Microsoft Sues Customs and Department of Homeland Security for Failing to Enforce ITC Exclusion Order

Microsoft Corp. v. Dep’t of Homeland Sec. By Katherine Walecka – Edited by Kathleen McGuinness Complaint, Microsoft Corp. v. Dep’t of Homeland Sec., No. 1:13-cv-01063-RWR (D.D.C. July 12, 2013) Complaint hosted by [caption id="attachment_3548" align="alignleft" width="150"] Photo By: Cushing Memorial Library and Archives, Texas A&M - CC BY 2.0[/caption] Microsoft filed a complaint against Customs and Border Protection (“CBP”) and the Department of Homeland Security (“DHS”), among others, alleging that CBP failed to implement a May 2012 International Trade Commission (“ITC”) exclusion order blocking the importation of Motorola cell phones and other mobile devices that were found to infringe Microsoft’s patent rights. Complaint, Microsoft Corp. v. Dep’t of Homeland Sec., No. 1:13-cv-01063-RWR at 2–3 (D.D.C. July 12, 2013). Reuters provides a summary of the case. Bloomberg discusses the DHS’s possible motivations in the case. Wall St. Cheat Sheet has information about the business implications of the CBP’s policies. The ITC issued the exclusion order after finding that Motorola had infringed Microsoft’s U.S. Patent No. 6,370,566 (“the ‘566 Patent”) directed toward smartphones with certain Google calendar functions such as synchronizing and scheduling. Id. (citing Certain Mobile Devices, Associated Software, and Components Thereof, Inv. No. 337-TA-744, 2012 ITC LEXIS 1042 (May 18, 2012) (Final)). Motorola asked the ITC to alter the exclusion order and to permit the importation of phones that synchronize phone calendars with a computer’s Google calendar, arguing that Microsoft had abandoned its claim of patent infringement. Id. at 3. The ITC rejected Motorola’s request as untimely, but, as of a June 24, 2013 ruling, the CBP allowed Motorola to import “redesigned” mobile phones that perform calendar synching but do not send out meeting requests. Id. at 16–17. The CBP’s June ruling reasoned that Microsoft had not sufficiently undermined Motorola’s claim of abandonment, holding that the ITC’s rejection of the claim as untimely “made no finding on this issue and instead took no position.” Id. at 3–4. Microsoft seeks injunctive relief to block the importation of the allegedly infringing Motorola phones and declaratory judgment that the CBP and the DHS acted arbitrarily and capriciously. Id. at 2, 21–22. In its complaint, Microsoft challenges the CBP’s legal authority to allow the importation of the allegedly infringing phones on several grounds. The most significant may be Microsoft’s challenge to the CBP’s process for determining whether new product models should continue to be excluded from importation. Id. at 3. When previous versions of a product have been found to infringe and are excluded from importation by the ITC, the CBP allows companies faced with exclusion orders to argue that the newer versions of their product no longer infringe the patent in closed, ex parte hearings. Id. Microsoft argues that these closed hearings have effectively “allowed Motorola to re-litigate—in secret—issues that Motorola lost before the [ITC]” and permits the CBP to ignore the ITC’s legitimate rulings. Id. Microsoft also challenged other elements of the CBP’s process, arguing that the CBP misplaced the burden of proof, id. at 4, failed to provide fair notice, id. at 4–5, and ignored relevant evidence in its determination of non-infringement, id. at 5. Microsoft also alleges that Motorola legally used Microsoft’s calendar synchronizing software, but when the license ended in 2007 negotiations failed and Motorola continued to use the technology unlawfully. Id. at 10. Microsoft has licensed the ’566 Patent to smartphone manufacturers including Apple and Samsung. Id. at 9–10. Microsoft’s challenge may be an uphill battle. Bloomberg suggests that the DHS may be more interested in fighting terrorism than patent infringement. Advanced technology might also make patent infringement harder for CBP officials to target, according to Mark Knapp for Wall St. Cheat Sheet. Yet Microsoft claims that Motorola’s infringement should be a priority due to the “balance of equities and public interest.” Id. at 5. The practical consequences of the suit for importers and smartphone-related businesses could be far-reaching. Microsoft joins a chorus of other companies, including Apple and Lexmark, who have found CBP’s enforcement inadequate or untimely, as Wall St. Cheat Sheet reports. Google interprets Microsoft’s suit as an inappropriate expansion of patent claims, Bloomberg reports. While Microsoft claims that all Motorola phones with Google’s Android software should be restricted, Google believes that the ban should only apply to Androids capable of scheduling meeting requests, Reuters reports. A successful challenge to the CBP’s ex parte procedures or a finding of infringement could substantially alter importers’ ability to bring these goods and others into the United States, and could give patent holders a stronger vehicle for ensuring the enforcement of the ITC’s exclusion orders.