As Germany Becomes Europe's East Texas, Microsoft Moves Its Distribution Center

from the makes-you-think dept

Just as companies often try to file their patent lawsuits in East Texas, so Germany is emerging as a favorite forum for patent litigation in Europe — and for precisely the same reason:

Germany’s specialized court system, where cases are ruled on relatively quickly and it can be easier than in other countries to get an injunction, is increasingly leading technology companies to file patent lawsuits there, say patent law specialists.

That ought to place Germany in an enviable position. After all, a common argument from supporters of patents is that foreign companies will be more willing to set up in countries with strong patent regime. So it’s curious that the article about Germany’s patent-friendly courts quoted above goes on to say:

Motorola sued Microsoft over patents it has on the H.264 video standard, which led Microsoft to move its European distribution center from Germany to the Netherlands even before the German court of Mannheim ruled in the case.

It explains that move as follows:

Apple tried to get an injunction against Samsung in the Netherlands. Samsung’s European distribution center is located in the Netherlands, so if Apple would have won, this would have effectively paralyzed Samsung’s business in Europe. The judge denied the injunction, meaning Samsung could continue its business in Europe.

This ruling is why Microsoft chose the Netherlands for its distribution center when it decided that Germany was too risky with Motorola’s standard-essential patent litigation in mind, said Agé.

This exposes the fundamental flaw in the argument that a patent-friendly legal system will encourage inward investment. However much foreign companies may welcome the ease with which they can sue their rivals and obtain injunctions against them, they also know that they are also more likely to be sued and blocked by injunctions themselves.

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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Companies: apple, microsoft, motorola, samsung

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Comments on “As Germany Becomes Europe's East Texas, Microsoft Moves Its Distribution Center”

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Lebenslustiger (user link) says:

True if it weren't

The tricky thing with Germany and the Netherlands though is that legislation in the EU is bound to become common – so Germany ruling on something will influence and compel courts in other EU countries and vice versa – in the end the Netherlands are not a patent ignorant safe haven but ultimately will rule similarly if warranted. Germany might just be a bit speedier in the process – simply to have the lawyers not bill so many hours 🙂

Anonymous Coward says:

Business Killer

The patent system is a business killer. Look at what happened to RIM, manufacturers of the Blackberry. Once they lost their patent suit and had to pay $600 million, they also lost their mojo. They became timid and unwilling to innovate, not to mention that they no longer had the money to spend on research. They drifted for a few years but now they are in serious financial trouble. That one patent lawsuit loss may end up killing them.

Small companies are terrified out of innovating, then they go broke because they failed to innovate.

The answer is to abolish the patent system. Hold the politicians responsible for maintaining the business killer patent system. Remind them every time they say “Jobs, jobs, jobs”.

Anonymous Coward says:

Worse yet for Germany, you don’t have to set up shop in Germany to sue in Germany, so the only people who get a windfall from the patent legislation are the lawyers and judges in Germany. Meanwhile, the entire Netherlands economy except their lawyers and judges get a big windfall from businesses moving there.

Courts should recognize that the injunctions often do far more harm then the actual harm the lawsuit was originally about.

Anonymous Coward says:

Re: Re:

How can they enforce the rulings, though? If a company has no presence in the country outside of its products, and people can freely leave the country to purchase those products anyways (and they will for Windows, regardless of fanbois on all sides of THAT debate), then what is the purpose of their rulings other than to enrich the pockets of the lawyers?

Paul says:

Wait wait wait....

Did I read this correctly…. Microsoft withdraw its entire distribution center from Germany to escape a lawsuit.
But why Microsoft is at the edge of innovation. They can “innovate around patents” no?…. or it may be the case that someones innovation is another ones patent, ups… I was here 1 second before you, I win you lose…

So Microsoft is running away from this and small companies should do what? stay and be “innovative”?

Patent system your loving it….

Anonymous Coward says:

I think that you need to understand that the German system is just running a little quicker, a little closer to internet time. I know most of the bandits online are playing arbitrage between the speed of putting something online and the time it takes to get legal action, which is a real issue.

Patents are the same thing – companies ignore patents (or specifically infringe them) and then attempt to get as much through the market place as possible before any legal action happens. Germany is in the forefront of dealing with these cases in a slightly more reasonable timeframe.

I don’t always agree with their rulings, but I think it’s important to realize that what they are doing is in fact useful for everyone involved.

TtfnJohn (profile) says:

Re: Re: Re: Re:

None of which means that you’ve actually written a line of code, just fed punch cards into ancient mainframes “back in the day” which may have contained code or data as far as you knew.

Nor does it address the incredibly broad patents granted on software by people with less understanding of what goes into actual software or what it really is in the United States and elsewhere.

No, let me rephrase that. Impossibly broad claims contained within software patent applications.

Software patents were, are, and always will be a bad idea and a worse practice. The real pity is that the court that started this by allowing software patents didn’t have clue either.

Paul says:

Re: Re: Re: Re:

Oh my apologies!!! I did not know I have a fellow brother in arms.

No I did not do punch cards I was learning my algebra back then.

Since you are more experienced in the field then me, I am looking for some advice…
I learned how to approach and solve problems with logic thinking and how to implement algorithms in different programing languages. But this idea that my way of thinking and the solution to an architectural problem in my software design may trash someones work by not benefiting from it, to me is unbearable.

I don’t want to reinvent the wheel every time I’m faced with a particular problem. If there is a solution out there I would like to implement it and reword the person who found it. This way I can focus my energy and time on problems that have no solution yet, thus contributing to the wold.

The problem is that finding the solution in these patents is proving to be very difficult. I am a slow reader, I can read about 300 pages in 1,5 2 weeks but for Social Networking alone there are around 30,000 related patents and if they where 1 page long I’m looking at around 2 years of reading.

Is there a way I can find my solutions to a particular problem, if they exists, faster. Spending 2 years reading about social networking is a waste of time considering it represents only a quarter of my project.

Thank you,

TtfnJohn (profile) says:

Re: Re: Re: Re:

Oh, and nice dodge of the issues presented in the linked article. You don’t answer a single one of them.

Now go create a few dozen punch cards that will read out into a 3270 “I will not resort to adhoms when trapped. I will remember that the point of debate or conversation is to offer differing viewpoints in order to sway those holding differing views from mine.”

Worse punishment, I’d guess, than writing it out on something as antiquated as a blackboard.

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