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 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.
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.
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.