Microsoft Corporation v. Motorola, Inc. ( 2014 )

Case: 14-1089 Document: 24 Page: 1 Filed: 05/05/2014
NOTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
MICROSOFT CORPORATION, A WASHINGTON
CORPORATION,
Plaintiff-Appellee,
v.
MOTOROLA, INC., GENERAL INSTRUMENT
CORPORATION AND MOTOROLA MOBILITY LLC,
Defendants-Appellants.
---------------------------------------------------------------------------------
MOTOROLA MOBILITY, INC. AND GENERAL
INSTRUMENT CORPORATION,
Plaintiffs-Appellants,
v.
MICROSOFT CORPORATION, A WASHINGTON
CORPORATION
Defendant-Appellee.
______________________
2014-1089
______________________
Appeal from the United States District Court for the
Western District of Washington in Nos. 2:10-cv-01823-
JLR and 2:11-cv-00343-JLR, Judge James L. Robart.
______________________
Case: 14-1089 Document: 24 Page: 2 Filed: 05/05/2014
2 MICROSOFT CORPORATION v. MOTOROLA, INC.
ON MOTION
______________________
Before LOURIE, DYK, and REYNA, Circuit Judges.
LOURIE, Circuit Judge.
ORDER
Microsoft Corporation (“Microsoft”) moves to transfer
this appeal to the United States Court of Appeals for the
Ninth Circuit. Motorola, Inc., Motorola Mobility LLC,
and General Instrument Corp. (collectively, “Motorola”)
oppose the motion. For the following reasons, we grant
the motion.
I.
Pursuant to the common patent policies of the Inter-
national Telecommunications Union (“ITU”) and Institute
of Electrical and Electronics Engineers Standards Associ-
ation (“IEEE”), Motorola declared that it was willing to
negotiate a license for use of its foreign and domestic
patents that embody certain video coding and wireless
local area network standards on a non-discriminatory
basis on reasonable (“RAND”) terms.
In October 2010, Motorola offered to license those
standard-essential patents to Microsoft at a proposed
royalty rate. Microsoft rejected the offer, and filed suit
against Motorola in the United States District Court for
the Western District of Washington asserting that
Motorola’s licensing proposal was unreasonable and in
breach of its RAND obligations. Microsoft further sought
a declaration that it was entitled to a license to those
foreign and domestic patents on RAND terms.
The day after the filing of Microsoft’s complaint,
Motorola initiated its own suit against Microsoft in the
United States District Court for the Western District of
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MICROSOFT CORPORATION v. MOTOROLA, INC. 3
Wisconsin, seeking damages and other appropriate relief
for patent infringement of U.S. patents subject to its
RAND commitments. Citing the relatedness of the in-
fringement case and contract case, the Western District of
Wisconsin transferred Motorola’s patent infringement
action to the Western District of Washington pursuant to
28 U.S.C. § 1404(a).
After Motorola’s action was transferred, the Western
District of Washington denied a motion to dismiss
Motorola’s patent infringement claims and re-file those
claims as compulsory counterclaims in Microsoft’s con-
tract case. It noted that “the essential facts are not so
intertwined and logically connected that considerations of
judicial economy and fairness dictate that the issues be
resolved in one lawsuit.” However, the court consolidated
the actions “for all purposes” pursuant to Fed. R. Civ. P.
42(a) in view of its conclusion that “at least some common
questions of law or fact, and the interests of judicial
economy will be served by consolidation.”
While the U.S. proceedings unfolded, the Mannheim
Regional Court in Germany enjoined the sale of Mi-
crosoft’s Xbox gaming system and certain Microsoft Win-
dows products in Germany, finding those products
infringed Motorola’s European standard setting patents
and that Microsoft could not enforce the ITU and IEEE
patent policy agreements. Soon after that ruling, the
Western District of Washington enjoined Motorola from
enforcing the German court’s injunction on the grounds
that the U.S. and German actions involved the same
issues and Microsoft’s contract action could resolve
whether injunctive relief is an appropriate remedy with
respect to infringement of Motorola’s U.S. and European
standard essential patents.
Motorola appealed the district court’s preliminary in-
junction ruling to the Ninth Circuit. While acknowledg-
ing that Motorola’s patent claims had been consolidated
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4 MICROSOFT CORPORATION v. MOTOROLA, INC.
with Microsoft’s action, because it concluded Microsoft’s
complaint sounded in contract, the Ninth Circuit found
that it had jurisdiction over the case. In exercising that
jurisdiction the Ninth Circuit affirmed the injunction,
concluding that it would not be legally erroneous to find
that Motorola’s RAND commitments constituted a legally
enforceable contract.
Following the Ninth Circuit’s injunction ruling, the
district court resolved Microsoft’s breach of contract claim
in two phases. First, the district court conducted a bench
trial to determine the appropriate RAND royalties for two
sets of U.S. and European patents. The court then con-
ducted a jury trial on Microsoft’s breach of contract
claims. After the jury rendered a verdict in favor of
Microsoft, the district court entered judgment pursuant to
Rule 54(b) of the Federal Rules of Civil Procedure, and
Motorola filed a notice of appeal naming this court as the
court to which it was seeking review. Microsoft now
moves to transfer the case to the Ninth Circuit.
II.
This court has jurisdiction to decide an appeal from a
final decision of a district court “if the jurisdiction of that
court was based, in whole or in part, on section 1338.” 28
U.S.C. § 1295(a)(1). Section 1338 provides that the feder-
al district courts have exclusive jurisdiction over “any civil
action arising under any Act of Congress relating to
patents.” 28 U.S.C. § 1338(a).
The Supreme Court has held that in order to demon-
strate that a case is one “arising under” patent law, the
plaintiff must “set up some right, title or interest under
the patent laws, or at least make it appear that some
right or privilege will be defeated by one construction, or
sustained by the opposite construction of these laws.”
Christianson v. Colt Indus. Operating Corp., 486 U.S. 800,
807-08 (1988).
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MICROSOFT CORPORATION v. MOTOROLA, INC. 5
In its injunction ruling, the Ninth Circuit rejected the
position that this court had jurisdiction over the matter
based on its view that Microsoft’s complaint sounds in
contract. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872,
881 (9th Cir. 2012) (“The Federal Circuit has jurisdiction
over an interlocutory appeal only if it would have jurisdic-
tion over a final appeal in the case under 28 U.S.C.
§ 1295. 28 U.S.C. § 1292(c)(1). Microsoft’s complaint
sounds in contract and invokes the district court’s diversi-
ty jurisdiction . . . .”).
Motorola acknowledges that, as a general matter, the
jurisdictional decision of a coordinate court is the law of
the case. Christianson, 486 U.S. at 816. But it says that
here, “neither party nor the Ninth Circuit realized the
implications of the consolidation of Motorola’s patent
infringement claim with Microsoft’s contract claim” at the
earlier stages of this litigation. Opposition to Transfer at
19. However, this argument finds no support in the
Ninth Circuit’s decision, which makes clear that it was
aware of the consolidation of the cases when it deter-
mined that it rather than this court had authority over
the case. See Microsoft, 696 F.3d at 878.
Nor are we persuaded by Motorola’s argument that
the Ninth Circuit’s preliminary assessment of the merits
issues justifies reconsidering its jurisdictional ruling. See
Opposition to Transfer at 20 (“[T]he Ninth Circuit ad-
dressed the narrow issue of whether the district court
abused its discretion in issuing the anti-suit injunction,
expressly reserving any determination on the merits.”).
The issue of whether this court or the appropriate region-
al circuit has appellate jurisdiction is defined by looking
to the complaint. See Christianson, 486 U.S. at 808 (well-
pleaded complaint rule governs). Thus, the preliminary
nature of the merits issues before the Ninth Circuit carry
no consequence.
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6 MICROSOFT CORPORATION v. MOTOROLA, INC.
Under the law of the case doctrine, we must adhere to
a coordinate court’s jurisdictional ruling unless there is a
showing of “extraordinary circumstances such as where
the initial decision was clearly erroneous and would work
a manifest injustice.” Christianson, 486 U.S. at 817; see
also id. at 819 (“Under law-of the-case principles, if the
transferee court can find the transfer decision plausible,
its jurisdictional inquiry is at an end.”). Here, there is
no manifest justice. Nor is there a “clearly erroneous”
result. The requested relief in Microsoft’s complaint
plausibly supports the Ninth Circuit’s conclusion that this
matter does not arise under the patent laws.
Motorola contends that the cases arise at least in part
under § 1338 based on the district court’s consolidation of
Microsoft’s contract action with its patent infringement
action. In fact, however, it appears that the district court
merely consolidated the cases for purposes of judicial
economy. The patent infringement complaint is not part
of this appeal, not having been decided by the district
court. Under such circumstances, it is plausible to con-
clude, as the Ninth Circuit seems to have done here, that
the act of “consolidation d[id] not merge the suits into a
single cause, or change the rights of the parties.” Johnson
v. Manhattan Ry., 289 U.S. 479, 496-97 (1933); see also
Cole v. Schenley Indus., Inc., 565 F.2d 35, 38 (2d Cir.
1977) (when complaints are consolidated a court must
still consider the jurisdictional basis of each complaint
separately).
While we have considered Motorola’s other argu-
ments, because we conclude that the Ninth Circuit’s
decision was, at a minimum, plausible, we grant the
motion to transfer.
Accordingly,
IT IS ORDERED THAT:
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MICROSOFT CORPORATION v. MOTOROLA, INC. 7
The motion is granted to the extent that the appeal
and any pending motions are transferred to the United
States Court of Appeals for the Ninth Circuit pursuant to
28 U.S.C. § 1631.
FOR THE COURT
/s/ Daniel E. O’Toole
Daniel E. O’Toole
Clerk of Court