FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`MICROSOFT CORPORATION, a
`Washington corporation,
`Plaintiff-Appellee,
`
`v.
`
`MOTOROLA, INC.; MOTOROLA
`MOBILITY, INC.; GENERAL
`INSTRUMENT CORPORATION,
`Defendants-Appellants.
`
`No. 14-35393
`
`D.C. Nos.
`2:10-cv-01823-JLR
`2:11-cv-00343-JLR
`
`OPINION
`
`Appeal from the United States District Court
`for the Western District of Washington
`James L. Robart, District Judge, Presiding
`
`Argued and Submitted
`April 8, 2015—San Francisco, California
`
`Filed July 30, 2015
`
`Before: Sidney R. Thomas, Chief Judge, and J. Clifford
`Wallace and Marsha S. Berzon, Circuit Judges.
`
`Opinion by Judge Berzon
`
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`MICROSOFT CORPORATION, a
`Washington corporation,
`Plaintiff-Appellee,
`
`v.
`
`MOTOROLA, INC.; MOTOROLA
`MOBILITY, INC.; GENERAL
`INSTRUMENT CORPORATION,
`Defendants-Appellants.
`
`No. 14-35393
`
`D.C. Nos.
`2:10-cv-01823-JLR
`2:11-cv-00343-JLR
`
`OPINION
`
`Appeal from the United States District Court
`for the Western District of Washington
`James L. Robart, District Judge, Presiding
`
`Argued and Submitted
`April 8, 2015—San Francisco, California
`
`Filed July 30, 2015
`
`Before: Sidney R. Thomas, Chief Judge, and J. Clifford
`Wallace and Marsha S. Berzon, Circuit Judges.
`
`Opinion by Judge Berzon
`
`
`
`2
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`SUMMARY*
`
`Patent Licensing
`
`The panel affirmed the district court’s judgment in favor
`of Microsoft Corporation in an action brought by Microsoft,
`a third-party beneficiary to Motorola, Inc.’s reasonable and
`non-discriminatory
`(“RAND”) commitments, alleging
`Motorola breached its obligation to offer RAND licenses to
`certain of its patents in good faith.
`
`At issue in the appeal were two patent portfolios, formerly
`owned by Motorola, both of which were subject to RAND
`agreements. The court previously upheld, in an interlocutory
`appeal, an anti-suit injunction preventing Motorola from
`enforcing in a German action any injunction it might obtain
`against Microsoft’s use of certain contested patents.
`Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir.
`2012). Following that prior decision, a jury determined that
`Motorola had breached its RAND good faith and fair dealing
`obligations in its dealings with Microsoft.
`
`The district court conducted a bench trial to determine a
`RAND rate and range for Motorola’s patents. The case then
`proceeded to a jury trial on the breach of contract claim, and
`the jury returned a verdict for Microsoft in the amount of
`$14.52 million. The district court denied Motorola’s motions
`for judgment as a matter of law.
`
` * This summary constitutes no part of the opinion of the court. It has
`been prepared by court staff for the convenience of the reader.
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`3
`
`The panel held that this court had jurisdiction. The panel
`held that this court’s exercise of jurisdiction over the case in
`the prior interlocutory appeal, and the Federal Circuit’s
`decision to transfer the instant appeal to this court because
`this court had jurisdiction, were both law of the case. The
`panel further held that the earlier jurisdictional determinations
`were not clearly erroneous.
`
`The panel rejected Motorola’s two merits challenges to
`the RAND bench trial, specifically, that the district court
`lacked the legal authority to decide the RAND rate issue in a
`bench trial, and that the RAND rate analysis was contrary to
`Federal Circuit precedent. First, the panel did not consider
`whether, absent consent, a jury should have made the RAND
`determination, because Motorola was aware that the RAND
`determination was being made to set the stage for the breach
`of contract jury trial, nor did Motorola ever withdraw its
`affirmative stipulation to a bench trial for that purpose.
`Second, the panel held that the district court’s RAND analysis
`did not violate Federal Circuit patent damages law because
`this was not a patent law action. The panel held, however,
`that the district court’s analysis properly adapted the Federal
`Circuit’s patent law methodology as guidance in this contract
`case concerning the questions of patent valuation. The panel
`concluded that the district court’s RAND determination was
`not based on a legal error or on a clearly erroneous view of
`the facts in light of the evidence.
`
`Concerning the jury trial and verdict, the panel held that
`the record provided a substantial basis on which the jury
`could have based a verdict favoring Microsoft.
`
`Concerning the motion for judgment as a matter of law,
`the panel rejected Motorola’s two challenges to the damages
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`4 s
`
`ought for attorneys’ fees and litigation costs incurred in
`defending the injunctive actions. First, Motorola raised the
`Noerr-Pennington doctrine, which shields individuals from,
`inter alia, liability for engaging in litigation. The panel noted
`that the doctrine does not immunize a party from actions that
`amount to a breach of contract. The panel held that enforcing
`a contractual commitment to refrain from litigation does not
`violate the First Amendment. The panel further noted that the
`jury concluded that seeking injunctive relief violated
`Motorola’s contractual RAND obligations. The panel
`concluded that the Noerr-Pennington doctrine did not
`immunize Motorola from liability for that breach of its
`promise. Second, Motorola alleged that Microsoft was not
`entitled to attorneys’ fees as damages under Washington law.
`The panel held that where a party’s injunctive actions to
`enforce a RAND-encumbered patent violated the duty of
`good faith and fair dealing, Washington courts would allow
`the damages awarded to include the attorneys’ fees and costs
`expended to defend against the injunction action.
`
`Finally, the panel rejected Motorola’s allegations that the
`district court abused its discretion in making two evidentiary
`rulings. First, concerning RAND rates and ranges submitted
`to the jury, the panel held that Motorola consented to
`admission of the facts underlying the RAND rates and ranges
`to the jury. The panel agreed with the district court that
`Motorola’s consent to the RAND bench trial encompassed
`introducing the court’s findings of fact to the jury in the
`breach of contract trial. Second, Motorola objected to the
`admission of evidence of a Federal Trade Commission
`investigation into Motorola’s enforcement policies, including
`its seeking of injunctions. The panel held that the district
`court did not abuse its discretion in admitting the evidence
`because the danger of prejudice in admitting limited
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`5
`
`testimony about the FTC investigation did not so manifestly
`outweigh the testimony’s probative value.
`
`COUNSEL
`
`Kathleen M. Sullivan (argued), Quinn Emanuel Urquhart &
`Sullivan, LLP, New York, New York; Brian C. Cannon,
`Quinn Emanuel Urquhart & Sullivan, LLP, Redwood Shores,
`California, for Defendants-Appellants.
`
`Carter G. Phillips (argued), Sidley Austin LLP, Washington,
`D.C.; David T. Pritikin, Sidley Austin LLP, Chicago, Illinois;
`Arthur W. Harrigan, Jr., Calfo Harrigan Leyh & Eykes LLP,
`Seattle, Washington; T. Andrew Culbert, Microsoft
`Corporation, Redmond, Washington, for Plaintiff-Appellee.
`
`Wayne P. Sobon, Arlington, Virginia, and and for Amicus
`Curiae American Intellectual Property Law Association.
`
`Richard S. Taffet, Bingham McCutchen LLP, New York,
`New York; Patrick Strawbridge, Bingham McCutchen LLP,
`Boston, Massachusetts; Stephanie Schuster, Bingham
`McCutchen LLP, Washington, D.C., for Amicus Curiae
`Qaulcomm Incorporated.
`
`Xavier M. Brandwajn, Alston and Bird LLP, East Palo Alto,
`California, for Amici Curiae Nokia Corporation and Nokia
`USA Inc.
`
`Charles Duan, Washington, D.C., as and for Amicus Curiae
`Public Knowledge.
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`ark S. Davies, Orrick, Herrington & Sutcliffe LLP,
`Washington, D.C.; Christopher J. Cariello, Orrick, Herrington
`& Sutcliffe LLP, New York, New York, for Amicus Curiae
`Apple Inc.
`
`6 M
`
`Lauren B. Fletcher, William F. Lee, Joseph J. Mueller,
`Timothy D. Syrett, Wilmer Cutler Pickering Hale and Dorr
`LLP, Boston, Massachusetts; James L. Quarles III, Brittany
`Blueitt Amadi, Wilmer Cutler Pickering Hale and Dorr LLP,
`Washington, D.C.; Matthew R. Hulse, Intel Corporation,
`Santa Clara, California, for Amici Curiae Intel Corporation,
`Aruba Networks Inc., Dell Inc., Hewlett-Packard Company,
`Newegg Inc., SAS Institute Inc., VIZIO, Inc., and Xilinx, Inc.
`
`Robert F. Krebs, Ronald F. Lopez, Karl Belgum, Nixon
`Peabody, LLP, San Francisco, California, for Amicus Curiae
`Sierra Wireless Inc.
`
`Christy G. Lea, Knobbe, Martens, Olson & Bear, LLP, Irvine,
`California; Christopher C. Kennedy, Knobbe, Martens, Olson
`& Bear, LLP, Washington, D.C.; Mauricio A. Uribe, Knobbe,
`Martens, Olson & Bear, LLP, Seattle, Washington; Alice C.
`Garber, John J. Murphy, T-Mobile USA, Inc., Bellevue,
`Washington, for Amicus Curiae T-Mobile USA, Inc.
`
`OPINION
`
`BERZON, Circuit Judge:
`
`We live in an age in which the interconnectivity of a wide
`range of modern technological products is vital. To achieve
`that interconnection, patent-holders often join together in
`compacts requiring licensing certain patents on reasonable
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`7
`
`and non-discriminatory (“RAND”) terms. Such contracts are
`subject to the common-law obligations of good faith and fair
`dealing.
`
`At issue in this appeal are two patent portfolios, formerly
`owned by Appellants Motorola, Inc., Motorola Mobility, Inc.,
`and General Instrument Corp., (“Motorola”), both of which
`are subject to RAND agreements.1 Appellee Microsoft, a
`third-party beneficiary to Motorola’s RAND commitments,
`sued Motorola for breach of its obligation to offer RAND
`licenses to its patents in good faith. Motorola, meanwhile,
`brought infringement actions in a variety of fora to enjoin
`Microsoft from using its patents without a license.
`
`We previously upheld, in an interlocutory appeal, an anti-
`suit injunction preventing Motorola from enforcing in a
`German action any injunction it might obtain against
`Microsoft’s use of certain contested patents. Microsoft Corp.
`v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) (“Microsoft
`I”). We did so after determining that there was, in the
`“sweeping promise” of Motorola’s RAND agreements, “at
`least arguably[] a guarantee that the patent-holder will not
`take steps to keep would-be users from using the patented
`material, such as seeking an injunction, but will instead
`proffer licenses consistent with the commitment made.” Id.
`at 884.
`
`After our decision, a jury determined that Motorola had
`indeed breached its RAND good faith and fair dealing
`obligations in its dealings with Microsoft. In this appeal, we
`
` 1 Patents owned by Motorola Mobility and General Instrument are now
`owned by Google Technology Holdings, LLC, a wholly owned subsidiary
`of Google Inc.
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`ddress (1) whether the district court overstepped its bounds
`by determining, at a bench trial preceding the jury trial on
`breach of contract, a reasonable and non-discriminatory rate,
`as well as a range of rates, for Motorola’s patents; (2) whether
`the court erred in denying Motorola’s motions for judgment
`as a matter of law on the breach of contract issue; (3) whether
`the court erred in awarding Microsoft attorneys’ fees as
`damages in connection with Motorola’s pursuit of injunctions
`against infringement; and (4) whether the district court
`abused its discretion in two contested evidentiary rulings.
`
`8 a
`
`I. BACKGROUND
`
`A. Standard-Setting Organizations and Standard-
`Essential Patents
`
`When we connect to WiFi in a coffee shop, plug a
`hairdryer into an outlet, or place a phone call, we owe thanks
`to standard-setting organizations (“SSOs”). See generally
`Mark A. Lemley, Intellectual Property Rights and
`Standard-Setting Organizations, 90 Calif. L. Rev. 1889
`(2002). SSOs set technical specifications that ensure that a
`variety of products from different manufacturers operate
`compatibly. Without standards, there would be no guarantee
`that a particular set of headphones, for example, would work
`with one’s personal music player. See id. at 1896.
`
`to both
`Standardization provides enormous value
`consumers and manufacturers. It increases competition by
`lowering barriers to entry and adds value to manufacturers’
`products by encouraging production by other manufacturers
`of devices compatible with them. See id. at 1896–97; Amicus
`Br. of American Intellectual Property Law Ass’n (“IPLA”) at
`6; Amicus Br. of Apple Inc. at 2. But because SSO standards
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`9
`
`often incorporate patented technology, all manufacturers who
`implement a standard must obtain a license to use those
`standard-essential patents (“SEPs”).
`
`The development of standards thereby creates an
`opportunity for companies to engage in anti-competitive
`behavior. Most notably, once a standard becomes widely
`adopted, SEP holders obtain substantial leverage over new
`product developers, who have little choice but to incorporate
`SEP technologies into their products. Using that standard-
`development leverage, the SEP holders are in a position to
`demand more for a license than the patented technology, had
`it not been adopted by the SSO, would be worth. The tactic
`of withholding a license unless and until a manufacturer
`agrees to pay an unduly high royalty rate for an SEP is
`referred to as “hold-up.” Ericsson, Inc. v. D-Link Sys., Inc.,
`773 F.3d 1201, 1209 (Fed. Cir. 2014). “Royalty stacking”
`refers to the risk that many holders of SEPs will engage in
`this behavior, resulting in excessive royalty payments such
`that (1) the cumulative royalties paid for patents incorporated
`into a standard exceed the value of the feature implementing
`the standard, and (2) the aggregate royalties obtained for the
`various features of a product exceed the value of the product
`itself. Id.; see also Mark A. Lemley & Carl Shapiro, Patent
`Holdup and Royalty Stacking, 85 Tex. L. Rev. 1991, 2010–13
`(2007); Amicus Br. of Public Knowledge at 11–20.
`
`To mitigate the risk that a SEP holder will extract more
`than the fair value of its patented technology, many SSOs
`require SEP holders to agree to license their patents on
`
`
`
`10
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`“reasonable and nondiscriminatory” or “RAND” terms.2
`Under these agreements, an SEP holder cannot refuse a
`license to a manufacturer who commits to paying the RAND
`rate.
`
`For example, International Telecommunications Union
`(“ITU”), one of the SSOs at issue in this case, has established
`a Common Patent Policy. That Policy provides that “a patent
`embodied fully or partly in a [standard] must be accessible to
`everybody without undue constraints.” ITU, Common Patent
`Policy for ITU-T/ITU-R/ISO/IEC, http://www.itu.int/en/ITU-T/
`ipr/Pages/policy.aspx (last visited June 15, 2015) [hereinafter
`ITU, Common Patent Policy]. Any holder of a patent under
`consideration for incorporation into an ITU standard is
`required to submit a declaration of its commitment to
`“negotiate licenses with other parties on a non-discriminatory
`basis on reasonable terms and conditions.” Id.; see also
`Microsoft I, 696 F.3d at 876. “If a ‘patent holder is not
`willing to comply’ with the requirement to negotiate licenses
`with all seekers, then the standard ‘shall not include
`provisions depending on the patent.’” Microsoft I, 696 F.3d
`at 876 (quoting ITU, Common Patent Policy).
`
`The two standards underlying this case are the H.264
`video-coding standard set by the ITU and the 802.11 wireless
`local area network standard set by the Institute of Electrical
`and Electronics Engineers (“IEEE”). The H.264 standard
`pertains to an efficient method of video compression. The
`802.11 standard regards the wireless transfer of information
`
` 2 The parallel terms of some SEP licensing agreements require fair,
`reasonable, and nondiscriminatory, or “FRAND” rates. FRAND and
`RAND have the same meaning in the world of SEP licensing and in this
`opinion.
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`11
`
`using radio frequencies, commonly referred to as “WiFi.”
`The H.264 standard is incorporated into Microsoft’s
`Windows operating system and into its Xbox video game
`console. The 802.11 WiFi network standard is incorporated
`into Xbox.
`
`B. History of the Present Dispute
`
`In October 2010, Microsoft sued Motorola in both the
`U.S. International Trade Commission (“ITC”)3 and the
`Western District of Washington for alleged infringement of
`certain smartphone patents. The parties thereupon engaged
`in a series of discussions concerning, among other matters,
`the possibility of a cross-licensing agreement granting
`Motorola licenses to Microsoft’s smartphone patents in
`exchange for licenses to any of Motorola’s patents
`Microsoft’s products may have been infringing.
`
`On October 21st and 29th, Motorola sent Microsoft two
`letters offering to license its 802.11 and H.264 SEP portfolios
`at 2.25% of the price of the end product—no matter the
`manufacturer—incorporating the patents. In other words,
`Microsoft would pay Motorola 2.25% of the selling price of
`an Xbox game console or of any computer running Microsoft
`Windows. The two offer letters, identical in all material
`
` 3 The ITC is “a quasi-judicial federal agency that adjudicates and
`enforces intellectual property rights in international trade through Section
`337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337.” Patricia
`Larios, The U.S. International Trade Commission’s Growing Role in the
`Global Economy, 8 J. Marshall Rev. Intell. Prop. L. 290, 294 (2009); see
`U.S. Int’l Trade Comm’n, About the USITC, http://www.usitc.gov/press_
`room/about_usitc.htm (last visited Apr. 21, 2015).
`
`
`
`12
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`terms, represented that the offer was in keeping with
`Motorola’s RAND commitments.4
`
`Soon after receiving Motorola’s letters, in November
`2010, Microsoft filed a diversity action in the Western
`District of Washington, alleging that Motorola had breached
`its RAND commitments to the IEEE and ITU.5 Microsoft
`
` 4 The letter referring to the H.264 SEPs is substantially the same as that
`referring to the 802.11 SEPs, and reads:
`
`This letter is to confirm Motorola’s offer to grant
`Microsoft a worldwide nonexclusive license under
`Motorola’s portfolio of patents and pending
`applications covering the subject matter of ITU-T
`Recommendation H.264 . . . .
`
`Motorola offers to license the patents on a non-
`discriminatory basis on reasonable terms and conditions
`(“RAND”), including a reasonable royalty of 2.25% per
`unit for each H.264 compliant product, subject to a
`grant back license under the H.264 patents of Microsoft
`. . . . As per Motorola’s standard terms, the royalty is
`calculated based on the price of the end product (e.g,
`each Xbox 360 product, each PC/laptop, each
`smartphone, etc.) and not on component software (e.g.,
`Xbox 360 system software, Windows 7 software,
`Windows Phone 7 software, etc.).
`
`. . . .
`
`Motorola will leave this offer open for 20 days.
`
` 5 Microsoft’s complaint also pleaded claims of promissory estoppel,
`waiver, and declaratory judgment. The waiver and declaratory judgment
`actions were dismissed in June 2011. The promissory estoppel claim, and
`Motorola’s counterclaim for declaratory judgment that it had not violated
`its RAND obligations, are still pending.
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`13
`
`alleged that Motorola’s offer letters constituted a refusal to
`license Motorola’s SEPs on RAND terms. The next day,
`Motorola filed suit against Microsoft in the Western District
`of Wisconsin seeking to enjoin Microsoft from using its
`H.264 patents. The cases were consolidated before Judge
`James Robart in the Western District of Washington.
`
`Motorola also filed patent-enforcement suits with the ITC,
`seeking an exclusion order against importing Microsoft’s
`Xbox products into the United States, and with a German
`court, seeking an injunction against sales of Microsoft’s
`H.264-compliant products.
` The German action was
`particularly threatening to Microsoft, as its European
`distribution center for all Windows and Xbox products was
`in Germany. To guard against the economic loss that would
`result if an injunction against use of Motorola’s two German
`H.264 patents were granted, Microsoft swiftly relocated its
`distribution center to the Netherlands. At the same time,
`Microsoft sought and obtained from the district court, in
`April 2012, an “anti-suit injunction” barring Motorola from
`enforcing any injunction it might obtain in a German court
`against Microsoft’s use of Motorola’s H.264 SEPs until the
`district court could “determine whether injunctive relief is an
`appropriate remedy for Motorola to seek.” Microsoft I,
`696 F.3d at 880. We affirmed the anti-suit injunction order
`in September 2012. Id. at 889. Meanwhile, the German court
`had ruled that Motorola was entitled to an injunction. Id. at
`879.6
`
` 6 The German injunction is not self-enforcing. To enforce it, Motorola
`must first post a bond securing Microsoft against damage if the ruling is
`overturned on appeal. Microsoft could then file a motion to stay the
`injunction. Microsoft I, 696 F.3d at 879.
`
`
`
`14
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`Proceedings in the district court continued apace.
`Microsoft amended its complaint to allege that Motorola’s
`filing of injunctive actions constituted a breach of contract,
`because the obligation to offer RAND licenses to all seekers
`prohibited Motorola from seeking injunctions for violations
`of patents subject to that obligation.7 The court granted a
`joint motion to stay all the patent-infringement claims in the
`consolidated cases pending the outcome on the RAND issues.
`
`In a series of orders, Judge Robart held that (1) “RAND
`commitments create enforceable contracts between Motorola
`and the respective SSO”; (2) “Microsoft—as a standard-
`user—can enforce
`these contracts as a
`third-party
`beneficiary”; (3) “Motorola’s commitments to the ITU and
`IEEE . . . requir[e] initial offers by Motorola to license its
`SEPs to be made in good faith,” but that “initial offers do not
`have to be on RAND terms so long as a RAND license
`eventually issues”; and (4) Motorola was not entitled to
`injunctive relief on its H.264 or 802.11 patents.8
`
`In November 2012, Judge Robart conducted a bench trial
`to determine a RAND rate and range for Motorola’s H.264
`
` 7 Microsoft’s amended complaint pointed to the infringement actions in
`Wisconsin district court and before the ITC as the source of the breach.
`Microsoft did not formally further amend the complaint to include the
`German infringement action, initiated several months later. The theory
`that the German injunctive suit breached Motorola’s contractual
`commitments was argued before the jury, without objection, however, and
`was a focus of the jury instructions.
`
` 8 Having so ruled, the district court dissolved the anti-suit injunction,
`ruling that the holding as to whether Motorola was entitled to an
`injunction on its H.264 patents was “dispositive of the propriety of
`injunctive relief in the German action.”
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`15
`
`and 802.11 patents. Such determination was necessary, the
`court reasoned, because “[w]ithout a clear understanding of
`what RAND means, it would be difficult or impossible to
`figure out if Motorola breached its obligation to license its
`patents on RAND terms.” After taking testimony from
`eighteen witnesses, the court issued a 207-page order setting
`forth its findings of fact and conclusions of law on RAND-
`rate-related issues. The court concluded that the RAND
`royalty for Motorola’s H.264 portfolio was .555 cents per
`end-product unit, with an upper bound of 16.389 cents per
`unit, and that the rate for Motorola’s 802.11 portfolio was
`3.71 cents per unit, with a range of .8 cents to 19.5 cents.9
`
`The case then proceeded to a jury trial on the breach of
`contract claim. Over Motorola’s objection, Microsoft was
`permitted to introduce the RAND rates determined at the
`bench trial through witness testimony. Microsoft also
`introduced, again over Motorola’s objection, testimony that
`the FTC had previously investigated Motorola and its then-
`parent company, Google Inc., for failing to license patents
`relating to smartphones, tablets, and video gaming systems on
`RAND terms. As damages for the asserted breach of
`contract, Microsoft sought its attorneys’ fees and costs in
`defending the injunctive actions Motorola had brought.
`Microsoft also sought as damages the cost of relocating its
`distribution facility from Germany to the Netherlands.
`
` In September 2013, the jury returned a verdict for
`Microsoft in the amount of $14.52 million: $11.49 million for
`relocating its distribution center and $3.03 million in
`
` 9 Based on these rates, Microsoft tendered $6.8 million to compensate
`for its past use of Motorola’s patents. Motorola did not accept the
`payment.
`
`
`
`16
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`attorneys’ fees and litigation costs. The verdict form asked
`both the general question whether Motorola “breached its
`contractual commitment[s]” to the IEEE and ITU and,
`specifically, for the purpose of damages, whether Motorola’s
`“conduct in seeking injunctive relief, apart from Motorola’s
`general course of conduct, violated Motorola’s dut[ies] of
`good faith and fair dealing with respect to Motorola’s
`contractual commitment[s].” The jury answered “yes” to all
`questions, unanimously.
`
`Motorola moved for judgment as a matter of law both at
`the close of evidence and at the close of Microsoft’s case-in-
`chief. See Fed R. Civ. P. 50(a). After the jury’s verdict, the
`court denied Motorola’s motions in a joint order, concluding
`that (1) the evidence was sufficient for the jury reasonably to
`conclude that Motorola breached its duty of good faith and
`fair dealing by making offers far above the RAND rates and
`by seeking injunctions against Microsoft, and (2) the damages
`award was proper. The court granted Microsoft’s motion for
`entry of final judgment on the breach of contract jury verdict.
`See Fed. R. Civ. P. 54(b).
`
`Motorola then appealed from the judgment on the breach
`of contract claim to the Federal Circuit. On Microsoft’s
`motion, the Federal Circuit transferred the appeal to this
`court. Microsoft Corp. v. Motorola, Inc., 564 F. App’x 586
`(Fed. Cir. 2014).
`
`II. DISCUSSION
`
`A. Jurisdiction
`
`In 2012, Motorola appealed to this court to review the
`district court’s grant of a preliminary anti-suit injunction. See
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`17
`
`Microsoft I, 696 F.3d 872. In that appeal, Motorola
`maintained that this court, not the Federal Circuit, had
`jurisdiction, “[b]ecause Microsoft’s complaint is pleaded in
`terms of contractual rather than patent rights.” Opening Br.
`of Defs.-Appellants, Microsoft I, 696 F.3d 872, No. 12-
`35352, 2012 WL 2132503, at *2. Upon entry of judgment in
`the district court on the breach of contract claim, however,
`Motorola switched gears and appealed to the Federal Circuit,
`which has jurisdiction over cases “arising under” federal
`patent law—that is, “those cases in which a well-pleaded
`complaint establishes either that federal patent law creates the
`cause of action or . . . that patent law is a necessary element
`of one of the well-pleaded claims.” Christianson v. Colt
`Indus. Operating Corp., 486 U.S. 800, 808–09 (1988) (citing
`28 U.S.C. § 1338(a)). The Federal Circuit then transferred
`the case here. See Microsoft, 564 F. App’x 586.
`
`Our exercise of jurisdiction over this very case on an
`interlocutory appeal, and the Federal Circuit’s decision to
`transfer the instant appeal to this circuit because we have
`jurisdiction, are both the law of the case. See Christianson,
`486 U.S. at 817. Accordingly, we may now decline
`jurisdiction only if “(1) the [earlier] decision[s] w[ere] clearly
`erroneous; (2) there has been an intervening change in the
`law; (3) the evidence on remand is substantially different;
`(4) other changed circumstances exist; or (5) a manifest
`injustice would otherwise result.” United States v. Renteria,
`557 F.3d 1003, 1006 (9th Cir. 2009). Motorola’s argument
`that the district court “constructively amended” the complaint
`by holding a bench trial on the RAND rate tacitly invokes the
`“changed circumstances” exception, although Motorola does
`not so specify. But because our jurisdictional determination
`on the interlocutory appeal was made knowing the RAND
`bench trial would occur and the Federal Circuit’s decision to
`
`
`
`18
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`transfer the case was made after the bench trial, we conclude
`that no changed circumstances are present. As the earlier
`jurisdictional determinations were not clearly erroneous, we
`have jurisdiction.
`
`1. The Interlocutory Appeal
`
`As we explained in the interlocutory appeal opinion in
`this case, “‘[n]ot all cases involving a patent-law claim fall
`within the Federal Circuit’s jurisdiction.’” Microsoft I,
`696 F.3d at 881 (quoting Holmes Grp., Inc. v. Vornado Air
`Circulation Sys., Inc., 535 U.S. 826, 834 (2002)). The
`Federal Circuit, we noted, would have jurisdiction over
`Motorola’s appeal of the anti-suit injunction “only if it would
`have jurisdiction over a final appeal in the case under
`28 U.S.C. § 1295.” Id. (citing 28 U.S.C. § 1292(c)(1)).
`Looking to Microsoft’s complaint, we explained that this
`action is not one “arising under any Act of Congress relating
`to patents,” 28 U.S.C. § 1338(a), but rather “sounds in
`contract and
`involves
`the district court’s diversity
`jurisdiction.” Microsoft I, 696 F.3d at 881. We therefore
`concluded that we had jurisdiction over the interlocutory
`appeal, thereby necessarily deciding also that we would have
`jurisdiction over a final appeal of the breach of contract
`claim. Id.
`
`2. The Federal Circuit’s Transfer
`
`Motorola nevertheless appealed from the final judgment
`in this case to the Federal Circuit. In support of Federal
`Circuit jurisdiction, Motorola maintained that the district
`court’s consolidation of Microsoft’s breach of contract case
`with Motorola’s patent infringement suit—the latter of which
`would fall within the Federal Circuit’s jurisdiction on
`
`
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`19
`
`appeal—conferred Federal Circuit appellate jurisdiction over
`both cases. See Microsoft, 564 F. App’x at 589.
`
`Applying law-of-the-case deference to our prior opinion,
`the Federal Circuit rejected that argument.10 It noted that the
`district court did consolidate the two cases under Federal
`Rule of Civil Procedure 42(a) in the interest of “judicial
`economy,” but denied a motion to dismiss Motorola’s patent-
`infringement claims and re-file them as compulsory
`counterclaims in the contract case. Id. at 588. In so ruling,
`the district court reasoned that the facts of the two cases were
`“not so
`intertwined and
`logically connected
`that
`considerations of judicial economy and fairness dictate that
`the issues be resolved in one lawsuit.” Id. Given that ruling,
`the Federal Circuit held, it was “plausible to conclude, as the
`Ninth Circuit seems to have done here, that the act of
`‘consolidation did not merge the suits into a single cause, or
`change the rights of the parties.’” Id. at 589 (quoting Johnson
`v. Manhattan Ry., 289 U.S. 479, 496–97 (1933)) (internal
`alterations omitted). Because the Federal Circuit found our
`decision not “clearly erroneous,” it transferred the case. Id.
`at 589.
`
` 10 Motorola had argued that law-of-the-case principles should not apply
`because “‘neither party nor the Ninth Circuit realized the implications of
`the consolidation of Motorola’s patent infringement claim with
`Microsoft’s contract claim’ at the earlier stages of this litigation.”
`Microsoft, 564 F. App’x at 589. As the Federal Circuit recognized,
`however, our earlier opinion makes clear that we were quite aware of the
`consolidation of the cases when we heard the interlocutory appeal and
`nonetheless determined that we had jurisdiction. See id. (citing Microsoft
`I, 696 F.3d at 878).
`
`
`
`20
`
`MICROSOFT CORP. V. MOTOROLA, INC.
`
`3. Law of the Case, Applied
`
`We, too, apply law-of-the-case deference to our previous
`jurisdictional determination, as well as to that of the Federal
`Circuit. In doing so, we are guided by the Supreme Court’s
`holding in Christianson, which in very similar circumstances
`highlighted the importance of deferring to prior jurisdictional
`determinations.
`
`Christianson came before the Supreme Court after both
`the Federal Circuit and the Seventh Circuit had declined to
`exercise jurisdiction over an antitrust suit with embedded
`questions of patent validity. Christianson, 486 U.S. at
`803–07. Review was initially sought in the Federal Circuit.
`See id. at 806. That Circuit concluded that it lacked
`jurisdiction and transferred the case to the Seventh Circuit.
`See id. The Seventh Circuit then, sua sponte, addressed its
`own jurisdiction, concluded that the Federal Circuit was
`“clearly wrong” in transferring the case, and transferred it
`back. Id. at 806 (quoting 798 F.2d 1051, 1056–57 (7th Cir.
`1986)). The Federal Circuit, in turn, stated that it was the
`Seventh Circuit that was “clearly wrong,” and had “exhibited
`‘a monumental misunderstanding of the [Federal Circuit’s]
`patent jurisdiction.’” Id. at 807 (quoting 822 F.2d 1544,
`1547, 1551 n.7 (Fed. Cir. 1987)). Nevertheless, in the
`“interest of justice,” the Federal Circuit addressed the merits
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