emphasis added).) When Motorola decided to file infringement lawsuits in Germany less than six months later, on patents that were included in its October 2010 letters, it did so fully aware that Microsoft viewed that conduct as within the scope of the dispute already before this Court. (See id. ¶ 85 (“Defendants are not entitled to enjoin or exclude Microsoft from implementing the technology of the SDO Litigated Patents.”).) Even if it were not clear from Microsoft’s Amended Complaint alone that Motorola’s continued pursuit of injunctions is within the scope of this case, the Court and the parties have been operating under that understanding for over a year. Motorola has been on notice since early 2012 that Microsoft objected—in this case—to Motorola’s efforts to obtain an injunction in Germany, because this case would put an end to Motorola’s pursuit of injunctions everywhere. (See, e.g., Dkt. No. 257 at 15.) Throughout the district court and Ninth Circuit anti-suit injunction proceedings, Motorola never advanced the argument it seems to have settled on now—that its conduct that followed the filing of Microsoft’s Amended Complaint is not within the purview of the Court.
Here's what Motorola told the court about the two cases:
Defendants Motorola, Inc., Motorola Mobility LLC, and General Instruments Corp. (“Motorola”) respectfully submit this letter in response to the Court’s request for authority on Motorola’s statement that a claim for breach of the implied duty of good faith and fair dealing cannot be a “moving target” and must be considered based on facts that occurred before or “at the time of the lawsuit.” Hr’g Tr. 45:12-46:20 (July 31, 2013).Finally, here's the Introduction from the judge's order regarding what the experts can and can't say:
Microsoft’s Complaint and Amended Complaint plead a cause of action for breach of contract based on two discrete sets of events: sending the October 21, 2010 and October 29, 2010 opening offer letters and filing the November 2010 patent enforcement actions. Am. Compl., Dkt. 53, at ¶¶ 70-72 (discussing the October letters and alleging that “Motorola’s demands constitute a breach of its WLAN and H.264 commitments”); Compl., Dkt. 1 at ¶¶ 70-71, 73 (same); Am. Compl., Dkt. 53, at ¶ 85 (alleging that Motorola “breached these contracts by filing the Motorola Patent Actions”). Counsel for Microsoft agreed at last week’s hearing that a good faith determination contains a subjective element. See Hr’g Tr. 76:6-10 (“Good faith is... a state of mind, typically, good faith, and it’s the sort of thing that no one, unless you can read minds, is in a position to opine as to what somebody’s internal and subjective motives were.”). It is Motorola’s state of mind at the time of the alleged breach that is relevant to any determination of whether Motorola acted in good faith. The complaint thus sets the relevant time period for any assessment of a breach of the implied covenant of good faith and fair dealing: when Motorola sent the October 2010 letters and when Motorola filed the November 2010 patent infringement suits.
Washington courts and courts in other jurisdictions support Motorola’s understanding by recognizing that whether a party acted in good faith must be judged at the time of the alleged breach. For example, in Gaglidari v. Denny’s Restaurant Inc., the Supreme Court of Washington overturned a jury verdict in favor of the plaintiff, a former employee of the defendant restaurant. 117 Wn.2d 426, 438-39 (1991). The plaintiff, a bartender, had alleged that the restaurant breached her employment contract by dismissing her because of her participation in an alleged fight. Id. at 430. At trial, the restaurant asserted five rule violations as justifications for the bartender’s dismissal, but only one—fighting on the premises—permitted the restaurant to terminate the bartender immediately. Id. at 437. The Supreme Court of Washington remanded the case for a new trial to determine, if at the time of the dismissal, the employer had reached a good faith and reasonable conclusion that plaintiff was fighting on company premises. Id. at 438-39. The court explained that in determining whether the employer acted in good faith, the issue of “whether plaintiff was actually fighting is irrelevant to this action; rather, the issue is whether at the time plaintiff was dismissed defendant reasonably, in good faith, and based on substantial evidence believed plaintiff had done so.” Id. (emphasis added).
Similarly, in Bonneview Homeowners Association v. Woodmont Builders, LLC, the court granted summary judgment to defendants on plaintiffs’ claim for breach of the covenant of good faith and fair dealing because the defendants lacked any bad motive or intent at the time of the alleged breach. 655 F. Supp. 2d 473, 511 (D.N.J. 2009). Homeowners had sued the property developers and others for breach of the covenant of good faith and fair dealing after the defendants represented that the land on which the homes were built did not have any environmental problems. Id. at 480. The land turned out to be contaminated. Id. at 483-88. The court found summary judgment appropriate because, “[w]hile it is disputed whether representations were made to the Plaintiffs about the nature of the topsoil, the Plaintiffs do not dispute that, at the time of the alleged misrepresentations regarding the nature of the topsoil, the Woodmont Defendants did not know that the soil was contaminated.” Id. at 510-11 (emphasis added). The court concluded that, “[b]ecause it did not know the soil was contaminated, [defendants] could not have had the requisite bad motive or intention that is essential to a cause of action for breach of the covenant of good faith and fair dealing.” Id. at 511 (internal quotations omitted).
These decisions are in accord with this Court’s recent statement in its Daubert ruling that “Monday morning quarterbacking is an easy job, but decisions by companies are certainly made in real time and on circumstances that existed at that time.” Dkt. 822 at 18 (Aug. 5, 2013).
I. INTRODUCTIONAnd here's the part that will help you to see that the German issue is about money:
Before the court is Microsoft Corporation’s (“Microsoft”) motion to exclude testimony of Richard Holleman, Dr. Gregory Leonard, Judge Maximilian Haedicke, and Bradley Keller. (Microsoft Mot. to Exclude (Dkt. # 724).) Also before the court are Motorola, Inc., Motorola Mobility, Inc., and General Instrument Corporation’s (collectively, “Motorola”) motions to exclude the testimony of Todd M. Menenberg (Mot. to Exclude Menenberg (Dkt. ## 722 (redacted), 734 (sealed)) and Dr. Theo Bodewig (Mot. to Exclude Bodewig (Dkt. ## 731 (redacted), 737 (sealed)). The court has reviewed the motions, the papers filed in opposition and support thereof, and the relevant law. The court heard oral argument on July 30, 2013, and considering itself fully advised, GRANTS in part and DENIES in part Microsoft’s motion to exclude, and GRANTS in part and DENIES in part Motorola’s motions to exclude.
At the outset, the court takes the rare opportunity to note that this order may not be as helpful as it could be because after expert discovery the parties continued to modify the expert reports and proffered expert testimony that were the subject of their the motions. Matters were complicated further at oral argument when both parties represented that they would further modify certain expert reports, as explained more fully herein, based on arguments raised in the motions. The court has found it difficult to gain solid footing on the ever-shifting sands of information contained in the parties’ expert reports. Ruling in this context has been a challenge because the court has been forced to examine newly-submitted testimony without the benefit of argument or briefing. At this point, the court must rule in order for the trial to move forward; there is no time to order supplemental briefing or argument. In light of this reality, the court can only express its disapproval of the parties’ conduct and warn that similar conduct by either party in the future will not be well received.
Motorola moves to exclude Dr. Theo Bodewig’s testimony regarding (1) statements the European Commission made about the Orange Book procedure and a request for clarification made by the Düsseldorf court to the European Court of Justice on the grounds that such testimony is irrelevant under Daubert and Federal Rule of Civil Procedure 403. (See generally Mot. to Exclude Bodewig.) Motorola also moves to exclude Dr. Bodewig’s opinions regarding (2) whether Microsoft was a willing licensee; (3) why Microsoft moved its EMEA distribution facility from Germany to the Netherlands; and (4) the potential effects of this court’s anti-suit injunction. (See generally id.)And here's just a snip from the part about what Motorola's experts wanted to say but won't be allowed to say to the jury:
It is the court’s understanding that one of Microsoft’s breach of contract claims is that it incurred damages from being forced to move its EMEA distribution facility as the result of Motorola’s German patent infringement suit in the Mannheim court which resulted in a finding of infringement and the issuance of an injunction in May 2012. (See generally id. at 2-7.) In response to this claim, Motorola intends to introduce testimony of a German law expert, Dr. Maximilian Haedicke (see infra § IV.B.3), who will explain that Microsoft could have used a procedure under German law referred to as the Orange Book (or Section 315) procedure to have avoided the injunction issued by the Mannheim court, thereby mitigating Microsoft’s damages. (Mot. to Exclude Bodewig at 2-9.) Microsoft seeks to rebut this theory through its expert Dr. Bodewig, who will testify that (1) the Orange Book does not provide a settled and predictable procedure to avoid an injunction on a standard-essential patent; (2) the Orange Book procedure would not have produced a RAND royalty rate; and (3) enforcement of an injunction in Germany is not a burdensome procedure for patent holders like Motorola. (See Bodewig Rpt. (Dkt. # 732- 6) at 5-6.)
Motorola argues that Dr. Bodewig’s testimony regarding statements by the European Commission and the Düsseldorf court’s request for clarification is irrelevant because the statements and request are not final positions and were made after the Mannheim court found Microsoft infringed Motorola’s patents and issued an injunction, and thus have no bearing to Microsoft’s options at that time. (Mot. to Exclude Bodewig at 8-9.) Specifically, Dr. Bodewig discusses statements made in a press release and a question-and-answer sheet from the European Commission on December 21, 2012, and May 6, 2013, respectively. (Bodewig Rpt. ¶¶ 40-43, 47-52.) The December 21, 2012, press release involved Apple and Samsung and the ETSI SSO, and the European Commission stated that its preliminary view, limited to the circumstances of the case, was that given a FRAND commitment and a willing licensee, recourse to injunctions harms competition. (See 12/21/12 Press Release (Dkt. # 732-8).) Similarly, in the May 6, 2013, press release involving Motorola and Apple, the European Commission stated that its preliminary view was that given a FRAND Commitment and the agreement of Apple to accept a binding determining of FRAND terms by a third party, recourse to injunctions harms competition. (See 5/6/13 Press Release (Dkt. # 732-9).) Dr. Bodewig also discusses questions submitted by the Düsseldorf district court to the European Court of Justice on March 21, 2013 relating to the use of the Orange Book procedure for SEPs involving FRAND commitments. (Bodewig Rpt. ¶¶ 44-46.) Motorola seeks to preclude Dr. Bodewig from testifying to and relying upon these statements in support of his opinion that the Orange Book does not provide a settled and predictable procedure to avoid an injunction. (Mot. to Exclude Bodewig at 8-9.) Microsoft responds that Dr. Bodewig’s rebuttal report—which includes the argument that the outcome of Orange Book proceedings would have been highly uncertain—is corroborated by the statements of the European Commission and the Düsseldorf court, and is therefore relevant. (Resp. to Mot. to Exclude Bodewig (Dkt. # 747) at 5-9.) Microsoft also argues that Motorola’s expert Dr. Haedicke admitted that the Orange Book procedure was in flux from July 2011 onward, prior to the issuance of any injunction in Germany, and the statements by the European Commission and the Düsseldorf court illustrate the evolution of the Orange Book procedure over time. (Id. at 8.)
Under Federal Rule of Evidence 702, evidence or testimony from an expert must be relevant. Daubert, 509 U.S. at 591 (“Expert testimony which does not relate to any issue in the case is not relevant and, ergo, not helpful.”). To be relevant, the evidence must assist the trier of fact to understand or determine a fact in issue. Id. at 592. Here, Motorola contends that, instead of moving its EMEA distribution facilities out of Germany because of the threat of a looming German injunction, Microsoft could have taken an alternative, mitigating course of action and employed the German Orange Book procedure, which (according to at least Motorola’s expert) would have worked to remove the threat of an injunction. Thus, the relevant questions are what options were available to Microsoft and how viable were those options at the time it chose to move its EMEA distribution facility from Germany to the Netherlands in March 2012.
Under this rubric, the court concludes that Dr. Bodewig’s testimony regarding statements of the European Commission and the Düsseldorf court are irrelevant to the viability of mitigations courses that Microsoft could have taken, but did not. Microsoft’s argument that the law surrounding the Orange Book procedure was evolving at the time Microsoft made the decision to move its EMEA facility does not persuade the court. Microsoft has not shown, and Dr. Bodewig does not testify, that Microsoft understood the changes in the law and believed at the time it made its decision to relocate that the German Orange Book procedure would face the possible scrutiny relevant to the statements by the European Commission and the Düsseldorf court. Monday morning quarterbacking is an easy job, but decisions by companies are certainly made in real time and on circumstances that existed at that time. To say ex post that a decision made was actually a good one is irrelevant to the factors that went into the decision, unless the ex post events were evaluated prior to the actual decision. Accordingly, the court grants Motorola’s motion as to Dr. Bodewig’s testimony regarding the statements of the European Commission and the Düsseldorf court.
Motorola also seeks to exclude Dr. Bodewig’s testimony about (1) why Microsoft chose to relocate its distribution facility; (2) the potential effects of this court’s anti-suit injunction; and (3) whether Microsoft is a willing licensee. (See Mot. to Exclude Bodewig at 9-10.) The court has examined Dr. Bodewig’s expert report and cannot find any instance where Dr. Bodewig offers an expert opinion as to why Microsoft chose to relocate its distribution facility. Instead, Dr. Bodewig simply explains that based on the Mannheim court’s schedule, there would not have been sufficient time for Microsoft to await a decision before relocating the facility. (Bodewig Rpt. ¶¶ 108-12.) Motorola does not challenge Dr. Bodewig’s qualifications as an expert of German law, and therefore, Dr. Bodewig is certainly qualified to testify as to the timing of the court’s schedule and compare it to facts concerning Microsoft’s EMEA facility relocation that he has learned from counsel. (Id. ¶¶ 110-11); Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1142 (9th Cir. 1997) (“The fact that [an expert’s] opinions are based on data collected by others is immaterial.”). Accordingly, the court denies Motorola’s motion as to Dr. Bodewig’s testimony about why Microsoft chose to relocate its EMEA facility. Indeed, Dr. Bodewig offers no such opinion in his report.
Similarly, Dr. Bodewig’s testimony about the potential effects of this court’s anti-suit injunction on Microsoft’s decision to relocate its EMEA facility is proper. Dr. Bodewig properly relied on the underlying record of this case, his knowledge of German legal procedures, and his general legal background to opine that Microsoft had to move its facility prior to this court’s anti-suit injunction ruling. (Bodewig Rpt. ¶ 112.) Dr. Bodewig further opined that if Motorola had been successful in appealing this court’s anti-suit injunction, Microsoft would have again been subject to the Mannheim court’s injunction. This opinion is clearly relevant to Microsoft’s decision not to pursue alternative Orange Book procedures in Germany, but instead to move its relocation facility. Moreover, this opinion is properly within Dr. Bodewig’s knowledge as an expert on German law and provides information that will assist the trier of fact in understanding the legal framework surrounding Microsoft’s decision to relocate. Elsayed Mukhtar, 299 F.3d at 1065 n.9 (To be helpful to the jury, expert testimony must address an issue “beyond the common knowledge of the average layman.”). Accordingly, the court denies Motorola’s motion as to Dr. Bodewig’s testimony as to the effect of this court’s anti-suit injunction on Microsoft’s decision to relocate its EMEA facility.
Dr. Bodewig’s testimony as to whether Microsoft is a willing licensee under the European Commission’s recent statements regarding the availability of injunctive relief in the context of a RAND commitment is a different story. As the court has already excluded the European Commission’s recent statements as irrelevant, an opinion as to whether Microsoft fits under the European Commission’s definition of a willing licensee is likewise irrelevant. Accordingly, the court grants Motorola’s motion as to Dr. Bodewig’s testimony that Microsoft is a willing licensee.
Mr. Holleman seeks to testify to the following statements:This is just a small part of this order, but it's enough for you to grasp the overview of what is happening in this courtroom in Seattle. For sure, the judge can't ever claim no one tried to tell him that what Microsoft has been laying down about FRAND is bunk.--“The RAND commitment is a commitment by the patent owner to engage in good faith bilateral negotiations with all potential licensees to license essential IPR [Intellectual Property Rights] on reasonable terms and conditions.”8 (Holleman Rpt. ¶ 30.)The court concludes that these statements are paradigm legal conclusions and therefore constitute impermissible testimony by an expert witness. The court, through its jury instructions, determines the rights and obligations of the parties under the RAND commitment and will convey those rights and obligations to the jury. Those jury instructions will act as the law of the case and Mr. Holleman or any other witness must be prohibited from opining on the interpretation of the RAND obligation vis-à-vis the rights and obligations of the SEP holder and implementer. Mr. Holleman’s opinions as to these rights and obligations are certainly appropriate in briefing related to proposed jury instructions, but there is little question that statements by an expert witness as to the circumstances under which a patent holder fulfills its RAND obligation is beyond the scope of permissible expert testimony. Additionally, although Mr. Holleman’s testimony in paragraph 31 is prefaced with the statement “[f]rom the SDO’s perspective,” the court concludes in this instance that the statement that follows leaves the jury with the impression that the SDO’s perspective may serve as the governing law and therefore is likely to confuse the jury as to the proper legal framework to apply to the facts. Indeed, the following statement explicitly opines that by meeting certain circumstances (being willing to enter into good faith negotiations), a SEP patent holder meets its RAND obligations. Simply put, expert testimony leaving an impression on the fact-finder concerning the duties and obligations pursuant to the RAND commitment is impermissible. Accordingly, Microsoft’s motion is granted as to the above-referenced testimony and any similar testimony.
-- “[T]he patent holder fulfills its RAND obligation by being willing to enter into good faith negotiations with all potential licensees who wish to negotiate, and attempting in good faith to reach a license on RAND terms and conditions in such an agreement.”9 (Holleman Rpt. ¶ 31.)
Microsoft also takes issue with Mr. Holleman’s proffered testimony regarding the duty of Motorola at the initial offer stage. Specifically, Mr. Holleman seeks to introduce the following testimony:-- “I understand that Judge Robart has stated that the initial offer to a potential licensee does not need to be on RAND terms.” (Holleman Rpt. ¶ 35.)Although these statements are slightly different from Mr. Holleman’s overt statements expounding on the parties’ RAND obligations, the court concludes these statements also implicate legal conclusions that are within the province of the court. The jury instructions in this case are yet to come, and how the court decides to frame those instructions is solely within its discretion. Mr. Holleman’s statements at issue here implicate the law as Mr. Holleman seeks to describe it. This is improper. In paragraph 38, Mr. Holleman again explains that because certain circumstances are met, Motorola has met its RAND obligations. As for paragraph 35, although Mr. Holleman attempts to couch his testimony as a statement of law from this court, at best, the statement is a half truth in that it leaves the impression that opening offers can be any amount or on any terms, whereas to the contrary, the court has previously held that opening offers must at least be made in good faith. In this case, the court will issue a jury instruction explaining the obligations of the parties in a RAND context at the initial offer stage. Mr. Holleman’s contested testimony—which assumes the law and the parties’ obligations or touches on what the law should be—invades the court’s province to instruct the jury on the law. Accordingly, Microsoft’s motion is granted as to the above-referenced testimony and any similar testimony.
-- “Thus, because Motorola attempted to engage Microsoft in good faith negotiations for a RAND license . . . its actions are fully consistent with its RAND obligations . . . .” (Holleman Rpt. ¶ 38.)
Microsoft next seeks to preclude Mr. Holleman from introducing the following testimony at trial.-- “There are no RAND provisions in SDO policies requiring a specific range, near-zero or nominal royalty rates, a single royalty rate for all situations, a specific royalty format or base, or a particular methodology for determining or negotiating to RAND terms. There similarly are no RAND provisions in SDO policies requiring that an opening offer be a certain rate, form, or relation to the final agreed-upon RAND license rate. And, there are no RAND provisions in SDO policies mandating the steps or analysis that a standard essential patent owner must take in formulating an opening offer. For example, there are no provisions in SDO policies requiring the patent holder to consider royalty stacking or patent poll rates in formulating its opening offer.” (Holleman Rpt. ¶ 47.)Compared with one another, Paragraphs 47 and 48 demonstrate the line between proper and improper expert testimony in this case, and the court will thus analyze both paragraphs together. Paragraph 47 is replete with statements to the effect that there are “no RAND provisions in SDO policies” requiring certain action by the SEP owner vis-à- vis licensing. These statements invade the province of the court to instruct the jury on the law. There are in fact “provisions” in the policies of the IEEE and ITU that require the SEP owner to act in a certain way when licensing or enforcing its standard essential patents. In previous orders, the court has interpreted the “provisions” of the ITU and IEEE policies to mean, inter alia, that SEP owners must offer SEPs in good faith and must grant RAND licenses. Were Mr. Holleman to testify that there are no “provisions” in the ITU and IEEE policies requiring SEP owners to make offers in good faith and then have the court instruct the jury that the ITU and IEEE policies require SEP owners to make offers in good faith, the resulting combination of these seemingly conflicting statements would be at best confusing and at worst contradictory from the perspective of the jury. Said differently, the court concludes that Mr. Holleman’s testimony in paragraph 47 leaves the impression on the jury that the law is something other than that provided by the court. Mr. Holleman is precluded from testifying to the statements in paragraph 47 or any similar statements.
-- “There is nothing in the ITU or IEEE’s written policies requiring that each offer made by Motorola at each stage of negotiations, and certainly not at the opening of negotiations, must be RAND, or within a specific RAND range. As noted above, I understand that Judge Robart has additionally clarified that an opening offer need not be within the RAND range.” (Holleman Rpt. ¶ 48.)
Paragraph 48, however, provides a different story. The first disputed sentence reads: “There is nothing in the ITU or IEEE’s written policies requiring that each offer made by Motorola at each stage of negotiations, and certainly not at the opening of negotiations, must be RAND, or within a specific RAND range.” (Holleman Rpt. ¶ 48.) Although this statement goes too far, it comes close to permissible expert testimony. The court’s concern is with the use of the word “requiring” and the phrase “or within a require opening offers to be made in good faith and it would make little sense and invade the province of the court to permit Mr. Holleman to state otherwise. It is true that this statement does not directly contradict the court’s prior orders, but that misses the point: it is the province of the court to instruct the jury on the duties and obligations that arise under the ITU and IEEE policies.
With that said, Mr. Holleman may properly testify as to the language of the ITU and IEEE policies. The court concludes that it will assist the trier of fact for Mr. Holleman, if he so chooses, to state what is and is not included in the ITU and IEEE written policies. Thus, to the extent that Mr. Holleman can confine his testimony to the language of the policies—as opposed to duties and obligations of the patent holder and implementer arising from those policies—his testimony is proper. In other words, the court has no objection to Mr. Holleman stating the language of the ITU and IEEE polices, but Mr. Holleman’s testimony cannot leave the impression on the jury that the language of the ITU and IEEE policies do or do not place particular duties and obligations on the parties. The court will trust that the experienced trial attorneys in this case can properly understand and try their respective cases within the legal framework set forth by this court. The court further cautions the parties that testimony elicited from a witness in contravention of the court’s legal framework runs the risk of the court striking the entirety of that witness’ testimony.
As for the second disputed sentence of paragraph 48, the court concludes that this sentence clearly invades the province of the court. The second sentence states: “I understand that Judge Robart has additionally clarified that an opening offer need not be within the RAND range.” (Holleman Rpt. ¶ 48.) This statement is an improper recitation of the law; this court has determined that opening offers cannot be blatantly unreasonable and must be made in good faith. Permitting Mr. Holleman to make statements regarding the law in a manner different than how the court describes the law invades the court’s province. Mr. Holleman is precluded from offering the second sentence and any similar testimony. Microsoft also argues that Mr. Holleman should not be permitted to testify to the effect that RAND licensing commitments do not bar SEP holders from pursuing injunctions. (Microsoft Mot. to Exclude at 11; see Holleman Rpt. ¶¶ 15, 21, 23, 39, 60.) For example, Mr. Holleman testifies:In my experience, RAND commitments made under SDO [standard determining organizations] Intellectual Property Rights (“IPR”) policies also are not understood to limit the IPR holder’s legal rights to enforce its patents, in the event good faith RAND negotiations with a potential licensee do not lead to a license agreement, or if the potential licensee simply refuses to engage in good faith negotiations.(Holleman Rpt. ¶ 21.) As explained more fully below, the court disagrees with Microsoft. It is the court’s understanding that Microsoft intends to argue at trial that Motorola breached its RAND commitment by seeking injunctive relief on its standard essential patents in Germany and at the ITC. In other words, Microsoft will argue that Motorola’s actions in seeking injunctive relief constitute bad faith. Motorola then must be able to rebut this contention by arguing that it understood its efforts to seek injunctive relief to be in compliance with the general understanding of the RAND obligations at the time it sought such injunctive relief. Nevertheless, Mr. Holleman’s testimony may be understood by a jury as explaining the rights and obligations of the parties under a RAND commitment with respect to injunctive relief. This would be improper, as explained above, in that Mr. Holleman cannot testify as to legal conclusions. Thus, so long as Mr. Holleman makes clear that his testimony is based on his knowledge of what was understood in the legal community, and hence by Motorola, as to Motorola’s right to seek injunctive relief in other courts, this testimony is relevant and proper.
8 Motorola appears to have withdrawn this proffered testimony of Mr. Holleman. (See 7/31/13 Ltr. at 2.)
9 Paragraphs 36, 42, 59 of Mr. Holleman’s report contain very similar language regarding the patent holder’s obligations under the RAND commitment.
Here are the filings, not all of which I got, because the kitty was getting low. I left out the various requests for sealing and some of the motions in limine. If any of you have any extra coin to spare to bring it up again, I'd appreciate you hitting the PJ Paypal button:
817 - Filed & Entered: 08/02/2013
DECLARATION of Christopher Wion re  Notice-Other by Plaintiff Microsoft Corporation. (Wion, Christopher)
818 - Filed & Entered: 08/02/2013
SEALED DOCUMENT Exhibit 1 to Declaration of Christopher Wion by Plaintiff Microsoft Corporation re  Order on Motion to Seal (Wion, Christopher)
819 - Filed & Entered: 08/03/2013
Letter from Arthur W. Harrigan, Jr. re  Letter regarding Motorola's expert opinions. (Attachments: # (1) Exhibit Excerpts of 7 30 Hearing Transcript)(Harrigan, Arthur)
820 - Filed & Entered: 08/03/2013
SUPPLEMENT re  Response to Motion Microsoft's Second Notice of Supplemental Authority Regarding Defendants' Motion for Summary Judgment by Plaintiff Microsoft Corporation. (Attachments: # (1) Exhibit U.S. Trade Representative Disapproval Letter)(Harrigan, Arthur)
821 - Filed & Entered: 08/05/2013
APPLICATION OF ATTORNEY Tony Balkissoon FOR LEAVE TO APPEAR PRO HAC VICE for Plaintiff Microsoft Corporation (Fee Paid) Receipt No. 0981-3300575. (Wion, Christopher)
822 - Filed & Entered: 08/05/2013
ORDER granting in part and denying in part [722,734] Morotola's Motion to Exclude; granting in part and denying in part  Microsoft's Motion to Exclude; granting in part and denying in part [731,737] Motorola's Motion to Exclude by Judge James L. Robart.(MD)
823 - Filed & Entered: 08/05/2013
MOTION to Seal Microsoft's 8/5/13 Motion to Seal by Plaintiff Microsoft Corporation. (Attachments: # (1) Proposed Order) Noting Date 8/16/2013, (Harrigan, Arthur)
824 - Filed & Entered: 08/05/2013
RESPONSE, by Plaintiff Microsoft Corporation, to  MOTIONS IN LIMINE . Oral Argument Requested. (Harrigan, Arthur)
825 - Filed & Entered: 08/05/2013
DECLARATION of Christopher Wion in Support of Microsoft's Opposition to Defendants' Motions in Limine filed by Plaintiff Microsoft Corporation re  MOTIONS IN LIMINE (Attachments: # (1) Exhibit 1, # (2) Exhibit 2, # (3) Exhibit 3, # (4) Exhibit 4, # (5) Exhibit 5, # (6) Exhibit 6, # (7) Exhibit 7, # (8) Exhibit 8)(Harrigan, Arthur)
826 - Filed & Entered: 08/05/2013
SEALED DOCUMENT Microsoft's Opposition to Defendants' Motions in Limine by Plaintiff Microsoft Corporation re  MOTION to Seal Microsoft's 8/5/13 Motion to Seal (Attachments: # (1) Exhibit 2 SEALED, # (2) Exhibit 5 SEALED, # (3) Exhibit 7 SEALED)(Harrigan, Arthur)
827 - Filed & Entered: 08/05/2013
MOTION to Seal Defendants' Opposition to Microsoft's Motions in Limine and Exhibits to Declaration of Andrea Pallios Roberts in Support by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc.. (Attachments: # (1) Proposed Order) Noting Date 8/16/2013, (Palumbo, Ralph)
828 - Filed & Entered: 08/05/2013
RESPONSE, by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc., to  MOTIONS IN LIMINE . Oral Argument Requested. (Palumbo, Ralph)
829 - Filed & Entered: 08/05/2013
DECLARATION of Andrea Pallios Roberts filed by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc. re  MOTIONS IN LIMINE (Attachments: # (1) Exhibit A-P)(Palumbo, Ralph)
830 - Filed & Entered: 08/05/2013
SEALED DOCUMENT Defendants' Opposition to Microsoft's Motions in Limine; Sealed Exhibits to Declaration of Andrea Pallios Roberts in Support by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc. re  MOTION to Seal Defendants' Opposition to Microsoft's Motions in Limine and Exhibits to Declaration of Andrea Pallios Roberts in Support (Attachments: # (1) Exhibit)(Palumbo, Ralph)
831 - Filed & Entered: 08/05/2013
EXHIBIT Q to Declaration of Andrea Pallios Roberts in Support of Defendants' Opposition to Microsoft's Motions in Limine re  Declaration by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc.. (Palumbo, Ralph)
832 - Filed & Entered: 08/06/2013
ORDER re (821 in 2:10-cv-01823-JLR) Application for Leave to Appear Pro Hac Vice. The Court ADMITS Attorney Anthony Balkissoon for Microsoft Corporation, by William M. McCool. (No document associated with this docket entry, text only.)(DS)
833 - Filed & Entered: 08/06/2013
Letter from Kathleen Sullivan for Motorola & General Instruments Corp. re  Motion Hearing,, in response to Court's request for authority on Motorola's statement. (Palumbo, Ralph)
834 - Filed & Entered: 08/07/2013
RESPONSE, by Plaintiff Microsoft Corporation, to  MOTION to Seal Documents in Support of Defendants' Motion in Limine. (Harrigan, Arthur)
835 - Filed & Entered: 08/07/2013
MOTION to Seal August 7, 2013 Letter From Ralph Palumbo and Documents in Support by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc.. (Attachments: # (1) Proposed Order) Noting Date 8/16/2013, (Palumbo, Ralph)
836 - Filed & Entered: 08/07/2013
Letter from Ralph H. Palumbo re  Order on Motion to Exclude,,,,, Requesting Permission to Renew Rule 702 Motion [REDACTED]. (Attachments: # (1) Exhibit 1 [REDACTED])(Palumbo, Ralph)
837 - Filed & Entered: 08/07/2013
SEALED DOCUMENT August 7, 2013 Letter from Ralph Palumbo and Supporting Documents by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc. re  MOTION to Seal August 7, 2013 Letter From Ralph Palumbo and Documents in Support (Attachments: # (1) Exhibit 1, # (2) Exhibit 2, # (3) Exhibit 3, Part 01, # (4) Exhibit 3, Part 02, # (5) Exhibit 3, Part 03, # (6) Exhibit 3, Part 04, # (7) Exhibit 3, Part 05, # (8) Exhibit 3, Part 06, # (9) Exhibit 3, Part 07, # (10) Exhibit 3, Part 08, # (11) Exhibit 3, Part 09, # (12) Exhibit 3, Part 10)(Palumbo, Ralph) 838 - Filed & Entered: 08/07/2013
Letter from Arthur W. Harrigan, Jr. re  Letter . (Harrigan, Arthur)
839 - Filed & Entered: 08/07/2013
RESPONSE, by Defendants General Instrument Corporation, Motorola Mobility LLC, Motorola, Inc., to  MOTION to Seal . (Palumbo, Ralph)
840 - Filed & Entered: 08/08/2013
Letter from Arthur W. Harrigan, Jr. . (Harrigan, Arthur)