Apple’s Case Against Motorola/Google Dismissed “With Prejudice”

Both Apple, Inc. (AAPL) and Android operating system maker Google Inc. (GOOG) subsidiary Motorola Mobility saw a potentially precedent setting ruling, in which both parties cases were dismissed by an irate federal judge.

I. Dismissed With Prejudice

Judge Richard A. Posner, a Seventh Circuit Court of Appeals judge who moonlighted in the U.S. District Court, Northern District of Illinois (Chicago) for this critical case, seemed to imply that both companies were trying to abuse the legal system, wasting its time with unclear arguments.

Both companies agreed that money would fix the alleged wrongs caused by the other’s infringement.  But Judge Posner was frustrated by the fact that neither company could reasonably justify the exorbitant sums they were claiming their patents were worth.

Judge Richard Posner was frustrated with what he viewed as ridiculous arguments from Motorola Mobility’s and Apple’s legion of lawyers. [Image Source: Abel Uribe, Chicago Tribune]
Also, Judge Posner complained about Apple’s lawyers filing a mired myriad of motions.  In this regard, Apple’s insistence at objecting to every ruling of Judge Posner’s may have hurt it in court.  

Notably, Judge Posner had stated in a preliminary ruling that some features in Google/Motorola Mobility’s Android operating system infringed on Apple’s intellectual property.  Apple complained about its victory, with its legal team essentially bellyaching about the fact that the Judge didn’t find in their favor for every single claim, even though he had found in their favor for most of them.

Judge Posner’s decision to dismiss the case was quite resolute, in that he dismissed it “with prejudice”, writing, “I have tentatively decided that the case should be dismissed with prejudice because neither party can establish a right to relief.”

II. Appeal? Unlikely

Either company will have a tough road ahead appealing that decision as Judge Posner is a senior member of the Appeals court which would hear their case.  In short Apple versus Motorola is probably over in the U.S. with no damages awarded to either company, on account of their legal teams’ inability to be reasonable (according to Judge Posner).

The only possible alternative route would be to file further complaints to the U.S. International Trade Commission.  But such complaints may not be taken seriously given the prestige Judge Posner holds among federal judges nationwide, in part thanks to his service for years as an esteemed faculty at the University of Chicago.

Apple’s options to appeal or complain to the ITC are scarce. [Image Source: ArsTechnica]
Other than the ITC or an appeal, both companies will likely be banned from filing lawsuits against each other until 2014.  It’s important to note that Motorola Mobility was already found innocent by the ITC of Apple’s accusations of infringement on several patents.

III. Good News for Customers; Bad News for Lawyers

Arguably this is a big win for consumers in that there will (likely) be no product bans, and the pair will be forced to compete on the market.  Of course some Apple and Android fans may fantasize about banning each other’s products, but to the average consumer, such bans would at best be an annoyance.

On the other hand, it’s a blow to both companies’ legal efforts.  For Google, it loses the ability to use Motorola Mobility as a club to beat Apple back from suing other Android handset makers, such as HTC Corp. (TPE:2498).  It was Motorola Mobility that filed the first lawsuit against Apple on Oct. 6, 2010.

For Apple, who filed countersuit against Motorola Mobility on Oct. 29, 2010, it is also a blow.  While Apple did not necessarily start this fight explicitly, its former CEO Steve Jobs long implied Motorola Mobility (and Google) were in infringement and that he would eventually “destroy” them with bans.

Indeed, bans could have destroyed Motorola or at least have forced its new owner Google to reach deep into its pockets, given that the smartphone maker is already struggling mightily with profitability.  Now Motorola’s lawyers will be free to focus on their court battle with Microsoft Corp. (MSFT).

Apple and Motorola Mobility will be forced to begrudgingly compete on the market.
[Image Source: Obama Pacman]
A diluted market is a dangerous market for Apple, as it learned in the 1980s.  It is in Apple’s best interest to keep the smartphone market a two-company race with Samsung Electronics Comp., Ltd. (KSC:005930), should its efforts to ban Samsung’s product line fail.  Having a host of smaller alternatives like Motorola and HTC could eventually hurt Apple in the long run, as Apple would be fighting a one-man sales battle against a crowd of rivals.

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