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

Heading: The RAND Findings

Text: At the end of the jury trial on breach of contract, Judge Robart instructed the jury on the RAND rates and ranges he had found for Motorola’s 802.11 and H.264 SEP portfolios. The judge also allowed other findings from his findings of fact and conclusions of law to be admitted through witness testimony, as “undisputed facts.” For example, one of Microsoft’s experts testified that it was undisputed that Motorola’s H.264 SEPs were “only of minor importance to the overall functionality of Microsoft’s Windows product . . . [and] Xbox product,” and “only constitute a sliver of the overall technology incorporated in the H.264 standard”—conclusions drawn directly from the court’s RAND order. Similar facts were introduced regarding Motorola’s 802.11 patents. Motorola contends that admitting any of the findings from the court’s RAND order was an abuse of discretion, because the evidence was not relevant, Fed R. Evid. 401, and was more prejudicial than probative, Fed. R. Evid. 403. With respect to findings other than the RAND rates and ranges, 56 MICROSOFT CORP. V. MOTOROLA, INC. Motorola contends not only that the evidence was irrelevant and its admission prejudicial but also that admitting it violated its Seventh Amendment right to a jury trial. We concluded in Part II.C.1, supra, that Motorola waived its right to a jury trial on the RAND determination. As we explained, it did so knowing that the bench trial would “identify[] what is RAND for use in evaluating reasonableness in the context of Motorola’s breach claim.” Motorola’s consent to the bench trial waived any objection to admission of the RAND rates and ranges at the jury trial. Admission of the district court’s factual findings underlying its RAND order presents a closer question. Undoubtedly, those findings were relevant to the ultimate breach of contract determination. See Fed. R. Evid. 801. The fact that Motorola’s patents were of minor import to the H.264 standard, for example, was evidence from which the jury could infer that demanding a 2.25% royalty rate was not a good-faith effort to realize the value of the technology, but rather an attempt to capitalize on the value of the standard itself—that is, to obtain the hold-up value. As the district court reasoned, the findings of fact were the “building blocks” of the RAND rate and range; if the jury could reevaluate those “building blocks,” “Motorola would in effect be allowed a second bite at the apple on the RAND rate and range.” On the other hand, the very fact that the court’s findings of fact and conclusions of law overlap with the issues in the breach of contract trial could give rise to a Seventh Amendment problem if Motorola did not waive its right to a jury trial on those findings. See Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1184 (9th Cir. 2010) (citing MICROSOFT CORP. V. MOTOROLA, INC. 57 Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 170 (9th Cir. 1989)). Once the court made those findings, they became law of the case. See id. But a court must generally avoid ordering proceedings in a manner that creates “the risk that findings made in the bench trial w[ill] become the law of the case and prevent a jury from determining the common issues.” Id. The district court disposed of Motorola’s Seventh Amendment claim on the ground that Motorola had waived any objections to the introduction of the underlying findings in consenting to the bench trial. As the district court noted, Motorola did not “qualify” its participation at the bench trial and “submitted 100 pages of proposed findings of fact and conclusions of law on these issues, urging the court to decide the very facts it now seeks to exclude.” But, once the court decided to hold a bench trial, Motorola had no choice but to present evidence and try to persuade the court that the facts weighed in its favor. Cf. Solis v. Cnty. of L.A., 514 F.3d 946, 955–56 (9th Cir. 2008). Further, Motorola objected to introduction of the court’s underlying findings before the jury trial, and again objected during the trial to their presentation as “undisputed facts.” On the other hand, “knowing participation in a bench trial without objection may be sufficient to constitute a jury waiver.” Palmer v. Valdez, 560 F.3d 965, 969 (9th Cir. 2009) (citation omitted). Motorola did not object to a judicial determination of the facts underlying the RAND rate and range until after the bench trial was concluded. Motorola was necessarily aware the court was going to make such findings, as the court was required to make factual findings supporting its decision, on the record. See Fed. R. Civ. P. 52(a)(1). Without those findings, the court would have had no 58 MICROSOFT CORP. V. MOTOROLA, INC. foundation on which to determine the RAND rates and ranges. Had the jury been permitted to come to its own conclusions on the factual issues underlying the RAND rate, the court’s findings on the RAND rate and range would largely be rendered a nullity—a bare set of numbers, divorced from their context and meaning. Further, Motorola’s claim that it expected the jury to make its own determinations of the underlying facts is unconvincing. The parties agreed to a bench trial in order to spare the jury from becoming entangled in complicated technical minutiae. By objecting to introduction of the underlying facts at the jury trial only after the judge announced those findings, Motorola was essentially seeking “to have two bites at the procedural apple.” Fuller v. City of Oakland, 47 F.3d 1522, 1531 (9th Cir. 1995). A party may not stand “silently by as the court proceed[s] to try his claim from the bench,” only later to demand a jury trial “after the court ha[s] ruled against him.” See id. (citing White v. McGinnis, 903 F.2d 699, 700, 703 (9th Cir. 1990) (en banc)). With these considerations in mind, we hold that Motorola consented to admission of the facts underlying the RAND rates and ranges to the jury. Motorola knew the district court would make those foundational findings when it consented to the bench trial on the RAND rate. See Fed R. Civ. P. 52(a)(1). Motorola was also aware when it consented to the bench trial that the RAND rates and ranges themselves would be introduced at the breach of contract trial. Those RAND rates and ranges would have had little meaning, and indeed could have been undermined by conflicting findings by the jury, if the facts supporting them were not also admitted. We therefore agree with the district court that Motorola’s consent MICROSOFT CORP. V. MOTOROLA, INC. 59 to the RAND bench trial encompassed introducing the court’s findings of fact to the jury in the breach of contract trial.