Microsoft Corporation v. Motorola Mobility
795 F.3d 1024
| 9th Cir. | 2015Background
- Microsoft, as a third-party beneficiary of IEEE and ITU RAND commitments, sued Motorola for breaching its duty of good faith and fair dealing by (a) offering 2.25% royalties for 802.11 and H.264 portfolios and (b) pursuing injunctive litigation (including in Germany and the ITC) against Microsoft.
- The district court held a bench trial (by consent) to determine RAND rates/ranges for Motorola’s 802.11 and H.264 SEP portfolios, then a jury trial on breach; the jury found Motorola breached and awarded $14.52 million (relocation costs + attorneys’ fees/costs).
- Motorola appealed; the Federal Circuit transferred the appeal to the Ninth Circuit, consistent with the Ninth Circuit’s earlier interlocutory opinion upholding an anti-suit injunction (Microsoft I).
- Key legal questions included (1) appellate/jurisdictional posture and law-of-the-case; (2) whether the bench trial on RAND rates was proper and consistent with patent-damages methodology; (3) sufficiency of evidence to support the jury’s breach finding; and (4) whether Noerr-Pennington or Washington law barred recovery of attorneys’ fees incurred defending Motorola’s injunctions.
- The Ninth Circuit affirmed: it retained jurisdiction under law-of-the-case; found Motorola consented to the RAND bench trial and the court’s RAND methodology was a permissible adaptation of Federal Circuit guidance; sustained the jury verdict as supported by substantial evidence; and held Noerr-Pennington did not shield Motorola and Washington law allowed recovery of defense costs as consequential contract damages.
Issues
| Issue | Plaintiff's Argument (Microsoft) | Defendant's Argument (Motorola) | Held |
|---|---|---|---|
| Appellate jurisdiction / law of the case | Ninth Circuit has jurisdiction; prior interlocutory ruling controlling | RAND bench trial changed the case so Federal Circuit should hear appeal | Ninth Circuit had jurisdiction; prior determinations were law of the case and not clearly erroneous; Federal Circuit transfer was proper (Christianson applied) |
| Bench trial on RAND rate / Seventh Amendment | Motorola consented to bench trial; court may use Federal Circuit patent-damages methodology as guidance in contract case | Bench trial deprived Motorola of jury on an issue that should be decided by jury; RAND analysis violated Federal Circuit damages law | Motorola consented; district court properly adapted patent-law royalty methodology to contract context; RAND findings not legally or clearly erroneous |
| Sufficiency of evidence for breach (injunctive litigation = breach) | Motorola’s injunctions and 2.25% offers evinced bad faith/hold-up; evidence (experts, timing, FTC inquiry) supports breach | Injunctive suits were protected petitioning activity and not per se breach; evidence insufficient | Substantial evidence supported jury finding that seeking injunctions (given offers, timing, and knowledge of RAND constraints) breached RAND duty |
| Damages: attorneys’ fees & Noerr-Pennington bar | Fees defending injunctions are consequential contract damages and mitigation; Noerr-Pennington does not bar contract-based liability | Noerr-Pennington immunizes litigation conduct; Washington law generally bars fee recovery absent statute or contract | Noerr-Pennington does not preclude enforcement of contractual promise not to litigate; Washington law permits fees here as consequential damages for breach of RAND obligations |
Key Cases Cited
- Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (U.S. 1988) (law-of-the-case and deference to prior jurisdictional rulings)
- Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) (hypothetical negotiation factors for royalty calculation)
- Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201 (Fed. Cir. 2014) (RAND context modifies Georgia-Pacific factors)
- Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) (interlocutory opinion upholding anti-suit injunction and interpreting RAND commitments)
- Bonzel v. Pfizer, Inc., 439 F.3d 1358 (Fed. Cir. 2006) (breach-of-contract claims remain contract actions even when patent law applied for damages)
- E. R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127 (U.S. 1961) (Petition Clause immunity principle)
- United Mine Workers v. Pennington, 381 U.S. 657 (U.S. 1965) (extension of Noerr immunity)
- Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014) (RAND holders may face difficult showings of irreparable harm for injunctions; licenses relevant when comparable)
- Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (U.S. 2015) (standard of review for factual findings in mixed questions)