Ropes & Gray defeated as Motorola denied ban against Microsoft’s Xbox

A US judge has ruled part-way through a trial that Ropes & Gray client Motorola cannot ban the sale of Microsoft’s Xbox 360 games console in the US and Germany, representing a significant step forward for Microsoft and its lawyers at US firms Sidley Austin and Calfo Harrigan Leyh & Eakes.

According to the ruling, Seattle US District Court Judge James Robart agreed to dismiss Motorola’s request for injunctive relief for patent infringement because Motorola “cannot show irreparable harm or that monetary damages would be inadequate”.

The case, which is taking place in Microsoft’s home town Seattle, will continue to decide on a fair licence rate for the patents involved at the heart of the argument. As well as asking for a sales ban on any products that infringe its H.264 patent, such as the Xbox 360 games console, Google subsidiary Motorola is claiming Microsoft should pay up to $4bn a year for using it without prior permission.

“It is now clear that at some point in the future (either by agreement of the parties or by court adjudication) a licence agreement for the Motorola Asserted Patents will become a reality,” said Judge Robart in the ruling. “Because Microsoft will pay royalties under any licence agreement from the time of infringement within the statute of limitations, this licence agreement will constitute Motorola’s remedy for Microsoft’s use of Motorola’s H.264 standard essential patent portfolio to include the Motorola Asserted Patents. Accordingly, Motorola cannot demonstrate that it has been irreparably harmed.”

Based on court documents filed at the end of June, Microsoft’s lawyers include Sidley Austin’s former Washington DC chief Carter Phillips as well as Chicago-based litigation partner Constantine Trela and chair of the firm’s intellectual property practice David Pritkin. The file also names commercial trial lawyer Arthur Harrigan of Seattle-based civil litigation boutique Calfo Harrigan Leyh & Eakes as one of Microsoft’s lead legal advisers.

The file also shows that Motorola has turned to a patent infringement team from Ropes & Gray, bringing New York-based partner Steven Pepe, Washington DC-based partner Norman Beamer and Washington DC-based counsel Paul Schoenhard on side. The team advised alongside Summit Law founder Phil McCune.

Ropes & Gray was rated highly in The Lawyer’s latest Top 50 litigation firms leaderboard (3 December 2012). According to the firm Motorola and Microsoft are involved in over 40 patent disputes in the US District Court, the International Trade Commission and Germany involving nearly every current product the pair own.

In May a German court awarded Motorola the right to remove Microsoft’s Xbox console and Windows 7 software from German retailers because of the dispute. However, that decision has since been put on hold pending Judge Robart’s ruling in the US, with the latest decision meaning any injunction will continue to be blocked. Microsoft moved its software distribution centre from Duren, a small German town near the Dutch border, to the Netherlands after the decision earlier this year.

“What Microsoft did is something more companies could do in the longer term, because the threat of an injunction in Germany is high and dangerous,” warned Tilman Muller-Stoy, a patent litigator at local IP firm Bardehle Pagenberg, in an interview with The Lawyer earlier this year.

The next hearing for this case is expected next spring, when Judge Robart is expected to give his final decision on royalty rates.