BREAKINGVIEWS-Patent lawyers: Y’all better Deutsch sprechen

Wed Oct 17, 2012 10:58pm IST

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Reynolds Holding

NEW YORK, Oct 17 (Reuters Breakingviews) - Attention all patent lawyers: Y’all better Deutsch sprechen. The smartphone wars are moving from eastern Texas to western Germany. The shift is occurring because courts in Mannheim and other cities nearby allow the likes of Apple (AAPL.O), Google (GOOG.O) and Microsoft (MSFT.O) to block rivals without proving damages. The court rulings can also carry global weight. The transatlantic legal arbitrage, however, may be hurting competition.

Judges in Marshall and other towns in the Lone Star State parlayed speed, expertise and pro-patent decisions into an infringement lawsuit boom. In 2011, they heard 608 cases, tops in the United States, according to law firm Perkins Coie. And litigation analyst LegalMetric found that, from 2008 to 2012, plaintiffs won patent trials more often in East Texas than anywhere else in the nation.

Recently, however, the U.S. Supreme Court made it tougher to obtain court orders stopping the sale of infringing products. And last October, the most pro-patent judge in the relevant part of Texas retired. So tech companies started seeking even friendlier climes.

Courts in Mannheim and other German cities have become big favorites. In addition to their haste, high-tech know-how and an unusually pro-patent approach, they can quash an offending product - and without any proof of harm. Only later do these courts determine whether the patent in question is actually valid.

That means only minimal proof may be needed to stop rivals cold in the enormous German market. In Duesseldorf, for instance, patent holders win about two-thirds of infringement hearings, according to the Global IP Project, compared with 35 percent worldwide. The court orders are sometimes enforceable throughout the EU and often compel quick settlements elsewhere.

Germans do pay a price for their system. Microsoft this year moved its European distribution headquarters from Germany to the Netherlands after Motorola Mobility sued it in Mannheim. Small companies have also gone bust after being found to have infringed a patent later held invalid.

Some U.S. courts say Germany enables the costly smartphone wars. Last April, for example, a Seattle judge blocked Motorola from enforcing any Mannheim court ruling against Microsoft because the underlying suit was, in effect, harassment. That sort of judicial backlash could make tech firms yearn for the charms deep in the heart of Texas.

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CONTEXT NEWS

- Microsoft said on Oct. 12 it would add Google as a defendant in a German patent lawsuit against Motorola Mobility. The Redmond, Washington-based company alleges that the Android operating system used in Motorola’s smartphones violates a software patent. Google owns both Motorola Mobility and the Android system.

- It is the first time Microsoft and Google have clashed directly in court over smartphone patents. It is, however, only the latest of scores of legal actions filed in Germany by those two tech giants as well as Apple, Samsung (005930.KS), Nokia (NOK1V.HE) and other companies fighting over the lucrative smartphone market.

- Reuters: Microsoft to sue Google with Motorola in German patent row [ID:nL1E8LCIW8]

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(Editing by Jeffrey Goldfarb and Martin Langfield)

((reynolds.holding@thomsonreuters.com)(Reuters messaging reynolds.holding.thomsonreuters.com@reuters.net)) Keywords: BREAKINGVIEWS MANNHEIM/

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