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German courts at epicenter of global patent battles among tech rivals
April, 09th 2012

Is Germany's system of litigating disputes over patents bad for business? Microsoft's decision to move its European logistics and distribution headquarters to the Netherlands from Germany has generated a debate over patent law here, where it is easy to block the sale of a rival's product even before an infringement claim is verified.

Microsoft cited the potential consequences of a lawsuit brought against it in Germany by Motorola Mobility as a factor in its decision to move its logistics center to the Netherlands from Duren, a small German town near the Dutch border.

Motorola Mobility has asked a court in Mannheim, Germany, to stop Microsoft from distributing its Xbox game consoles and Windows 7 operating system software because they employ a video streaming technology that Motorola claims to own. The court in Mannheim is scheduled to rule on Motorola's request on April 17.

Microsoft is taking no chances. Thomas Baumgartner, a Microsoft spokesman in Unterschleissheim, Germany, said the possibility that the court in Mannheim might grant Motorola's request and ban the European distribution of the Xbox and Windows 7 had prompted Microsoft to seek a friendlier base.

The company began transferring its operations this year to a location in the Netherlands, which it will not disclose.

"The move is taking place as we speak," Baumgartner said last week.

In the last two years, Apple, Samsung, Nokia, Microsoft and Motorola Mobility have either introduced or defended themselves against patent claims in Germany. In one case, Apple won a ruling at a court in Dusseldorf that banned the sale of the Samsung Galaxy Tab 10.1 tablet computer in Germany. Samsung quickly modified the device, releasing the Galaxy Tab 10.1N a month later. Apple sued to block sales of the new device, but a court in Munich denied its request.

In March, Apple won a Munich court ruling against Motorola Mobility because Motorola had used one of Apple's patented photo management technologies on its mobile phones. Motorola said it had modified the devices to remove the infringing technology.

Nokia is suing Apple in Dusseldorf and Mannheim, as well as in Britain and the Netherlands, accusing Apple of using 13 Nokia patents without authorization in its iPhone, iPad and iPod Touch.

The lawsuits, often claiming violations of patents that are considered essential parts of globally recognized mobile technology standards, prompted the European Commission to open investigations this year against Samsung and Motorola Mobility.

Joachim Henkel, a professor of management at the Technical University of Munich, said big international companies were often seeking to exploit the German system for strategic advantage.

Henkel said the prominent patent and intellectual property disputes in the mobile phone sector, which have also involved courts in Asia, Britain and the United States, were bogging down cutting-edge companies in court.

"All of these infringement cases in Germany, Europe, the United States and Asia are having a hampering effect on innovation globally," Henkel said. "Usually, what masquerades as a patent dispute is in actuality a dispute motivated by business strategy."

The process has turned the German patent courts in Mannheim, Dusseldorf and Munich into some of the most overworked in Europe.

Two-thirds of all patent claims in Europe are now filed in Germany, according to the Munich law firm Meissner Bolte, which does patent litigation. In a sense, Germany has become a destination for fast, effective one-stop patent challenges, much as Britain is for libel and the state of Delaware is for registration of U.S. companies.

While these may benefit German law firms financially, technology experts and smaller German technology firms say the system is being abused to generate nuisance claims.

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