A highly anticipated patent infringement case between Apple and Motorola Mobility was dismissed by a Wisconsin district court yesterday, hours before the trial was due to begin.
The two companies were arguing over licence rates for patents owned by Motorola that cover parts of the wireless UMTS, GPRS, GSM and 802.11 standards. The patents are vital parts of the technologies and so Motorola Mobility is required to license them to competitors on "fair, reasonable, and non-discriminatory terms," often referred to by the acronym FRAND.
"We're pleased that the court has dismissed Apple's lawsuit with prejudice," Motorola Mobility said in a two-line statement. "Motorola has long offered licensing to our extensive patent portfolio at a reasonable and non-discriminatory rate in line with industry standards. We remain interested in reaching an agreement with Apple."
At issue was where the boundary lay between reasonable and unreasonable terms.
Last week Apple told the court it would pay up to $1 per device for a licence to Motorola patents covering cellular and Wi-Fi technologies. Motorola Mobility was arguing for a royalty payment of 2.25% on each device.
However, Apple said that if the court found in Motorola's favour and instructed Apple to pay more than $1, Apple would pursue all possible appeals against the ruling.
The presiding judge in the case, US District Court Judge Barbara Crabb, didn't take kindly to Apple's offer.
"At the final pretrial conference, I asked Apple to explain why it believed the court should determine a FRAND rate even though the rate may not resolve the parties' licensing or infringement disputes," Judge Crabb said in an order. "I questioned whether it was appropriate for a court to undertake the complex task of determining a FRAND rate if the end result would be simply a suggestion that could be used later as a bargaining chip between the parties.
"Apple responded that the rate would resolve the dispute in this particular case, namely, whether Motorola's licence offer was FRAND and if not, what the rate should have been. Apple's response was not satisfactory and did not assuage my concerns about determining a FRAND rate that may be used solely as a negotiating tool between the parties," she said.
The two companies were given until yesterday morning to persuade the court as to why the case should go ahead.
The minutes of the courtroom proceedings Monday indicate that Judge Crabb found "that case can not proceed to trial on remaining issue; case dismissed with prejudice." However, the judge's final ruling has not been published yet.