FOSS Patents

By the end of next week, the UK Competition & Markets Authority (CMA) will probably have lost its only ally against Microsoft's purchase of Activision Blizzard: the U.S. Federal Trade Commission (FTC) may still be against the deal, but I believe it will have lost decisively. I consider it highly likely that the United States District Court for the Northern District of California will deny the FTC's motion for a preliminary injunction (PI) that was filed on Monday. A temporary restraining order (TRO) has issued (unsurprisingly), and a two-day PI hearing will be held in about a week (Thursday, June 22, and Friday, June 23). The court will probably rule at the end of the hearing, or very shortly thereafter.

Against that backdrop, the earliest closing date--if Microsoft is prepared to close over the CMA's objection--will be Monday, July 3, which means that two weeks would still be left under the existing merger agreement to find middle ground with the CMA, which presumably knows that its April 26 decision is indefensible on appeal.

Here's my updated timeline chart (click on the image to zoom in and make it look crisper):

Now let's talk about the latest developments since yesterday's post. You can find my real-time commentary on this rapidly-evolving merger topic on Twitter, so for my Twitter followers some of the below is not new.

First, FTC v. Microsoft & Activision was related (i.e., merged for procedural purposes) with the class-action-style lawsuit in the same district, and the same judge--United States District Judge Jacqueline Scott Corley--is now presiding over the proceedings, particularly also next week's PI hearing. She recently denied a PI that was requested by the "gamers" who act as plaintiffs for the lawyers who are the driving force (and have received at least some logistical support from Sony).

The basis on which the PI was denied in the private action was that even if the court had agreed with the class-action lawyers on irreparable harm (negative consequences for consumers from the consummation of the merger), such hypothetical harm would not have been immediate. The likelihood of success on the merits (i.e., the question of whether those plaintiffs could prevail after a full trial) was never reached. In fact, the PI hearing was purely about irreparable harm and its non-immediacy.

In the FTC case, the focus will be very much on the likelihood of success on the merits. In the equitable analysis, it could--and in my view should--still weigh against the grant of the PI that any of the alleged effects of the merger are far-fetched and (even if they were--as they are not--realistic) far off. The balance of hardships here comes down to the FTC seeking to kill a merger that has a July 18 closing date while any of the hypothetical effects on competition would not materialize for quite some time to come, especially in light of the fact that Microsoft offered contractual commitments for 10 years. That 10-year period would be more than enough for the case to be litigated (even for the exhaustion of all appeals) and Microsoft theoretically being forced to divest some or all of the acquired assets at that stage.

The FTC chose to bring a complaint before its in-house Administrative Law Judge (ALJ), which is constitutionally controversial. In light of the Supreme Court's recent Axon decision, it is even harder for the FTC to explain why it didn't sue in federal court. Now the FTC runs to the court in San Francisco and wants it to kill a 70ドルB deal, while the only reasonable venue choice would have been to start a federal lawsuit in December.

At one of the hearings in the private lawsuit, Judge Corley made reference to her colleague Judge Edward Davila's denial of a PI that the FTC was seeking against Meta's acquisition of virtual reality fitness app maker Within. I discussed the Meta-Within decision in early February. That case was, relatively speaking, a stronger one for the FTC than its opposition to the acquisition of Activision Blizzard King (ABK). The substantive issues are different, but there is an abstract parallel here in the sense that the FTC espouses some wild theories without any hard facts to back them up.

Realistically the FTC won't have any "smoking gun" to present at the PI hearing. They will presumably just serve a lot of weak tea on those two days. The FTC's console theory of harm has been rejected by the regulators in charge of 40 countries (even the CMA dropped it). It also raised cloud gaming, which was more of an afterthought in the beginning but will probably be put front and center now because of the CMA decision. As you can also tell from my timeline chart, the CMA decision came down a few weeks prior to the mid-May PI hearing in the private lawsuit, but the clearance decisions by the European Commission, China's SAMR, and South Korea's KFTC were announced only subsequently (second half of May). The CMA and the FTC are outliers, and it can be inferred from the public redacted version of the FTC's filings that Microsoft and ABK essentially forced the FTC's hand by saying they might close the deal as early as this week's Friday, triggering the proceedings in federal court that I believe will simply take the FTC out of the game, isolating the CMA.

There may be some discussion of the CMA decision now, but the fact of the matter is that the United States District Court for the Northern District of California is not the appeals court for the CMA: the UK Competition Appeal Tribunal has jurisdiction over appeals from CMA decisions, and the CAT will hold its appellate hearing in late July and early August (as my timeline chart also shows). I was in London earlier this week for a conference (where I was invited--on very short notice--to speak) and seized the opportunity to attend a CAT hearing in person. I must admit I'm honored and humbled by the fact that Mr Justice Marcus Smith, the President of the CAT, stayed at that conference even after his AI-centric keynote speech and listened to the panel session to which I made my little contribution. I had a good time there, and the UK in general seems to be very much open for business, but the CMA's antics are one of the issues that must be addressed there.

I believe it won't be hard for Judge Corley to see that the CMA decision is unlikely to stand. For just one example of many, even the class-action lawyers alleged a Microsoft cloud gaming market share of "only" 40%, while the CMA arrived at a 70% figure, which is not only an exaggeration but a lunacy. The combination of the CMA decision being obviously flawed and the global picture--approximately 40 countries in favor--is dynamite.

On Tuesday, Judge Edward J. Davila--the Meta-Within judge--helped out Judge Corley by entering a TRO:

Federal Trade Commission v. Microsoft and Activision Blizzard (case no. 23-cv-2880-JSC, N.D. Cal.): Order Re: Temporary Restraining Order and Preliminary Injunction

A few hours earlier I had tweeted (while waiting for a flight at Heathrow Airport) the following:

The hurdle for a temporary restraining order is low but it also wouldn't solve the problem the FTC is facing: they need a preliminary injunction.

Judge Corley knows the merger, could deny TRO but again, a merger TRO wouldn't mean much. At the latest, FTC will fail to get a PI.

— Florian Mueller (@FOSSpatents) June 13, 2023

The FTC almost always gets a TRO, but the current FTC also loses almost every merger case when it really matters.

Given that Judge Corley is already familiar with this merger and that the FTC's complaint is egregiously weak, this case could have become an exception to the rule that the FTC always gets a TRO. But given the size of the transaction and all the publicity surrounding this merger, it's easy to see why the court didn't want to humiliate the FTC by denying a TRO. The FTC's TRO motion mentioned that most defendants even stipulate to a TRO, and given that Judge Davila entered the order even before Microsoft or Activision Blizzard had made any filing (other than lawyers signing up), we don't even know how much resistance the merging parties would have mounted.

The TRO order does not address the merits in the slightest. It's purely procedural. It's just a scheduling order. Microsoft and ABK will file their opposition briefs on Friday (and they can take until right before midnight Pacific Time). The FTC will reply by noon Pacific Time on Tuesday.

The TRO will be in place after the PI decision. Assuming that the court rules at the end of the PI hearing and throws out the motion (which is my prediction), that means the end of Friday, June 30. Practically that makes Monday, July 3, the earliest practical closing date. The next day is Independence Day.

The additional time after the PI decision would theoretically enable the FTC to appeal a denial to the United States Court of Appeals for the Ninth Circuit, and to seek emergency relief there.

There will be more than two weeks left between the PI hearing and the contractual closing date. I won't give up hope that a solution can be worked out between Microsoft and the CMA. Otherwise, after the FTC is defeated in federal court, "closing over" is obviously a possibility, though the parties in that scenario should not find it hard to agree on a short extension to await a CAT decision.

The merger is on the right track, and I continue to believe that it will consummate.

While a few regulatory decisions are still outstanding, the Microsoft-ActivisionBlizzard merger review process now comes down to the United Kingdom and the United States. There were important events in both jurisdictions, and I commented in real time on Twitter. That's why I'll keep this post relatively short and mostly just show some documents.

I attended the first part, and watched via livestream the remainder, of yesterday's 2nd case management conference in Microsoft v. Competition & Markets Authority. The UK Competition Appeal Tribunal (CATribunal, or just CAT) is moving amazingly fast. The hearing will start in late July. Microsoft proposed Friday, July 28, as the start date. The parties thought that four days would be sufficient, but it looks like it will more likely be five or six.

Some expert evidence (particularly economic evidence regarding market definition) will be accepted by the court on what appears to be a de bene esse basis, meaning that the court could still declare such evidence inadmissible if it is not really deemed helpful at the time of the hearing. Lord Pannick KC (for Activision Blizzard) made a de bene esse fallback argument.

I had originally intended to watch the livestream of the CAT hearing, but a short-notice invitation to a Concurrences and King's College London event taking place today (which I mentioned in a recent post) resulted in a change of plans. That was fortunate because Mr Justice Marcus Smith, the President of the CAT, suspended the livestream for the first couple of hours. The reason for that decision was that some angry gamers who disagree (as do I) with the CMA decision used material from the livestream (screenshots) to mock CMA lawyers. I never did any of that and, in fact, discouraged it by calling on my many Twitter followers twice (here and here) to consider that it's illegal and that we can't even know where a given CMA person stands (some may personally consider the decision just as absurd as we do). Yesterday I also called on my followers to refrain from insulting FTC chair Lina Khan.

I was the second of about 20 participants to leave the speakers' dinner because of the Federal Trade Commission's federal lawsuit, in which the agency is now seeking a preliminary injunction (PI) and a temporary restraining order (TRO). Back at the hotel, I downloaded the complaint (the TRO motion was filed a little later).

The FTC case places the emphasis on a vertical input foreclosure theory relating to videogame consoles. That one has been rejected by the regulators in charge of 40 countries. Even the UK CMA dropped that one after it made a mathematical mistake that was quite unbelievable and doomed that theory of harm.

The FTC complaint does also mention cloud gaming, so the FTC will try to somehow convince the United States District Court for the Northern District of California that the CMA decision weighs in favor of a TRO and a PI. But cloud gaming as more of an afterthought in the FTC's original December 2022 complaint, and they now had to bring a federal complaint consistent with the one they filed with their in-house court.

What the FTC told the district court yesterday shows that Microsoft and Activision Blizzard indicated they might close the deal as early as Friday (June 16). The FTC now asks for a TRO to issue before 9 PM Pacific Time on Thursday, which is midnight on Friday by Eastern Time (the merger agreement is based on Eastern Time because that's the time zone for New York).

The FTC most often gets a TRO, but has a poor track record winning PIs. Here, even a TRO should be denied in my view, but even if the FTC won a TRO, it would face a higher hurdle for a PI, where the likelihood of success on the merits will become key.

I assume the case will be deemed as related to the private class-action-style lawsuit in San Francisco and assigned to United States District Judge Jacqueline Scott Corley.

The FTC and the CMA tried to deadlock the merger--under the merger agreement, the deal must be closed by July 18--by creating a situation where either one could point to the fact that a second regulator was blocking, or trying to block, the deal. Procedurally there is a key difference: the FTC needs help from a court to prevent the deal from closing, while in the UK it either takes a successful appeal of the CMA ruling or Microsoft has to "close over" the CMA's objections. Given that the CMA ruling is so obviously flawed, that is also an option.

Finally, here are the complaint, the motion for a TRO, and the declaration in support of the TRO along with the public exhibits:

Federal Trade Commission v. Microsoft & Activision Blizzard (case no. 3:23-cv-2880, N.D. Cal.): Complaint for a Temporary Restraining Order and Preliminary Injunction Pursuant to Section 13(b) of the Federal Trade Commission Act

Federal Trade Commission v. Microsoft & Activision Blizzard (case no. 3:23-cv-2880, N.D. Cal.): FTC's Motion for a Temporary Restraining Order

Federal Trade Commission v. Microsoft & Activision Blizzard (case no. 3:23-cv-2880, N.D. Cal.): Declaration in Support of FTC's Motion for a Temporary Restraining Order

On Thursday, Judge James Donato of the United States District Court for the Northern District of California (San Francisco Division) held a case management hearing that he scheduled at the same time he stayed a preliminary-injunction motion by Epic Games relating to Epic's recently-acquired Bandcamp music marketplace, whose Android app Google has threatened to kick out of the Google Play Store unless Bandcamp complies with an in-app purchasing (IAP) policy change (mislabeled by Google as a mere clarification). That same day, Google had to defend itself against allegations of monopoly abuse not only on the West Coast but also on the East Coast, where it came away unscathed with its "Communicate with Care" policy.

All I know about what the judge and the parties said at the San Francisco hearing I learned from Courthouse News reporter Maria Dinzeo's highly informative coverage.

Not only did Judge Donato discuss the Epic v. Google motion but also a more recent one by Match Group (the Tinder company). Shortly after its complaint (on which I commented earlier this week), Match Group filed a motion for a temporary restraining order (PDF).

The Courthouse News report mentions two different types of reservations on Judge Donato's part. One is that the case presents "difficult and challenging issues" he'd rather not decide on the fast track, especially since the Epic Games v. Google trial has been scheduled for next January anyway. The other is that Bandcamp has known since August 2021 of having to switch to Google Billing, and that it appears its new ownership (i.e., Epic, which was already embroiled with Google and Apple in app store antitrust litigation) is the reason for which it now, all of a sudden, needs emergency relief from the court: "You can’t waiver for eight months and come in and say the house is on fire."

Judge Donato also describes this as "a problem of [Epic's] own making," which is a huge issue not only but especially in the Ninth Circuit, where self-inflicted harm weighs strongly against a preliminary injunction. That was Epic's problem in 2020 when it wanted to bring Fortnite back to Apple's App Store.

The house-on-fire metaphor also reminded me of another antitrust case--in the Southern District of California--in which the same vaunted law firm, Cravath Swaine & Moore, literally claimed that its client Qualcomm's house was on fire because of Apple having ordered its contract manufacturers to stop making royalty payments. That one went nowhere because Qualcomm was financially too strong that the cessation of royalty payments could have put the company in jeopardy. Qualcomm's concern related to the possibility of other licensees doing the same, but then there would have been a new situation.

PI motions are part of a vigorous representation of clients, and movants may sometimes like the idea of finding out early how the other side presents its case and on what questions the court still needs to be convinced. But the Bandcamp motion has already made much more of an impact than the aforementioned ones: Judge Donato encouraged the parties to work it out and to show some flexibility so he wouldn't have to adjudge Epic's PI motion and Match Group's TRO motion.

Epic's position is that Google should not kick out Bandcamp until the trial. If Google rejected that demand categorically, the judge would definitely not be amused. What I guess Google will do now is to attach some strings to such a grace period that the court may consider reasonable but that will be somewhat burdensome on Epic and Match Group. However, that is not easy to do: Epic and Match Group have plenty of cash, so if they have to post a bond, they'll do it.

I interpret the Courthouse News report as Judge Donato not being too likely--even if Google disappointed him by being inflexible or making unreasonable demands--to grant Epic's or Match Group's motion. In that case, the question is whether the parties would appeal the matter to the Ninth Circuit. In the Apple case, Epic didn't do so, presumably because of a near-term trial date. For Match Group the calculus may be different.

Judge Donato may even suspect--and if he did, it wouldn't be unreasonable in the slightest--that the app store dispute was the primary reason for which Epic acquired Bandcamp. In the market definition context (also in the Apple dispute), Epic stressed that it offers more than games, but buying Bandcamp has given it another tool for challenging the major app stores' IAP rules, especially with the benefit of standing up for content creators (which, however, also exposes Epic to the accusation of holding those content creators--and end users--hostage).

At any rate, the judge has a point that this here is partly a manufactured conflict. It's not 100% self-inflicted as Google indeed wants to enforce a different policy, but it made its intent known a long time ago and Match Group and Epic's Bandcamp could have filed for a preliminary injunction a lot sooner. Now the deadline is June 1, and of course the court could theoretically enjoin Google by means of a TRO, which would then have to be replaced by a PI.

The key to understanding Epic's strategy here as well as in the Fortnite case against Apple is the following paragraph from its PI motion:

"Under the Ninth Circuit's 'sliding scale' approach, the overwhelming evidence showing Epic's likelihood of success weighs strongly in favor of preliminary relief. See Indep. Techs., LLC v. Otodata Wireless Network, Inc., 836 F. App'x 531, 533 (9th Cir. 2020) ('Where a party can show a strong chance of success on the merits, he need only show a possibility of irreparable harm.')."

If one agrees with Epic on the merits (as I do, without reservation in this case), it's a different picture. The question of whether Bandcamp was essentially preparing to comply with Google's policy change is then doubly irrelevant. First, because the timing of the motion wouldn't lend Google's conduct the legitimacy it lacks. Second, because there is nothing illegitimate whatsoever about Epic simply having the financial strengths to duke it out with Google while Bandcamp was presented with a point-blank situation and would have been forced to cave had it not been acquired. What a party does or agrees to under duress does not and must not count. That is, by coincidence, also the core of Apple's case against Qualcomm over license fees paid by its contract manufacturers, but that case settled during opening argument (a great result for Cravath, though in all fairness it had more to do with Apple's need for 5G chips than anything else).

It's what Epic already argued in the #FreeFortnite context in the summer of 2020. I remember how Cravath partner Gary Bornstein told Judge Yvonne Gonzalez Rogers (YGR) at the TRO and PI hearings in 2020 that a party simply should not have to abide by a contract that was unilaterally imposed upon it in violation of the antitrust laws. It was the same logic. He also insisted--in my opinion, rightly and brilliantly--on the single-brand market definition, which Judge YGR rejected at all stages of proceeding (as it turned out later, she appears to have been utterly confused all along about the Kodak case law), and on the merits of the tying claim. We're now in a similar situation, but hopefully with a judge who will understand Kodak and Epic's related argument.

So it's not a simple question of whether Epic's request for a PI is reasonable. If one agrees with them (and, therefore, by extension with me) on the merits, then there's nothing wrong with the timing, and the court should enter a TRO if need be. I don't think Google should be rewarded for having abused its monopoly power against the likes of Bandcamp: it's actually in the public interest that Bandcamp now belongs to Epic (no matter the motivation for the deal) and that this allows them to stand up to the bully. But if one doubts the merits--and Judge Donato at least isn't comfortable with considering it a slam dunk for Epic--then it all looks a lot more complicated.

What Will Google Do? (Yes, an allusion to a book title.)

To be perfectly honest, I could easily see people on Google's legal team (internal or external) argue that they should rigidly enforce their new rule and kick out those apps if necessary, just to show that they're 100% confident of the strength of their position. For Google the risk of Judge Donato enjoining them on a TRO or PI basis appears limited--and with the trial being on the horizon, Epic might not appeal, just like it accepted the denial of its motion in the Apple case. But Judge Donato wouldn't like that, and he's going to preside over the January trial. And it could also be that this time around Epic will actually try to take the matter up with the Ninth Circuit at the earliest opportunity. It has a better chance of success with a panel of three high-ranking judges than when a single district judge has to make a decision.

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It's not always true that "the second is the first of the losers," but when there are only two in a race, then there's simply one winner and one loser. On December 11, Ericsson brought a new FRAND lawsuit against Samsung in the troll-friendly Eastern District of Texas. The parties had been negotiating a renewal of their patent cross-license, but their positions were apparently too far apart for them to come to an agreement this year. Therefore, they need guidance from courts to resolve their dispute.

It now turns out that Ericsson wasn't first to go to court. Instead, Samsung pre-empted Ericsson by almost a week, filing a case with the Wuhan Intermediate People's Court in China as an Ericsson filing in Texas revealed yesterday.

Not only did Samsung seek a global FRAND determination in China but, shortly after Ericsson's filing in the Eastern District of Texas, the Korean electronics giant sought an antisuit injunction in China, which was granted on the morning of December 25, says Ericsson.

According to Ericsson, "the Wuhan injunction (1) bars Ericsson from seeking injunctive relief on 4G and 5G SEPs around the world (including in [the Eastern District of Texas]); (2) bars Ericsson from seeking a FRAND adjudication anywhere other than Wuhan (including in [the Eastern District of Texas]); and (3) bars Ericsson from seeking an anti-anti-suit injunction requiring Samsung to stop using the Wuhan Court to neutralize Ericsson’s legal remedies in other forums, including [the Eastern District of Texas].

The third item is an anti-anti-suit injunction: at Samsung's request, the Chinese court barred Ericsson from seeking an anti-antisuit injunction. That is, by the way, consistent with something I had written in October: antisuit injunctions are of no more value unless they are accompnied by anti-anti-antisuit injunctions. In that same post I lashed out at the insansity of the global patent litigation system and proposed "a more mathematical notation" like "A3SI" so one wouldn't have count all those consecutive occurrences of "anti" all the time. Samsung had obtained everything it needed to ensure that the Chinese court could set a global FRAND rate without Ericsson undermining the Chinese proceedings by means of a U.S. antisuit injunction, but Ericsson simply disregarded the Chinese decision and filed an anti-antisuit motion in the Eastern District of Texas yesterday (December 28, 2020; this post continues below the document):

20-12-28 Ericsson Motion fo... by Florian Mueller

It's brash and brazen to respond to an antisuit injunction from a court in one country (here, China) by rushing to a court in another venue (here, the Eastern District of Texas) and doing precisely what's prohibited. But Ericsson made this choice that many other litigants would not have dared to make. Ericsson simply didn't want to give up the battle over the FRAND forum. If Ericsson respected the Chinese order, it would have to withdraw its Texas complaint. Instead, Ericsson decided to disrespect China as a jurisdiction. If anyone ever asked me to provide an example of "contempt of court" in a cross-jurisdictional litigation context, I couldn't possibly come up with a more illustrative one than what Ericsson has just done.

Ericsson's message to Judge Gilstrap was that it needed not only a preliminary injunction but, until one would issue, a temporary restraining order (TRO) in order to keep its Texas case alive. Given that the Chinese injunction had already come down, Ericsson's motion fails to specify why it needed a decision within a matter of hours and without giving Samsung a chance to respond. Ericsson presumably relied on Judge Gilstrap's wilingness to do pretty much anything that attracts patent cases to, and keeps them in, his court.

Here's Judge Gilstrap's order granting Ericsson's motion all the way (this post continues below the document):

20-12-28 Order Granting TRO... by Florian Mueller

Three aspects of this order are particularly troubling:

1. Judge Gilstrap knew that Ericsson was violating an order by another court in bringing this motion. I'm sure he'd be disappointed if a colleague of his in another jurisdiction saw that a party brings a motion in direct contravention of an order by Judge Gilstrap. But a patent extremist whose number one ambition it is to preside over as many patent cases as possible, and to have a reputation for helping patent holders in any way he can, obviously wouldn't care.

2. While a TRO should merely preserve the status quo for a (typically two-week) period until a decision is made on whether to grant a preliminary injunction, Judge Gilstrap granted Ericsson a TRO that goes way beyond: not only is Samsung required to indemnify Ericsson for any fines imposed by the Chinese court (which is a far more problematic order than just asking Samsung not to take further steps in China) but Judge Gilstrap also orders Samsung to "send to Ericsson, within 24 hours of [yesterday's order], by email a copy of all filings made or received in the Wuhan Action" and to do so "promptly" with respect to all future filings.

   Give me a break. This is not just outrageous. It's totally insane. What does a requirement to provide court documents from another jurisdiction have to do with the objective of a TRO to preserve the status quo during a judicial process?

   No, Judge Gilstrap, the U.S. is not a banana republic. Decisions like this can bring an entire country--the world's oldest democracy--into disrepute on the world stage.

3. The briefing schedule he set for the preliminary injunction (which would have to replace the TRO shortly) is also reflective of his fundamental unfairness. He entered that order yesterday and gave Samsung until 5 PM local time on New Year's Day (!), while giving Ericsson another four days for a reply brief. Any remotely reasonable decision would at least have given Samsung signicantly more time for its opposition filing than Ericsson for the reply brief. But what's an even clearer indication of Judge Gilstrap's unbalanced approach is that the page limit for Samsung's opposition brief and for Ericsson's reply brief is the same: 15 pages. This means Ericsson got to file a 23-page motion, but Samsung gets only 15 pages to respond, and to those 15 pages Ericsson gets just as much space to reply.

   It's a safe assumption that the PI process (briefing and January 7 hearing) is going to be completely farcical. It's a foregone conclusion that Judge Gilstrap is going to be 100% unreceptive to even the best factual or legal argument Samsung's lawyers could possibly make. He's determined to convert the TRO into a PI. The East Texas proceeding can't be taken seriously, and the real fight will only begin when Samsung appeals Judge Gilstrap's PI decision to the Fifth Circuit. (A TRO can't be appealed.)

The Fifth Circuit is among the more antisuit-friendly circuits in the U.S.--as Ericsson's motion accurately suggests. But the fact that Samsung's Chinese complaint was filed almost a week prior to Ericsson's Texas case is going to matter. It won't matter in Judge Gilstrap's court, I guess. But it will help Samsung at the next procedural stage.

In the meantime it remains to be seen what the Chinese judiciary will do. Samsung would have to reimburse any fines to Ericsson under Judge Gilstrap's order, which may however be overturned soon (I'm sure that at least some parts are so outrageous that the appeals court is not going to affirm them). Sooner or later, the Chinese court may be able to penalize Ericsson for its extremely disrespectful conduct.

My own position is that no court anywhere in the world should set a global FRAND rate unless so requested by both parties or unless the parties contractually agreed upon a judicial determination. It doesn't matter whether it's a UK court, U.S. court, German court, Chinese court, or a court on Mars. Each court should normally make determinations only with respect to patents that are valid and enforceable in that particular court's jurisdiction. And no defendant should have to enter into a global license only to avoid an injunction in one jurisdiction.

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A few hours after I wrote that this Friday (October 9) and Monday (October 12) were the days on which the United States District Court for the Northern District of California was particularly likely to rule on Epic Games' motion for a preliminary injunction (PI) against Apple, and consistent with what I had told a major newspaper after Epic's temporary restraining order (TRO; blog post), Judge Yvonne Gonzalez Rogers has effectively converted the TRO into a PI (this post continues below the document):

20-10-09 Order on Epic Game... by Florian Mueller

The outcome is the same as at the TRO stage in terms of Epic not being allowed to bypass Apple's in-app payment rules with Fortnite, Apple not being allowed to terminate the developer account for Unreal Engine that formally belongs to an Epic entity in Switzerland, and the court once again declines to hold that one party or the other is likely to prevail on the merits. My report on the PI hearing already stated in its headline that Epic was struggling to persuade the court of its likelihood to win.

While the TRO was a pre-PI decision, the PI is preliminary to a hypothetical permanent injunction that may or may not come down after the bench trial to be held in Oakland in May 2021. Whoever loses will likely appeal, and then it's another question whether a permanent injunction coming down at that point will or will not continue to be enforced.

Judge Gonzalez Rogers acknowledges arguments made by either party with respect to the merits, but the issues are too complex and important to be pre-decided at this point. In particular, the judge notes the highly factual nature of market definition. Here, there are even two market definition disputes (while most antitrust cases involve just one): the question of whether the iOS app distribution market (better for Epic) or the wider games distribution market (better for Apple) must be looked at, and with respect to Epic's "tying" claim the question of whether in-app payments can be separated from the app distribution market. Judge Gonzalez Rogers is not prepared to decide on market definition, even on a preliminary basis, at this early stage--and she also notes that Epic focuses on harm to competitors so far, while any bottom-line impact on consumers under the rule of reason (where Apple could prevail by showing that what it does is ultimately good for consumers) would also need to be considered. Ultimately, the antitrust laws are meant to benefit consumers.

The PI order gives both parties some guidance as to where they bear the burden of proof and on what aspects of the case they must do more going forward. For instance, Apple will later have to convince the court that what its app distribution terms are designed to achieve cannot be achieved with softer rules. Only Epic, however, is told that "adamant[ly]" taking unreasonable, "baffling" positions has already made it lose some of its credibility with Judge Gonzalez Rogers. Footnote 7 says:

"Epic Games disputes that its use of the hotfix was deceptive where it is common practice in the gaming and software industry. The deceptive conduct does not derive from Epic Games’ use of the hotfix specifically, but from using a hotfix to clandestinely add features in violation of the guidelines and its agreements with Apple, and then failing to disclose such code. Moreover, Epic Games did this despite receiving an unambiguous refusal from Apple only a few weeks prior to the introduction of its hotfix. The record further reflects that while hotfixes are commonly used in the industry, their uses are generally to fix or patch critical bugs or defects—not to enact substantive and significant new features. Epic Games’ adamant refusal to understand this basic distinction is not only baffling, but undermines its credibility with this Court." (emphasis added)

Regardless of the party to be reproached (here, Epic, but in other contexts it would also apply to Apple), I think courts should do this more often and tell parties very clearly when their lawyers persistently engage in framing to the extent that it is an insult to human intelligence. It happens in all sorts of contexts all the time. As a litigation watcher, I find it annoying, and I think it must be even worse for judges.

Microsoft is not formally a party here, though it practically intervened (through sworn declarations) as an Epic supporter. Given all the attention that Microsoft's public statement on app distribution terms (blog post) got this week, it's interesting to see that this judge--at least for now--disagrees with Microsoft's view that video game consoles like the Xbox can still have the kind of business model that Epic and Microsoft believe Apple and Google should not have:

"First, Epic Games avers that the iOS market is distinct from other video game platforms because Sony, Nintendo, and Microsoft do not make much profit, if any, on the sale of the hardware or console—unlike Apple, which allegedly makes significant profits from the sale of each iPhone. This distinction is without legal precedent under section 2 of the Sherman Act. Indeed, Sony, Nintendo and Microsoft all operate similar walled gardens or closed platform models as Apple, whereby the hardware, operating system, digital marketplace, and IAPs are all exclusive to the platform owner. As such, a final decision should be better informed regarding the impact of the walled garden model given the potential for significant and serious ramifications for Sony, Nintendo and Microsoft and their video game platforms."(emphases added)

The Windows and Xbox company tried to distinguish the Xbox from the iPhone making the very same distinction that a judge has now, in diplomatic terms, held to make no sense whatsoever. So far, Microsoft appears to have hoped it could have its cake and eat it: keep imposing similar terms as Apple and Google on XBox game makers while forcing Apple and Google to give Microsoft and others more favorable terms. Microsoft would be well advised to make up its mind on the appropriate Xbox game distribution terms sooner rather than later.

It's worth noting that the order makes reference to the COVID-19 pandemic in a couple of contexts:

• "these continued difficult times that is the COVID-19 pandemic era, where gaming and virtual worlds are both social and safe" (by launching a game very soon, I'm going to make a contribution in this regard, too)

• "the continued ongoing pandemic has demonstrated the imperative for substantial digital and virtual innovation"

Epic can now appeal the denial of the Fortnite-related main part of its motion to the Ninth Circuit, while Apple can appeal the consolation prize Epic got with respect to Unreal Engine.

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In the Northern District of California, Epic Games just filed its reply brief in support of the Fortnite and Unreal Engine maker's motion for a temporary restraining order (TRO) against Apple (this post continues below the document):

20-08-23_doc43 Epic Games&#... by Florian Mueller on Scribd

Previously I reported on one of the three declarations Epic's lawyers submitted in support of that reply brief: the one by a Microsoft executive because it shows that the Windows, Office and Xbox company is backing Epic against Apple.

Epic's reply brief completely fails to address the legally most powerful part of Apple's opposition to the TRO motion: that Epic brought this situation upon itself, and "self-inflicted wounds" can't give rise to the requested type of relief in the Ninth Circuit. While Epic described as a "hotfix" its tactic of firstly running a Fortnite version by Apple that already contained the code for an alternative payment system and later triggering the display of that option to end users by means of data the Fortnite app retrieved from Epic's servers, Apple's opposition brief said this breach of a longstanding App Store rule became Epic's "hot mess."

Epic's decision not to address the "self-inflicted wounds" part is consistent with my overall impression that they've already given up with respect to Fortnite--not formally in the sense of a partial withdrawal of the motion, but practically. They must have realized that Judge Yvonne Gonzalez Rogers is hardly going to force Apple to offer a Fortnite version via the App Store that clearly breaches Apple's terms. Instead, Epic's reply brief focuses on the Unreal Engine, arguing that even if Apple was in its right to terminate any Fortnite-specific Epic accounts, "the breadth of Apple's retaliation is itself an unlawful effort to maintain its monopoly and chill any action by others who might dare oppose Apple." By "breadth" Epic means that Apple terminated multiple accounts, and that there are two Epic legal entities: Epic Games, Inc. of Maryland and Epic Games International S.à.r.l. of Switzerland. However, Apple argues that all those Epic accounts are managed as one, and Apple generally terminates the contracts of affiliated entities when a major breach occurs.

I don't intend to analyze the contractual part in detail now: the court hearing will take place tomorrow (Monday, 3 PM Pacific Time). Even with respect to the Unreal Engine, I still can't see how Epic would prevail, given that it has a simple option: to comply with the existing agreements while challenging their terms in court.

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After Apple filed its opposition to Epic Games' motion for a temporary restraining order (TRO) in the App Store antitrust dispute in the Northern District of California, Judge Yvonne Gonzalez Rogers allowed the Fortnite and Unreal Engine maker to file a reply brief of up to 10 pages by 9 AM Pacific Time today.

The very first document Epic's lawyers filed in this context is a declaration by Kevin Gammill, General Manager of Microsoft's Gaming Developer Experience division, supporting Epic against Apple by stressing the relevance of the Unreal Engine to Microsoft (this post continues below the document):

20-08-23_doc40 Cv5640 MSFT ... by Florian Mueller on Scribd

I don't doubt that Microsoft and other companies consider the Unreal Engine useful. My own app development company prefers Unity for our specific purposes, but we are fully aware of how powerful and versatile the Unreal Engineis.

However, what Mr. Gammill's declaration doesn't explain is why Epic couldn't live and comply with the Apple Developer Agreement it had been gladly and (very) profitably honoring for years. In that case, Epic's Apple Developer Agreement wouldn't be terminated, and the further development of the Unreal Engine wouldn't be affected by the ongoing litigation.

While Microsoft's Xbox division reportedly keeps the same 30% commission of app revenues as Apple, I already wrote last week that Microsoft presumably hates having to give 30% of its Office revenues on mobile platforms to Apple and Google.

If Apple hadn't revolutionized mobile computing with the iPhone, with Google then being a fast follower (they had the Android mobile operating system in the works, but it would have been more BlackBerry-like and then they changed direction when they saw iOS), Microsoft would still be the dominant operating system company. It wouldn't have to worry about Apple or Google getting a 30% cut. In the old computing world, Microsoft could simply have told Apple and Google that it just wouldn't make Office available on their platforms if it didn't get a better deal. Microsoft has meanwhile found opportunities in other areas, such as cloud computing, but may bear a grudge against Apple and Google because they simply displaced Windows on mobile devices.

Based on today's declaration it's clear where Microsoft stands, and it's not hard to figure out why, but the above declaration really doesn't strengthen Epic's case for a TRO. The key issue is still the one of "self-inflicted wounds," which the United States Court of Appeals for the Ninth Circuit doesn't accept as a pretext for seeking a TRO.

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Apple just filed its response to Epic Games' motion for a temporary restraining order (TRO). As no one would have doubted, the iPhone maker opposes the Fortnite and Unreal publisher's motion in the strongest terms (this post continues below the document):

20-08-21 Apple's Respon... by Florian Mueller on Scribd

With respect to Epic's claim of suffering irreparable harm unless the court grants its motion, Apple's opposition brief is consistent with a statement it provided to The Verge a few days ago. The term "status quo" plays a central role here. The purpose of temporary relief is to prevent a party from changing a situation to the moving party's detriment in the absence of an injunction (a TRO is the fastest injunction, even more preliminary than what is called a preliminary injunction). Apple explains to the court that Epic's perspective on the status quo is, in reality, something else: the status quo would be for Epic to simply comply with Apple's App Store terms and policies, and with its developer agreement, while its antitrust complaint challenging those terms is pending. If, however, the court granted Epic's motion, it would allow Epic to get away with a breach of its contractual obligations. The requested TRO would not preserve the status quo. It would force Apple to modify its long-standing App Store terms.

Another key term--in connection with any type of injunction--is "irreparable harm." Epic's motion for a TRO argued that the unavailability of Fortnite on the App Store and, as a further consequence of Epic's non-compliance, the termination of its developer agreement (which would prevent Epic from using Apple's developer tools in the further development not only of Epic's games but also of its Unreal Engine) would constitute irreparable harm. Apple's opposition brief dismisses that theory and distinguishes between irreparable harm on the one hand and "self-inflicted wounds" on the other hand. The Ninth Circuit, which is the appeals court for (among many others) the Northern District of California, stated earlier this year that "self-inflicted wounds are not irreparable injury," quoting earlier decisions in this circuit and in the Seventh Circuit.

Apple's motion stresses that point not only in legalese but also in colloquial terms:

"Apple has offered Epic the opportunity to cure, to go back to the status quo before Epic installed its 'hotfix' that turned into its hot mess, and to be welcomed back into the App Store. All of this can happen without any intervention of the Court or expenditure of judicial resources. And Epic would be free to pursue its primary lawsuit." (emphasis added)

Epic's motion explained what the Fortnite maker means by "hotfix." They submitted a version of Fortnite to Apple's App Store review that seemed to comply with Apple's in-app purchasing rules at the time. However, it already contained program code that made a request to Epic's server in order to find out whether it should offer an alternative payment method in addition to making payments via Apple's in-app purchasing system. A little over a week ago, Epic's server started telling the client (the Fortnite app) to make that additional offer, which is not permitted by Apple's app distribution terms. Epic threw down the gauntlet to Apple:

"Around 2am on August 13, Mr. Sweeney of Epic wrote to Apple stating its intent to breach Epic's agreements: “Epic will no longer adhere to Apple’s payment processing restrictions.'"

The term "hotfix" sounds like Epic just sent some new graphics or similar data down to the client. A "hotfix" is something that doesn't require a formal update, but has an impact on functionality. In this case, the "hotfix" was simply some data--presumably in an XML or JSON format--that told the client to activate some functionality Epic had secretly incorporated into the last approved update. Apple's motion doesn't use the term "Trojan horse," but that's what it is (not in the sense of a computer virus, of course).

The "hot mess" is that Apple had to remove Fortnite from the App Store. The only alternative for Apple would have been to waive a fundamental contractual obligation that iOS app developers have to meet.

Apple's brief quotes some Fortnite gamers (referring to a declaration by Epic's CEO Tim Sweeney):

"Some Epic customers, based on materials attached to Epic's motion, have seen through Epic's subterfuge to understand this is a problem of Epic's making. As one user asked Epic's customer support team after the takedown: 'Did you guys just screw over all your mobile players?' [...] One user predicted Epic would 'remove the illegal (according to Apple) update and be back to normal in no time.'"

That user predicts the same as I also wrote yesterday: I expect the TRO motion to go nowhere, but Fortnite to return to the App Store in the near term.

It's not publicly known how many of Fortnite's 350 million users run the game on iOS, but Apple's motion mentions "[t]ens of millions of iOS Fortnite players."

Unsurprisingly, Apple is not amused by Epic's PR campaign, the latest part of it is a #FreeFortniteCup "with prizes targeting Apple." That tournament will start on Sunday. IGN, a leading games website, wrote that "Epic turns its legal dispute into an in-game event."

All of what I just wrote is unrelated to the merits of Epic's case. For now the question is just whether Epic is likely to persuade the court to enjoin Apple, and I don't see that happening.

Large parts of Apple's response to the motion dispute that anything is anticompetitive about the App Store terms. Apple also disagrees that in-app payments are a separate market from the App Store. But it's too early--just about a week into this litigation--to discuss this in detail. Apple just has to convince the court that this isn't a clear and simple case under settled antitrust law. Apple's lawyers argue that the court would have to "create new law on a scant record" in order to grant Epic's motion.

Judge Yvonne Gonzalez Rogers will preside over the motion hearing (Monday 3 PM Pacific Time; via Zoom).

Finally, just an update to a recent post in which I mentioned three of the Gibson Dunn lawyers representing Apple in this case. The first-named attorney on today's filing signed up shortly after them: Theodore J. "Ted" Boutrous, whom some of you may have seen on TV.

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Epic Games provoked Fortnite's removal from the iOS App Store and the Android Play Store by running a promotion that circumvented the in-app payment rules of those platforms--and already had that Nineteen-Eighty-Fortnite video as well as two partly-overlapping antitrust complaints, each more than 60 pages long, prepared at the time.

This legal dispute may very well take years to be resolved and go all the way up to the Supreme Court. Epic Games isn't seriously going to forgo its revenue opportunity on iOS (and Android) for the better part of the 2020s.

Epic would have us all believe that they're idealistic freedom fighters, the Braveheart of the mobile app universe. Realistically, they're more principled than a self-serving Spotify (trying to capitalize on the fact that the EU presently has the least principled competition commissioner in the bloc's history), but neither are they prepared to die for this cause nor are they just drama queens (well, maybe to some degree if that YouTube video is any indication). At the end of the day, they're businesspeople running a company recently valued at 17ドル.3 billion and trying to change some parameters in their favor. Also, I do find it credible that it's not only about money but also about their view of what would be fair.

I've been following high-stakes commercial disputes like this for a long time. There's only one circumstance that sets this one apart from cases like Apple v. Samsung or Oracle v. Google: Epic Games is privately-held, with a majority belonging to its founder Tim Sweeney, roughly 40% of the shares to China's Tencent (which also owns well over 90% of Supercell, for example), 1.5% to Sony (which I understand wants a 30% cut from developers just like Apple), and the rest to some financial investors and maybe some key employees. Officers of a publicly-traded company have a fiduciary duty toward other shareholders, which makes their key decisions more predictable. Here it's a major unknown how much leeway Mr. Sweeney enjoys--it depends on his non-public agreements with all those minority shareholders, some of whom have a purely financial interests and only one of whom (Tencent) may actually like the idea of Epic Games acting as a proxy warrior.

But even if Mr. Sweeney truly considered this a holy war and Epic's minority shareholders supported or simply couldn't do anything about it, Fortnite would realistically return to the App Store in a matter of weeks--or maybe months should it take surprisingly long.

There are litigants like Apple who mostly just let their lawyers speak and largely refrain from commenting on pending cases in public, and there are the likes of Qualcomm (who published an infographic when asserting patents against Apple) and Nokia (who are incessantly vocal about their ongoing dispute with Daimler and its suppliers of mobile communications components). The way Epic Games started this leaves no doubt they're at least as PR-focused as Qualcomm and Nokia combined. I don't want to take a position on accusations of Epic seeking to "weaponize" Fortnite gamers for its purposes, but it is fair to say that a mobilization effort of that nature and stature is unprecedented in smartphone-related litigation.

At least on Twitter I don't get the impression that Epic is off to a good start. They thought they came out swinging, but so far it appears Apple actually has broader support in the court of public opinion than Epic, which is a potential sign of some miscalculation on Mr. Sweeney's part. He may have made the mistake to assume that end users care as much about that 30% App Store cut as he and other developers do. I am an app maker--as I've repeatedly stated and will soon be more specific about when I announce my new game--, so Epic's campaign could theoretically benefit me, but I also have a reputation at stake here as a smartphone litigation commentator.

Someone as successful as Mr. Sweeney is ultimately rational, so what's the end game here with respect to Fortnite's availability on the App Store?

Epic would love to obtain a temporary restraining order (TRO) in order to deal Apple a first blow. That would be "la puerta grande" for Fortnite to return to the App Store. The motion hearing will take place on Monday, and I predict that Judge Gonzalez Rogers is going to be more than reluctant to enjoin Apple at this stage. From the perspective of a judge, it doesn't make sense that someone would purposely breach an agreement and then ask a court to enter an order within a matter of days only to prevent the other party (that met its own obligations) from triggering the contractually defined consequences of such conduct. As Apple told The Verge, they're happy to make Fortnite available again, provided that Epic honors the related agreements, which it had been doing for years and very profitably so.

Should Epic totally surprisingly get its TRO, then Fortnite will be back up on the App Store within about a week. Assuming the far more likely outcome, which is that Epic's TRO motion will be denied, it will happen, too--just a little bit later.

From a rational perspective, Epic has nothing to gain from a protracted unavailability of Fortnite for iOS after failing to win a TRO:

• By bringing the TRO motion, regardless of how much of a long shot it was in the first place, Epic has already shown to the court of law and the court of public opinion that it strongly believes in its views.

• Apple won't have to worry about damages Epic might be seeking later on. In that scenario, it would still be clear that Epic had access to the App Store and to Apple's developer tools, and all it had to do was to stop running a promotion that didn't comply with Apple's in-app payment rules. That wouldn't give rise to a huge damages award even in a best-case scenario for Epic.

• Maybe Epic is trying to work something out with Google (interestingly, I still haven't seen a TRO motion against the Android maker), but even if that happened, very few iOS users would switch to a different mobile operating system just because of Fortnite.

• There comes a point at which Epic's own iOS user base is going to be annoyed.

All things considered, I believe the most likely development is that the court will deny Epic's motion for temporary relief and Epic will then say it's disappointed but at least it tried, and now it must live with the decision, and in the interest of their customers, they will comply with Apple's rules again (for the time being, while pursuing their litigation) in order to make Fortnite available for iOS again and to ensure continued access to Apple's developer tools with a view to the Unreal Engine as well.

Whether a federal judge will be comfortable with the notion of her court being used as a PR tool by a multi-billion-dollar games company is another question. That may or may not be Epic's second miscalculation in the early stages of this dispute.

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In July, Nokia surprised everyone by obtaining an anti-antisuit-injunction injunction ("AAII") preventing automotive supplier Continental from pursuing a U.S. antisuit injunction against Nokia in an effort to shield Continental customer Daimler from Nokia's ten (and possibly other) German patent infringement suits. When that news broke, a few people in the industry were already wondering about whether the next level of escalation would be an anti-anti-antisuit motion. In fact, there is historic precedent for that, though it's rare.

Here we go--a couple of hours ago, Continental brought a motion for a temporary restraining order (TRO), asking Judge Lucy H. Koh of the United States District Court for the Northern District of California to bar within a matter of hours--ex parte, i.e., without a hearing--Avanci, Nokia, Sharp, Conversant (which has very recently become the third and latest Avanci member to sue Daimler for patent infringement, as I reported earlier today), and Optis from seeking another AAII against Continental in Germany.

Today's TRO motion renews the original pursuit of a U.S. antisuit injunction against those defendants, but now also includes Sharp. About a month ago, Judge Koh had denied the previous motion without prejudice, explicitly allowing renewal (but didn't want to entertain multiple motions in a row).

I've criticized Continental's lawyers very harshly. I thought the original motion was overbroad. They were seeking to shield Daimler even from lawsuits targeting cars that don't come with an accused Continental component, which I described as behaving like a class-action plaintiff without meeting the requirements for a class action; they failed to clarify at the time that they didn't mean to enjoin Sharp, which wasn't a defendant when the original motion was brought and when defendants had to respond to it (but by now Sharp has been added to the case--and presumably been properly served, too); and they originally wanted to prevent patent assertions against Daimler regardless of remedies sought.

Continental has now brought a narrowly-tailored TRO. That makes a lot more sense, and I feel that their decision to focus on what's more realistically achievable (though a motion for an antisuit injunction or TRO is never a cakewalk) also validates my criticism. They've abandoned their unbelievable attempt to overreach, and I commend them for that. Now it's just about Daimler cars that come with accused Continental components; it's only about parties that were in the case at the relevant time; and it's only about preventing those Avanci members from seeking injunctive relief against Daimler.

The current TRO motion does not include the first ten cases Nokia brought against Daimler in Germany. Continental already had to withdraw that part of the original motion in September due to Nokia's Munich AAII. But the motion notes that--as this blog has also reported--the Munich Higher Regional Court will hear Conti's appeal on Halloween, and should the existing AAIIs be lifted, Conti will inform Judge Koh and will presumably seek an extension to those cases.

The exclusion of those ten pending Nokia v. Daimler cases is a major limitation. Even if today's TRO motion succeeded, the Avanci group would achieve its strategic goal of forcing Daimler to accept their supra-FRAND royalty rates if Nokia just got enough leverage from one of those first ten cases.

Continental has certainly become very reasonable now. Will they succeed? I generally like to offer predictions, but in this case I'll refrain from it, especially since this motion will likely be resolved very swiftly one way or the other.

The anti-anti-antisuit request makes a lot of sense. It could be that Judge Koh flatly declines to play a long-distance game of leverage with her Munich counterparts, but she might also conclude that an anti-anti-antisuit TRO just for the purpose of quickly resolving the actual motion is reasonable.

The more conventional part of the motion, which comes down to a motion for an antisuit (just one "anti" for a change) injunction that would start as a TRO (TROs need to be converted into injunctions after a short while or they automatically expire), is now narrowly-tailored as I said. This is a clear case of standard-essential patent holders--who whine about "hold-out" (implementers' delay tactics) all the time--being unwilling to license a company just because they don't like Conti's position in the supply chain and consider car makers like Daimler the more lucrative type of target. That's a strong policy argument in favor of Conti's U.S. case. The primary issue is still timing. What matters here is not the date of the motion, but the date of the filing of the original complaint. The Northern California complaint was brought in May, but Nokia's and Sharp's patent assertion campaigns against Daimler started before. However, timing is not an issue with respect to any cases that were filed after Continental's U.S. complaint (such as that newly-discovered Conversant lawsuit) or will be filed going forward. The two Munich AAIIs that are in effect (one against the U.S. entity that is the plaintiff in California, and one against the German group parent) require Conti to exclude Nokia's first ten cases from the scope of the requested TRO for the time being. So timing could become a bigger issue should Conti, after a successful appeal in Munich (a Happy Halloween scenario for Conti), seek to broaden the scope of the order they're seeking.

This is an interesting procedural twist, and should I find anything worth highlighting after a closer look (so far I've looked at those documents only cursorily), I may do a follow-up post, though chances are that some sort of a decision--even if just a procedural order--will come down before I even get there.

Let me now, finally, show you both the motion and the underlying memorandum (two documents):

19-10-08 Continental Motion... by Florian Mueller on Scribd

19-10-08 Continental Memo I... by Florian Mueller on Scribd

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Late on Monday, Judge Lucy Koh responded to a joint Apple-Samsung proposal for a nearest-term schedule regarding the S III. The agreement that the parties had reached on the next steps reflected caution on both sides. Samsung apparently tried to be reasonably cooperative, while Apple wanted to take Samsung's claim of technical differences between the Galaxy Nexus and S III phones seriously. But Judge Koh had told Apple to notify by June 8 (last Friday) whether or not it wanted to file for a temporary restraining order (TRO). Judge Koh takes Apple's stipulation with Samsung for a "no TRO".

The problem that Apple faced is that a TRO motion would have delayed the process in its first California lawsuit against Samsung. Judge Koh would have postponed a hearing scheduled for June 21, and as a result, the July 30 trial date could also have slipped.

It's easy to understand that Apple didn't want to act rashly against the S III. The worst outcome would have been for Apple to fail with a TRO motion against the S III due to technical differences between the Nexus and the S III and to see the summer trial postponed.

Judge Koh's Monday order also announces that "[a]n order on the pending motion for preliminary injunction [the one against the Nexus] will issue shortly", but I'm not sure what she means by "shortly". At the end of a September 2011 hearing on Apple's first motion for a preliminary injunction she also indicated that a decision would come down not long after -- and it took almost three months. I don't think this here will take three months, or even two, but I don't think "shortly" means this week.

For Apple, the ruling on the Nexus motion will provide some indication as to its chances of a quick win against the S III. If one or two of the patents it wanted to assert against the S III are deemed valid and infringed, then it all comes down to whether there really are outcome-determinative technical differences between the Nexus's and the S III's implementation of the claimed inventions. If, however, Apple doesn't prevail on at least one of those patents with respect to the Nexus, then it would be unlikely to do so against the S III, given that Samsung was well aware of Apple's enforcement of those patents when it made technical decisions on the S III.

Since it's unclear exactly when Judge Koh will rule on the Nexus motion, Apple wouldn't know by the time of filing a motion against the S III whether that motion turns out to have been a non-starter from the outset only a few hours, days or weeks later. If this happened very quickly, Apple could at least withdraw the S III motion and keep the schedule for the summer trial. But if it happened after the court reschedules the first lawsuit, then it's possible that even a withdrawal of the motion doesn't reinstate the original schedule.

Apple also faces a tough choice with respect to the patents and other intellectual property rights it dropped from the first California litigation. Judge Koh allowed reassertion. If Apple reasserts immediately, there's a risk of those claims being added to its second California litigation against Samsung. That case is on a relatively slow schedule anyway, and if it becomes inflated, it will only get slower, and pressure on Apple to drop claims from that litigation will grow. Apple could bring a second ITC complaint against Samsung over those intellectual property rights, but the ITC has become a difficult forum for Apple's purposes and an ITC judge would have to familiarize himself with the asserted IPRs while Judge Koh already knows those assets fairly well.

All of this uncertainty is in Samsung's and the court's interest, but not in Apple's. The court doesn't want to encourage Apple to file too many complaints and motions. Samsung wants to continue to sell its existing products and to launch new ones.

No one can blame Apple's decision makers for acting responsibly and proceeding deliberately. The United States is a difficult jurisdiction to get quick decisions, and to have multiple lawsuits pending in parallel. The courts can transfer and consolidate cases, and thereby cause delay. This worked to Apple's advantage against Google/Motorola in the Southern District of Florida, but it's a problem in other contexts. By contrast, Apple could bring any number of lawsuits in different German regional courts, and as long as there aren't any entirely duplicative claims (asserting the very same patent against the very same defendant), everything will progress in parallel.

For Samsung it's definitely a win that it can go ahead and launch the S III in the United States. Apple's attempt to block it even provided some additional publicity, though pre-orders for the S III were huge anyway. It looks like the S III will be wildly successful all over the world. While Apple continues to innovate, it will really need the iPhone 5 to keep Samsung in check. But if Apple wins a preliminary injunction against the Nexus over patents that the S III implements in more or less the same manner, things could fall into place rather quickly. Also, if Apple enforces any patents against older Samsung products at the summer trial, it can then ask for quick decisions against the S III with respect to the prevailing patents. And the situation in the U.S. may lead Apple to file a number of lawsuits against the S III in some other jurisdictions.

Samsung can run, but it can't hide forever. Its ability to launch the S III on time is a tactical win, not a strategic one.

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At a Thursday hearing on Apple's motion for a preliminary injunction against the Galaxy Nexus as well as Apple's concern over the launch of the Galaxy S III (scheduled for June 21), Judge Koh indicated that a request for a temporary restraining order (TRO) may be the only way for Apple to get a decision ahead of the scheduled launch of the Galaxy S III, and told the parties to make a joint submission the next day regarding differences between the Nexus and the S III with respect to the accused features.

Owing to the tight schedule, Apple focuses on two of its four preliminary injunction patents with respect to which it believes there aren't any outcome-determinative differences between the ways in which the Nexus and the S III implement the relevant features: the '604 (unified search, i.e., Siri) and '647 (data tapping) patents. The parties now refer to the accused features as "Android Browser" and "Quick Search Box".

On Friday evening local time, Apple and Samsung filed a joint propoal for a near-term roadmap to answer the question of different implementations. In the following, I will summarize its practical implications for the process that could delay the launch of the S III:

Samsung has committed to identifying by Tuesday (June 12) "whether it contends that the accused features [...] of the Galaxy S III are more than colorably different from the comparable features of the Galaxy Nexus".

If Samsung doesn't identify differences, then I guess Judge Koh will immediately approve Apple's motion to add the S III as another accused product to its Nexus motion.

But Samsung will certainly try very hard to argue that there are potentially outcome-determinative differences. In that case, Samsung's Tuesday filing "will identify the relevant differences between the respective features, as well as any additional non-infringement arguments related to such differences that Samsung contends exist", and Samsung will then "make its best efforts to produce the source code implemented on the Samsung Galaxy S III relating to the accused features by no later than Thursday, June 14, 2012". Given that Samsung certainly has that source code, an agreement to "make its best efforts" is a relatively weak commitment. It provides Samsung with an opportunity to cause further delay, though it wouldn't be in Samsung's interest to delay things too much since it would be viewed negatively by the court.

At any rate, the parties will reconnect within three days of Samsung's statement on differences to "determine what additional discovery and briefing regarding the Samsung Galaxy S III may be required, if any, and the amount, timing, and exact nature of any such discovery and briefing".

This schedule suggests to me that Apple will make its final decision on whether to file for a TRO either in a few days (if Samsung concedes that the relevant features are implemented in pretty much the same way, or if Samsung grossly overstates the significance of any differences) or in the early part of the following week.

Various media reports quote Samsung as assuring the market that the S III will launch on time. But Samsung has committed to a schedule that would enable Apple to cause significant delay and, potentially, force Samsung to throw out features.

I heard that many Google lawyers were in the courtroom at the Thursday hearing. Google doesn't admit it but it's very nervous about the situation. It overpromised last summer when it told the Android ecosystem that its acquisition of Motorola Mobility, which was closed last month, would enable it to "protect Android". For now it appears that all those who said that this was "too little, too late" were right. Motorola has so far won only one ruling over a non-standard-essential patent (the push notification patent, in Germany). It also won a German injunction against Apple over a standard-essential one but can't enforce it anymore. And in the United States it's not going to enforce a non-standard-essential patent against Apple for another two years based on current court schedules. Its only chance to enforce a standard-essential one during that period is an ITC investigation that has drawn an unprecedented level of statements on the public interest arguing against an import ban (from the competition enforcers at the FTC and from major industry players including Cisco, HP and Nokia as well as industry associations such as the Business Software Alliance and the Retail Industry Leaders Association, not because any of those stakeholders want to favor Apple over Google/Motorola but for overarching reasons: injunctive relief based on standard-essential patents causes widespread concern.

Every time Google or its partners fend off an Android infringement lawsuit, there's celebration. But six patents have already been enforced against Android in three different jurisdictions, and many more will be over time. It's clear that Google and its partner can fend off some but not all such assertions. That's why the key question is: how will Google make good on its promise to "protect Android"? If it wants to do so, it must get some legitimate (i.e., non-abusive) leverage against Apple. Paying 12ドル.5 billion doesn't necessarily buy enforceable decisions. Prior to the year 2014, Google most likely won't get leverage in the U.S. to force Apple to tolerate Android's infringement. As a result, Android device makers like Samsung continue to be under pressure, and Google's lawyers going to the courtrooms can watch but they can't help.

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