Despite its position, Apple maintains that it is entitled to specific performance in the form of the court determining what a FRAND rate is for Motorola's patents. At the final pretrial conference, I asked Apple to explain why it believed the court should determine a FRAND rate even though the rate may not resolve the parties' licensing or infringement disputes. I questioned whether it was appropriate for a court to undertake the complex task of determining a FRAND rate if the end result would be simply a suggestion that could be used later as a bargaining chip between the parties. Apple responded that the rate would resolve the dispute in this particular case, namely, whether Motorola's license offer was FRAND and if not, what the rate should have been.

Apple's response was not satisfactory and did not assuage my concerns about determining a FRAND rate that may be used solely as a negotiating tool between the parties. After further consideration, I believe it would be inappropriate to grant Apple's clarified request for specific performance.

Apple's allegations of "irreparable harm" have at least two problems. The first problem is that Apple's request for specific performance in the form of court declaration of a FRAND rate without any obligation by Apple to accept the rate would not prevent Motorola from suing Apple for patent infringement and requesting injunctive relief. In other words, if Apple refuses to be bound by the rate determined by the court, Motorola could continue to sue Apple for patent infringement and request injunctive relief.

The second problem is that Apple has provided no reason why its injuries would not be remedied by an award of money damages.

• Motorola, Cisco and Netgear all have licensed the patents in question, meaning that users of that equipment are covered by those patents under the concept of patent exhaustion (basically, if you buy a licensed product, it's licensed). Innovatio conveniently doesn't mention this to the people it sends threat letters to.
• The patents in question are part of commitments to IEEE that they'll only be licensed on RAND terms, but the threat letters demand way more than would be considered "reasonable."
• Incredibly, Innovatio includes some expired patents in the list of patents it has threatened people over. That's a massive no-no. Once a patent is expired you can't demand a license for it. At all.
• Innovatio apparently tells the people it threatens that it'll be cheaper to just settle, rather than to even investigate the claims that it's making -- and has told people that the manufacturers in question aren't defending their customers, which is proven false by the lawsuit, which, again, was filed soon after Innovatio popped up on the scene.
• In an attempt to appear more legit, Innovatio claims that the patents in question have "generated in excess of $1 billion in settlements and license fees" to scare small businesses into complying. It leaves out that it appears to be basing this number on the famous broad patent fight settlement between Qualcomm and Broadcom, which was a wide-ranging cross licensing program, that has nothing to do with Innovatio or its specific patents.

Defendants prey upon end users that are not involved in the development or supply of the accused technologies, demanding exorbitant licensing amounts that breach numerous obligations on the patents and greatly exceed any notion of reasonableness. In furtherance of their plan, Defendants threaten protracted negotiations with onerous burdens on end users, and offer supposed “discounts” for promptly paying Innovatio without engaging in such negotiations, while making it clear that Innovatio will initiate costly litigation with anyone that does not acquiesce (something it cannot realistically do given the 8000-plus letters sent throughout the U.S.). Under these circumstances, Innovatio circumvents its obligations and illegally obtains and seeks to obtain licensing fees to which it is not entitled, at great detriment to the Plaintiffs in this action, their customers, and the public generally.

To date, at least ten of the Innovatio Patents have expired, yet those patents continue to be highlighted in Defendants’ threat letters in furtherance of their licensing campaign. Yet Innovatio states to its licensing targets that “Innovatio proposes granting [the licensing target] an upfront, paid-up license for its use under all of 31 of the issued Innovatio Patents,” when those targets have no liability on and therefore no need of such a license to expired patents. For example, on May 9, 2012, almost one year after the ‘771 patent expired and almost six months after the ‘311 patent expired, Innovatio sent a demand letter to [redacted] .... Innovatio did not provide notice of these or its other patents to [redacted] before expiration. Notwithstanding the expiration of these patents and other patents, Innovatio’s May 9, 2012 demand letter stated “[t]he operation and use of any [WLANs that use the IEEE 802.11 communication protocols] by [redacted] constitutes infringement of at least the following Innovatio Patents: . . . U.S. Patent No. 5,940,771 . . . [and] U.S. Patent No. 6,374,311.” .... Yet circumstances here including a failure to comply with 35 U.S.C. §287, confirms that Innovatio cannot assert infringement or recover damages on at least these expired patent claims. On information and belief, Innovatio never disclosed that these patents had expired, or that its remedies were limited, and the purpose behind inclusion of these patents is to inflate the size of Innovatio’s portfolio, instill fear, increase fees and costs to investigate, and force its targets to capitulate promptly to Innovatio’s unlawful demands.

Posner said some industries, like pharmaceuticals, had a better claim to intellectual property protection because of the enormous investment it takes to create a successful drug.

Advances in software and other industries cost much less, he said, and the companies benefit tremendously from being first in the market with gadgets - a benefit they would still get if there were no software patents.

"It's not clear that we really need patents in most industries," he said.

Also, devices like smartphones have thousands of component features, and they all receive legal protection.

"You just have this proliferation of patents," Posner said. "It's a problem."

It’s not as if nominal damages were compensation for a nominal harm. They are a symbolic recognition of a wrong that produced no harm, though it may have infringed a right. You can’t go into federal court and say you had a contract with X and X broke it and you’re really annoyed even though you sustained no injury of any sort (in fact you made money because you're contracted at a higher price) so please give me a judgment for $1 that I can pin on my wall.

“Going for broke” is the inescapable characterization of Motorola’s damages claim. Motorola claims to be entitled to a minimum royalty of 2.25 percent for a license for the patents in the portfolio that contains the ‘898. Though it’s the only patent in the portfolio that remains in this suit, Motorola claims to be entitled to damages equal to (or “up to,” or “at least”—it seems not to have made up its mind) 40 to 50 percent of 2.25 percent, which would be 0.9 to 1.125 percent of sales of Apple devices that infringe the ‘898.

The problem is not that damages cannot be calculated, but that on the eve of trial, with the record closed, it became apparent that the parties had failed to make a responsible calculation.

Apple is not a “small company”; its market capitalization exceeds that of Google and Microsoft combined. To suggest that it has suffered loss of market share, brand recognition, or customer goodwill as a result of Motorola’s alleged infringement of the patent claims still in play in this case is wild conjecture.

In its latest written and oral submissions Apple attempts what I told its legal team at a pretrial conference I would not let it do in the liability trials then envisaged: turn the case into an Apple versus Motorola popularity contest. Apple wanted me to allow into evidence media reports attesting to what a terrific product the iPhone is. I said I would not permit this because the quality of the iPhone (and of related Apple products, primarily the iPad) and consumers’ regard for it have, so far as the record shows, nothing to do with the handful of patent claims that I had ruled presented triable issues of infringement. Apple’s “feel good” theory does not indicate that infringement of these claims (if they were infringed) reduced Apple’s sales or market share, or impaired consumer goodwill toward Apple products.

The notion that these minor-seeming infringements have cost Apple market share and consumer goodwill is implausible, has virtually no support in the record, and so fails to indicate that the benefits to Apple from an injunction would exceed the costs to Motorola. An injunction that imposes greater costs on the defendant than it confers benefits on the plaintiff reduces net social welfare.

[re a slide-to-unlock patent] Apple’s .. argument is that “a tap is a zero-length swipe.” That’s silly. It’s like saying that a point is a zero-length line.

Motorola’s contention that the term has a “plain and ordinary meaning” is ridiculous; Motorola seems to have forgotten that this is a jury trial.

It's also pretty rich that Microsoft should complain about the possibility of an injunction being granted against it by another jurisdiction when that is precisely what it is trying to do by filing an action against Motorola in the International Trade Commission as well as in a US District Court. If Microsoft says German courts shouldn't get involved in its dispute with Motorola, it's equally ridiculous that an international trade body should be dragged into a domestic dispute between two US companies, as Techdirt has noted before.

Basically, Microsoft is just whining because it thinks it's going to lose in Germany, and has gone running to the US judge in an attempt to subvert that country's judicial system. It's a huge pity that he acceded to this ridiculous request: it creates a terrible precedent that's likely to lead to more such interference in the legal systems of other countries -- including foreign courts ordering companies not to obey US rulings -- and a general weakening of respect for the rule of law around the world.

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Microsoft's hurried decision to withdraw its entire distribution center from Germany shows a possible consequence of this double-edged sword: companies pull out so that patent-friendly courts can't be turned against them. As patent litigation balloons, and more cases head to Germany, other foreign companies may come to the same conclusion as Microsoft, and start taking the same defensive precautions. In which case, Germany will find that far from attracting foreign investors, its patent-friendly courts are actually driving them away.

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Google is saying that they don’t plan on making any changes to the way Motorola was enforcing their patent pool. This presumably means, among other things, they’ll now be suing Apple and trying to block the iPhone from being sold in certain countries.

This also presumably means they’ll be suing Microsoft and trying to bring down the H.264 video codec — which, by the way, Google created a competitor to (WebM) out of fear that someone would come along one day and try to enforce patents that would kill the H.264 video codec.

How’s that for a mind fuck?

The tables have gotten so turned that it’s now Apple and Microsoft who are complaining about patent enforcement. Specifically, both want assurances that patents licensed under fair, reasonable and non-discriminatory (FRAND) terms, are actually just that — fair.

In Motorola’s eyes, “fair” is Apple paying 2.25 percent on each iPhone and iPad sold. John Paczkowski of AllThingsD did the math: this would mean Apple paying about a billion dollars a year in royalty fees to Motorola.

A billion dollars. The mobile unit that Google is buying lost $285 million for the year last year. Apple would be indirectly keeping them, a competitor, afloat.

• Microsoft, thanks to patents, makes more money from Android phones.
• In order to fend off patent threats, Google buys Motorola to get its patents.
• In doing so, handset makers scared of competing with Google, start looking at Microsoft as a partner.
• The end result: Microsoft may get more handset partners, but less money, since Android is a pure licensing profit center.

“You’d much rather see Apple spend some of that $4 billion on new inventions, and Google invest that $12 billion to generate new knowledge,” said Josh Lerner, an economist at the Harvard Business School. “It’s a transfer of wealth from innovators to bondholders and stockholders who have no motivation to innovate. It’s disturbing.”

The successful launch of the iPhone on Verizon, he writes, has "taken the wind" out of Android's sails. The Google app store is "a disaster." Honeycomb, the operating system on which Motorola has hitched its wagon, is "incomplete," "unstable," has a "poor UI" and is basically "dead on arrival."

All in all, Motorola's "competitive fixation" on Apple (AAPL) and Research in Motion (RIMM) is misplaced. Rather than trying to innovate on software, Chowdry suggests, "selectively attacking with patents other Android phone OEM's is a better strategy."

"We have a responsibility to our customers, partners, and shareholders to safeguard the billions of dollars we invest each year in bringing innovative software products and services to market."

• 5,579,517: Common name space for long and short filenames
• 5,758,352: Common name space for long and short filenames (yes, again)
• 6,621,746: Monitoring entropic conditions of a flash memory device as an indicator for invoking erasure operations
• 6,826,762: Radio interface layer in a cell phone with a set of APIs having a hardware-independent proxy layer and a hardware-specific driver layer
• 6,909,910: Method and system for managing changes to a contact database
• 7,644,376: Flexible architecture for notifying applications of state changes
• 5,664,133: Context sensitive menu system/menu behavior
• 6,578,054: Method and system for supporting off-line mode of operation and synchronization using resource state information
• 6,370,566: Generating meeting requests and group scheduling from a mobile device

We understand there is a community of developers interested in going beyond Android application development and experimenting with Android system development and re-flashing phones. For these developers, we highly recommend obtaining either a Google ADP1 developer phone or a Nexus One, both of which are intended for these purposes. At this time, Motorola Android-based handsets are intended for use by consumers and Android application developers, and we have currently chosen not to go into the business of providing fully unlocked developer phones.

The use of open source software, such as the Linux kernel or the Android platform, in a consumer device does not require the handset running such software to be open for re-flashing. We comply with the licenses, including GPLv2, for each of the open source packages in our handsets. We post appropriate notices as part of the legal information on the handset and post source code, where required, at http://opensource.motorola.com. Securing the software on our handsets, thereby preventing a non-Motorola ROM image from being loaded, has been our common practice for many years. This practice is driven by a number of different business factors. When we do deviate from our normal practice, such as we did with the DROID, there is a specific business reason for doing so. We understand this can result in some confusion, and apologize for any frustration.

products [including], without limitation, cell phones, computers, network drivers, high definition television sets, ultrasound machines, MRI machines, lab equipment, arbitrary waveform generators, audio amplifiers, video amplifiers, hard disc drives, ADC/DAC converters, DVD-RW players, DSL modems, CCD cameras, satellite communication technology, and other products where high performance, high speed analog circuits are used, and/or components thereof.

Nowhere in the Amended Complaint does Plaintiff identify, with the requisite level of factual detail, the particular product or line of products, that allegedly infringe the '188 Patent. Instead, Plaintiff merely claims that the infringing "products include, without limitation, cell phones, computers . . . and other products where high performance, high speed analog circuits are used, and/or components thereof." [P]laintiff has done nothing more than recite a laundry list of electronic devices. These cursory allegations are insufficient to give the Defendant fair notice of the claims being alleged against it.