Opinion ID: 2822000
Heading Depth: 4
Heading Rank: 1

Heading: Motorola’s Consent to the Bench Trial

Text: Judge Robart began by determining, quite reasonably, that the true RAND royalty rate for Motorola’s SEPs was an important fact for the jury to consider in determining whether Motorola breached it good faith obligations under the RAND agreements. After soliciting input from the parties as to how the RAND rate determination should be made, he ordered a bench trial as to that issue. Microsoft contends that Motorola affirmatively consented to a bench-trial determination of the RAND royalty rate for each SEP portfolio, thereby waiving any argument that the court lacked the authority to decide the RAND rate itself. We agree. 11 Motorola did not raise before the district court a Seventh Amendment claim with respect to the RAND rate bench trial itself, nor has it made that argument on appeal. MICROSOFT CORP. V. MOTOROLA, INC. 25 Motorola expressed its consent to a bench trial on the RAND rate at a June 14, 2012 status conference. During that proceeding, Motorola’s counsel informed the court that the parties had agreed “that the court [will] decide all the material terms of the RAND license.” After Microsoft’s counsel confirmed the agreement, counsel for Motorola repeated that the “agreement is that the court w[ill] decide all the material terms of the RAND license.” The parties left open at that hearing whether the question of Motorola’s breach of its contractual obligation of good faith and fair dealing would be determined by a jury or at a bench trial. Motorola requested a jury trial on that issue shortly thereafter. Motorola now protests that counsel’s June 14, 2012 statements consenting to a RAND-rate bench trial were “taken out of context,” and “equivocal,” and did not amount to consent. Specifically, Motorola contends that its consent, if any, was limited to a bench-trial determination of the terms of an agreement the court was planning to craft between the parties. At the oral argument on this appeal, counsel explained Motorola’s position: We agreed that the court could set the terms of a [RAND] license. The court later abandoned the quest to set the terms of the license . . . [H]e changed the basis on which he was finding the RAND rate. He said, ‘I’m not going to set a license; I now think it’s necessary for the fact-finder to know the true RAND rate in order for us to decide breach.’ That is a change of litigation parameters. We are no longer setting a license, which is all we conceivably could have agreed to. 26 MICROSOFT CORP. V. MOTOROLA, INC. That contention is unpersuasive, for two reasons. First, Motorola was not misled as to the connection between the RAND determination and the breach-of-contract trial, and did not cabin its consent to a license-setting scenario. Judge Robart alerted the parties on several occasions, long before the June 14, 2012 status conference, that a determination of the RAND royalty rate would be used “as guidance” in adjudicating the breach of contract claim. For example, in an order on the parties’ cross motions to dismiss filed June 1, 2011, Judge Robart indicated that determination of the RAND rate was a necessary predicate to adjudicating the breach of contract claim. Months later, in a February 2012 telephone conference, he reiterated that he was being asked “to determine what the RAND terms and conditions . . . are so that [the factfinder] may then attempt to determine if Motorola’s offer to Microsoft was within that range.” And just days before the hearing in which Motorola explicitly consented to a bench trial on the RAND rate, Judge Robart, in denying Microsoft’s motion for summary judgment on the breach of contract issue, stated that summary judgement was inappropriate because before it could “[be] determine[d] whether Motorola breached its duty to make good faith offers by its October 21 and 29 Letters, the court must first determine the RAND terms of an agreement between Motorola and Microsoft for Motorola’s relevant portfolios of standard essential patents.” It was at that point that the court requested input from the parties as to the structure of the trial—to which request the parties responded they had agreed that the RAND rate adjudication would be a bench trial. So Motorola was amply aware before the June 14, 2012 hearing that Judge Robart MICROSOFT CORP. V. MOTOROLA, INC. 27 believed the RAND rate determination was an essential precursor to the breach-of-contract trial. Second, Motorola’s contention on appeal that it consented to adjudication of the RAND rate only for purposes of a court-created license is diametrically opposed to its position before the district court, expressed on several occasions. One month after its June 14, 2012 consent to the bench trial, Motorola filed a motion for partial summary judgment, essentially asking the court not to determine a RAND royalty rate after all. In that motion, Motorola told the court that it had become opposed to such a trial once it “fully appreciated that the Court intended to have a separate trial to determine the actual terms of a RAND contract, as opposed to identifying what is RAND for use in evaluating reasonableness in the context of Motorola’s breach claim.” In its reply in support of that motion, Motorola further maintained that until recently Motorola did not fully appreciate and focus on—let alone fully research the authority relevant to—the Court’s intent to determine the actual terms of a RAND contract in a separate trial, rather than (as the Court suggested on Feb 13, 2012 and in its June 6, 2012 Order) to consider RAND terms in the context of determining the breach of contract issues. (Emphasis added). Motorola’s position at that juncture—that it consented to a bench trial on the understanding that the RAND rate would be determined for purposes of the breach of contract adjudication, and that it was the license creation 28 MICROSOFT CORP. V. MOTOROLA, INC. it objected to—is precisely the opposite of its current contention.12 In short, Motorola was quite aware, when it agreed with Microsoft in June to a RAND determination bench trial, that the RAND determination was being made to set the stage for the breach of contract trial. Nor did Motorola ever withdraw its affirmative stipulation to a bench trial for that purpose. We therefore do not consider whether, absent consent, a jury should have made the RAND determination.13 12 Like its contention on appeal, Motorola’s July 18, 2012 argument to the district court is also rebutted by the record. The court made the parties aware that the RAND determination would be used both to enable “a jury to resolve the question of whether Motorola’s October 21 and 29 Letters breached its duty to make good faith offers,” and for purposes of creating a license, should that relief be appropriate. 13 Seemingly to avoid the waiver problem through a jurisdictional argument, Motorola recasts essentially the same challenge to the RANDrate bench trial by maintaining that the result was an “advisory opinion,” and so beyond the district court’s constitutional power under Article III of the Constitution. See Flast v. Cohen, 392 U.S. 83, 94–97 (1968); Gordon v. United States, 117 U.S. 697, 702 (1864). The result of the bench trial was, however, decidedly not advisory: That rate was vigorously disputed by the parties from the outset of this case and, as the district court’s observations quoted in the text illustrate, understood by both the court and the parties as an essential factual aspect of the breach-of-contract determination. Moreover, as we shall see, far from maintaining the irrelevance of the RAND-rate determination to the ultimate jury verdict, Motorola challenges that verdict as impermissibly influenced by Judge Robart’s RAND-rate determination, going so far as to maintain that its introduction “effectively directed a verdict for Microsoft.” MICROSOFT CORP. V. MOTOROLA, INC. 29