Ninth Circuit Affirms Preliminary Injunction Against Enforcement of German Patent Injunction Based on RAND Commitment: Relying on Motorola’s Commitment to License Its Worldwide Patents on RAND Terms, the Court of Appeals Upheld a Preliminary Injunction Barring Enforcement of a German Court’s Injunction Against the Continued Infringement by Microsoft of Motorola’s German Patents

Sullivan & Cromwell LLP - October 2, 2012

In Microsoft Corp. v. Motorola, Inc. (9th Cir. Sept. 28, 2012), a unanimous panel of the Court of Appeals for the Ninth Circuit (Circuit Judges Wallace, Thomas and Berzon) upheld a preliminary injunction barring Motorola from enforcing (by posting a security bond) a patent infringement injunction entered by a German court; the injunction would have prohibited Microsoft from offering or supplying key products in Germany. The Ninth Circuit found that Motorola’s promise to a standard-setting organization to license its standard-essential patents on reasonable and non-discriminatory (“RAND”) terms created a contract enforceable by Microsoft as a third-party beneficiary. The Ninth Circuit further determined that the district court properly prohibited Motorola from enforcing the German court’s injunction because resolution of whether Motorola had breached its RAND commitment would resolve the German litigation, and because Motorola was not permitted to compromise the U.S. district court’s ability to decide the breach question by putting pressure on Microsoft to settle based on the German injunction.

The Microsoft decision may give a potential licensee or accused infringer of standards-essential patents a new tactic that could be used to avoid the entry of an injunction in a foreign patent action.