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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Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Lebenslustiger, Apr 12th, 2012 @ 1:03am

    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 :)

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, Apr 12th, 2012 @ 2:53am

    Lets see if Germany can survive on patent trolls alone.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, Apr 12th, 2012 @ 4:12am

    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".

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, Apr 12th, 2012 @ 5:15am

    Why would they move?

    They can just get a US judge to order any US company it is in litigation with to not comply with any german injunction. 

    Sounds like.. disgusting is what it sounds like.

    reply to this | link to this | view in thread ]

  5. identicon
    Anonymous Coward, Apr 12th, 2012 @ 5:32am

    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.

    reply to this | link to this | view in thread ]

  6. icon
    Squig (profile), Apr 12th, 2012 @ 5:34am

    Re: True if it weren't

    But continental European law takes earlier ruling of different courts far less into account than the English/American legislative system. So while there will be harmonization, rulings from German regional courts will matter little.

    reply to this | link to this | view in thread ]

  7. identicon
    Paul, Apr 12th, 2012 @ 6:18am

    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....

    reply to this | link to this | view in thread ]

  8. identicon
    Anonymous Coward, Apr 12th, 2012 @ 7:12am


    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?

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, Apr 12th, 2012 @ 7:52am

    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.

    reply to this | link to this | view in thread ]

  10. icon
    Jeremy2020 (profile), Apr 12th, 2012 @ 8:12am


    It's not useful for anyone. Making bad lawsuits quicker does not somehow transform them into 'useful'

    reply to this | link to this | view in thread ]

  11. identicon
    Paul, Apr 12th, 2012 @ 8:36am


    I bet you haven't written a line of code in your life... but if you didn't maybe this article will shine some lite on your lack of understanding software patents -they-dont-scale.ars

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, Apr 12th, 2012 @ 9:35am


    By involved you mean the monopolist who got a granted monopoly.

    No, not even him will benefit from it at some point all this BS will just collapse and bring down everyone involved.

    reply to this | link to this | view in thread ]

  13. identicon
    Anonymous Coward, Apr 12th, 2012 @ 9:45am

    Re: Re:

    Paul, you really don't know. Ever done punch cards? I have.

    You get to join Marcus with the dunce cap on in the corner.

    reply to this | link to this | view in thread ]

  14. identicon
    IProbability, Apr 12th, 2012 @ 10:11am


    Blocking off a company before it's found guilty is completely insane. It can mean the death of said company even if it's found innocent.

    And for what... Oooh, someone violated a patent now hundreds of people will die from illegal technology.

    reply to this | link to this | view in thread ]

  15. icon
    TtfnJohn (profile), Apr 12th, 2012 @ 10:56am

    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.

    reply to this | link to this | view in thread ]

  16. identicon
    Paul, Apr 12th, 2012 @ 11:08am

    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,

    reply to this | link to this | view in thread ]

  17. icon
    TtfnJohn (profile), Apr 12th, 2012 @ 11:10am

    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.

    reply to this | link to this | view in thread ]

  18. identicon
    Lawrence D'Oliveiro, Apr 13th, 2012 @ 3:22am

    Re: Ever done punch cards? I have.

    So have I. Except, unlike you, I have progressed a little beyond then.

    Paul 1, Marcus 1, me 1, you 0.

    reply to this | link to this | view in thread ]

  19. icon
    Ninja (profile), Apr 13th, 2012 @ 7:49am

    I do hope they keep going farther in the patents and copyright laws to the point every1 will run from them. By 'them' I mean the US, Germany and the likes. After they are emptied of technology and innovative industries they can keep happily legislating in their own Middle Ages feud.

    reply to this | link to this | view in thread ]

  20. identicon
    Anonymous Coward, Sep 2nd, 2012 @ 1:31pm

    i found this clip on

    reply to this | link to this | view in thread ]

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