updated 10:11 pm EDT, Mon June 25, 2012
FRAND argument takes center stage in new look
In part influenced by the opinion published by US District Court judge Richard A. Posner in a separate case Apple-Motorola action, the International Trade Commission (ITC) has agreed to review its previous preliminary ruling that found some Apple products to be infringing on a Motorola Wi-Fi patent. If the patent is now found to be a standards-essential patent, Motorola's primary win against Apple thus far could be up-ended.
The preliminary win for Motorola on the patent could also be upheld, which could lead to a sales ban of some Apple products. If the patents are found to be FRAND-eligible, however, Motorola would still win the battle (Apple was infringing) but lose the war (and must license the patent to Apple, with no penalties other than the owing of backdated royalties).
Because of new factors in the review that have come up since the initial ruling, the focus of the review is seen by many as a victory for Apple's ongoing position that FRAND-eligible patents should not be used as legal weapons and can't result in injunctions or sales bans. Though a normal part of the process of an ITC ruling, the review appears to be reconsidering the entire question of Motorola's patents in light of Posner's dismissal of a similar suit between the two companies, and has specifically said it will request further information from Motorola regarding FRAND licensing along the same lines that Posner criticized in his ruling.
Posner asked Motorola to answer how a patent (once found to be standards-essential) could not be subject to FRAND licensing, essentially rendering litigation over such patents moot. If Apple can move the FRAND question to the center of the review, it stands a good chance of escaping a sales ban or other penalties, and could even get the ruling reversed, though that is seen as unlikely.
The ITC has already said it will ask Motorola to answer questions such as "does the mere existance of a [F]RAND obligation preclude issuance of an exclusion order [aka sales ban]?" and "should a patent owner that has refused to negotiate a license on [F]RAND terms with a named respondent in a Commission investigation be precluded from obtaining an exclusion order?"
Apple has managed to obtain letters of support for its general position that FRAND-eligible patents can't be used to obtain injunctions from most of the rest of the industry, even those companies that it competes with such as Microsoft, HP, Nokia, Verizon and others, including the Federal Trade Commission. The letters accuse Motorola of recklessly abusing its FRAND commitments and pursuing litigation as a negotiating tactic.
The actual Motorola patent at issue is described as "a method and system for generating a complex pseudonoise sequence for processing a code division multiple access signal." Judge Thomas Pender found that Apple was infringing on the patent in April, setting the stage for a full review by all six judges. Interestingly, the panel will also be re-examining the three other Motorola patents tossed out of the initial Moto suit by Judge Pender, effectively re-trying the entire case with an emphasis on FRAND considerations.
Apple had filed a countersuit charging Motorola with infringing on some of Apple's patents, but the Google-owned division was ultimately found not to be infringing. The ITC expects to have answers to its questions from Motorola within a few weeks, and will make its final ruling sometime in August.
ITC Review Notice