In the aftermath of last week’s Microsoft-Motorola RAND-setting opinion, the case will now to proceed toward an August trial date. At this trial — if it gets that far — either Judge Robart or a jury (this issue is still up in the air) will determine (1) whether Motorola breach its RAND obligations to the IEEE and ITU; (2) if a breach has occurred, whether Microsoft is entitled to damages as a result; and (3) the amount of any damages owed. As we’ve noted before, Microsoft will likely seek summary judgment prior to trial, given the difference between Motorola’s opening 2.25% offer and the final RAND royalty rate set by Judge Robart. But either way, the issues of breach of contract and potential damages remain in the case, and the parties are currently taking some limited discovery on these issues.
Yesterday, Motorola filed a letter motion with the court [LINK], asking it to limit the theories on which Microsoft may base its damages claims. Motorola asserts that in recent weeks, Microsoft has significantly (and improperly) expanded its damages contentions in violation of the Federal Rules of Civil Procedure, prejudicing Motorola’s ability to prepare its own case.
Motorola argues that throughout the 2+ years that the case has been pending, Microsoft has only been seeking attorneys’ fees as damages for the alleged RAND breach of contract. But in early April, Microsoft supplemented its discovery responses “to disclose brand new damages theories.” According to Motorola, Microsoft is now seeking damages based on:
- Microsoft’s legal expenses incurred in defending Motorola’s patent infringement actions in the ITC, U.S. district courts, and Germany;
- the costs incurred by Microsoft to relocate its EMEA (Europe, Middle East, and Africa) distribution center from Germany to the Netherlands in preparation for a German injunction relating to two Motorola H.264-essential patents (which was never enforced after Motorola was enjoined by Judge Robart), as well as the ongoing increased operation costs in the Netherlands;
- Motorola’s alleged refusal to grant a license to Marvell (Microsoft’s 802.11 WiFi chip supplier); and
- Motorola’s alleged refusal to grant Microsoft a license to its H.264 patents under the grantback provisions of Google’s MPEG LA AVC/H.264 patent pool agreement.
Motorola notes that while Microsoft’s supplemental disclosure calculates the damages stemming from the relocation of the EMEA distribution facility at $11 million, Microsoft does not provide damages figures stemming from the refusals to grant licenses to Marvell or pursuant to the MPEG LA grant, or its attorneys’ fees (although Microsoft apparently produced invoices and billing statements). Motorola also accuses Microsoft of delaying the depositions of corporate witnesses relating to these damages theories.
Under the court’s scheduling order, the parties are required to complete any additional (albeit limited) discovery on liability and damages by May 20, and opening expert reports on these issues are due May 29. Relying on Rule 26 of the Federal Rules of Civil Procedure (as well as Rule 37), Motorola argues that Microsoft should be precluded from relying on these newly-identified damages theories, because Microsoft did not supplement its discovery responses in a timely manner and that delay has now prejudiced Motorola.
Specifically, Motorola asserts that due to Microsoft’s delay, it is now too late for Motorola (1) to serve any additional written discovery relating to these new damages theories; (2) to depose all of Microsoft’s newly disclosed witnesses, let alone any other witnesses; and (3) to secure an expert witness on this topic. Motorola requests that in the event the court does allow Microsoft to rely on its newly-identified damages theories, that it alter its scheduling order to allow time for additional discovery, as well as granting leave for Motorola to take additional written and deposition discovery.
It will be interesting to see what Judge Robart decides here. On one hand, prior to making his RAND determination, he showed an inclination to consider as much evidence and argument as possible (e.g., briefing on the Google-MPEG LA agreement), even if it delayed his eventual ruling. But at the same time, he appears to have little tolerance for litigation gamesmanship by the parties (and, as Motorola notes on p.3 of its letter brief, he already admonished the parties about their Rule 26 duty to supplement their discovery responses).