Case 1:13-cv-01063-RWR Document 20 Filed 08/02/13 Page 1 of 3

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MICROSOFT CORPORATION Plaintiff, v. UNITED STATES, U.S. DEPARTMENT OF HOMELAND SECURITY, et al. Defendants, and MOTOROLA MOBILITY LLC 600 North U.S. Highway 45 Libertyville, IL 60048, Proposed Intervenor-Defendant. Case No. 1:13-cv-01063-RWR

MOTOROLA MOBILITY LLCS MOTION TO DISMISS PURSUANT TO RULES 12(b)(6) AND 12(b)(1) Proposed Intervenor-Defendant Motorola Mobility LLC (Motorola) hereby respectfully moves to dismiss Microsoft Corporations (Microsoft) complaint, which amounts to an unprecedented attempt to circumvent the administrative process wherein Customs and Border Protection (Customs) enforces exclusion orders issued by the International Trade Commission (ITC) under Section 337 of the Tariff Act of 1930, as amended (Section 337). Although it has well established, readily available administrative process at the ITC to obtain the very same relief (including interim relief) it seeks here, Microsoft is asking this Court to take action that is extraordinary, and, indeed, unprecedented: to intervene in the administrative process, to interpret the ITCs exclusion order as desired by Microsoft but without benefit of illumination from the

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ITC itself, to interfere with Customs exercise of enforcement discretion as informed by its consultations with the ITC, and to compel Customs to exclude Motorolas mobile phones from the United States and to recall those phones that have already been imported. This Court should reject the instant action at the threshold and dismiss in particular, because Microsofts recourse should be to the ITC and then, if aggrieved, to the Federal Circuit, and also because the instant dispute will remain unripe for adjudication unless and until Customs actually refuses to enforce an on-point exclusion order of the ITC. For these reasons and those elaborated upon in the accompanying memorandum of points and authorities, Microsofts complaint should be dismissed for failure to state a claim for relief or, in the alternative, for lack of subject-matter jurisdiction.

Dated: August 2, 2013 Respectfully submitted, By: /s Paul F. Brinkman Paul F. Brinkman (D.C. Bar No. 441,681) paulbrinkman@quinnemanuel.com Derek L. Shaffer (D.C. Bar No. 478,775) derekshaffer@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 1299 Pennsylvania Ave., NW Washington, DC 20004 Telephone: (202) 538-8000 Facsimile: (202) 538-8100 Charles K. Verhoeven charlesverhoeven@quinnemanuel.com Kevin Smith kevinsmith@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 50 California Street, 22nd Floor 2

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San Francisco, California 94111 Telephone: (415) 875-6600 Facsimile: (415) 875-6700 Edward J. DeFranco eddefranco@quinnemanuel.com Matthew A. Traupman matthewtraupman@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Avenue, 22nd Floor New York, New York 10010 Telephone: (212) 849-7000 Facsimile: (212) 849-7100 Counsel for Proposed Intervenor-Defendant Motorola Mobility LLC

Case 1:13-cv-01063-RWR Document 20-1 Filed 08/02/13 Page 1 of 2

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MICROSOFT CORPORATION Plaintiff, v. UNITED STATES, U.S. DEPARTMENT OF HOMELAND SECURITY, et al. Defendants., and MOTOROLA MOBILITY LLC Proposed Intervenor-Defendant. Case No. 1:13-cv-01063-RWR

[PROPOSED] ORDER Upon consideration of the Motorola Mobility LLCs Motion to Dismiss Pursuant to Rules 12(b)(6) and 12(b)(1), the supporting Memorandum of Points and Authorities, and the oppositions thereto, it is, by the Court, this __ day of ____, 2013, ORDERED: That the motion be, and is hereby, GRANTED.

Hon. Richard W. Roberts CHIEF DISTRICT JUDGE

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Copies to: Joseph R. Guerra SIDLEY AUSTIN LLP 1501 K Street, N.W. Washington, D.C. 20005 Telephone: 202-736-8000 Facsimile: 202-736-8711 Richard A. Cederoth SIDLEY AUSTIN LLP 1 S. Dearborn Street Chicago, Illinois 60603 Telephone: 312-853-7000 Facsimile: 312-853-7036 Counsel for Plaintiff Microsoft Corporation Stephen Carl Tosini U.S. DEPARTMENT OF JUSTICE CIVIL DIVISION 1100 L Street, NW Room 1266 Washington, DC 20530 Telephone: (202) 616-5196 Fax: (202) 514-7965 Sean McNamara Senior Counsel for Management National Courts Civil Division U.S. DEPARTMENT OF JUSTICE PO Box 480 Ben Franklin Station Washington, DC 20044 Telephone: 202-305-7573 Counsel for United States Defendants

Case 1:13-cv-01063-RWR Document 20-2 Filed 08/02/13 Page 1 of 28

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MICROSOFT CORPORATION Plaintiff, v. UNITED STATES, U.S. DEPARTMENT OF HOMELAND SECURITY, et al. Defendants, and MOTOROLA MOBILITY LLC 600 North U.S. Highway 45 Libertyville, IL 60048, Proposed Intervenor-Defendant. Case No. 1:13-cv-01063-RWR

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTOROLA MOBILITY LLCS MOTION TO DISMISS PURSUANT TO RULES 12(b)(6) AND 12(b)(1)

August 2, 2013

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TABLE OF CONTENTS pages I. II. III. INTRODUCTION ...............................................................................................................1 FACTUAL BACKGROUND..............................................................................................2 ARGUMENT.......................................................................................................................5 A. B. C. IV. Legal Standard .........................................................................................................5 Microsoft Cannot State a Claim for Relief Under the Administrative Procedure Act...........................................................................................................6 Microsofts Complaint Is In Any Event Unripe ....................................................11

CONCLUSION..................................................................................................................12

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TABLE OF AUTHORITIES Page Cases Abbott Labs. v. Gardner, 387 U.S. 136 (1967).................................................................................................................11 Am. Petroleum Inst. v. E.P.A., 683 F.3d 382 (D.C. Cir. 2012) .................................................................................................11 Am. Road & Transp. Builders Ass'n v. E.P.A., 865 F. Supp. 2d 72 (D.D.C. 2012) .............................................................................................8 Beamon v. Brown, 125 F.3d 995 (6th Cir. 1997) .....................................................................................................9 Block v. SEC, 50 F.3d 1078 (D.C. Cir. 1995) .................................................................................................10 Bowen v. Massachusetts, 487 U.S. 879 (1988)...................................................................................................................8 City of Houston, Tex. v. Dep't of Hous. & Urban Dev., 24 F.3d 1421 (D.C. Cir. 1994) .................................................................................................11 Cobell v. Norton, 240 F.3d 1081 (D.C. Cir. 2001) .................................................................................................5 Drake v. FAA, 291 F.3d 59 (D.C. Cir. 2002) ...................................................................................................10 Dresser v. Meba Med. & Benefits Plan, 628 F.3d 705 (5th Cir. 2010) .....................................................................................................9 Fomaro v. James, 416 F.3d 63 (D.C. Cir. 2005) .....................................................................................................9 Friends of the Earth v. U.S. E.P.A., No. 12-363, 2013 WL 1226822, -- . Supp. 2d - (D.D.C. Mar. 27, 2013) ..............................8, 9 Garcia v. Vilsack, 563 F.3d 519 (D.C. Cir. 2009) ...................................................................................................8 Heckler v. Chaney 70 U.S. at 126...........................................................................................................................10 Himmelman v. MCI Communications Corp., 104 F. Supp. 2d 1 (D.D.C. 2000) .............................................................................................10 Hinton v. Corr. Corp. of Am., 624 F. Supp. 2d 45 (D.D.C. 2009) .............................................................................................6

ii

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K-V Pharm. Co. v. U.S. Food & Drug Admin., 889 F. Supp. 2d 119 (D.D.C. 2012) .........................................................................................10 Khardr v. United States, 529 F.3d 1112 (D.C. Cir. 2008) .................................................................................................6 Kisser v. Cisneros, 14 F.3d 615 (D.C. Cir. 1994) ...................................................................................................10 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994)...................................................................................................................6 In re Long-Distance Tel. Serv. Fed. Excise Tax Refund Litig., 501 F. Supp. 2d 34 (D.D.C. 2007) .............................................................................................5 Marcelus v. Corrections Corp. of America/Correctional Treatment Facility, 540 F. Supp. 2d 231 (D.D.C. 2008) .......................................................................................5, 7 Marshall v. Honeywell Tech. Solutions, Inc., 536 F. Supp. 2d 59 (D.D.C. 2008) .............................................................................................6 Mississippi Valley Gas Co. v. F.E.R.C., 68 F.3d 503 (D.C. Cir. 1995) ...................................................................................................12 Nevada v. Dep't of Energy, 457 F.3d 78 (D.C. Cir. 2006) ...................................................................................................11 Roberts v. Napolitano, 792 F. Supp. 2d 67 (D.D.C. 2011) ...........................................................................................10 In re Russell, 155 F.3d 1012 (8th Cir. 1998) ...................................................................................................9 Sec'y of Labor v. Twentymile Coal Co., 456 F.3d 151 (D.C. Cir. 2006) .................................................................................................10 Settles v. U.S. Parole Comm'n, 429 F.3d 1098 (D.C. Cir. 2005) .................................................................................................6 Shoshone-Bannock Tribes v. Reno, 56 F.3d 1476 (D.C. Cir. 1995) .................................................................................................10 Sierra Club v. Jackson, 648 F.3d 848 (D.C. Cir. 2011) ...................................................................................................5 Total Telecommunications Services, Inc. v. AT&T, 919 F. Supp. 472 (D.D.C. 1996) ..............................................................................................10 Vanover v. Hantman, 77 F. Supp. 2d 91 (D.D.C. 1999) ...............................................................................................6 Ward v. D,C, Dept. of Youth Rehabilitation Servs., 768 F. Supp. 2d 117 (D.D.C. 2011) ................................................................................... 5, 7, i

iii

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Statutes 5 U.S.C. 704 .............................................................................................................................6, 8 19 C.F.R. 210.75 ...........................................................................................................................7 19 C.F.R. 210.76 ...........................................................................................................................7 19 C.F.R. 210.77 ...........................................................................................................................8 19 C.F.R. Part 177...........................................................................................................................4 28 U.S.C. 1254..............................................................................................................................9 28 U.S.C. 1295(a)(6).....................................................................................................................9 Fed. R. Civ. P. 12(b)(1)....................................................................................................................6 Fed. R. Civ. P. 12(b)(6) ..........................................................................................................1, 5, 7

iv

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Proposed Intervenor-Defendant Motorola Mobility LLC (Motorola) hereby respectfully moves to dismiss Microsoft Corporations (Microsoft) complaint, which amounts to an unprecedented attempt to circumvent the administrative process wherein Customs and Border Protection (Customs) enforces exclusion orders issued by the International Trade Commission (ITC) under Section 337 of the Tariff Act of 1930, as amended (Section 337). I. INTRODUCTION Microsoft would have this Court determine that certain Motorola products necessarily fall within the scope of an exclusion order issued by the ITC and direct Customs to bar them at the border. In a written ruling, however, Customs has determined after consultation with the ITC that the ITC has yet to consider Microsofts latest claims against the products at issue, much less order them excluded. Customs has therefore refrained from exercising its enforcement authority until such time as it may receive on-point direction from the ITC. Instead of following the well established, readily available administrative process at the ITC to obtain the very same relief (including interim relief) it seeks here, however, Microsoft is asking this Court to take action that is extraordinary, and, indeed, unprecedented: to intervene in the administrative process, to interpret the ITCs exclusion order as desired by Microsoft but without benefit of illumination from the ITC itself, to disregard Customs exercise of enforcement discretion as informed by its consultations with the ITC, and to compel Customs to exclude Motorolas mobile phones from the United States and to recall those phones that have already been imported. This Court should reject the instant action at the threshold and dismiss. Microsofts complaint simply does not belong before this Court. While invoking the Administrative Procedure Act (APA), Microsoft defies black-letter law that sets the outer limit for judicial review of claims under the APA and insists that aggrieved parties seek available remedies before turning to a federal court. Despite the clear ability of the ITC to grant the relief 1

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Microsoft seeks after which Microsofts recourse would properly take the form of a direct appeal to the Federal Circuit Microsoft has not turned to the ITC in the first instance for consideration of the issue it poses to this Court. In a related vein, because the instant dispute will remain unripe unless and until the ITC has affirmatively agreed with Microsoft and ordered exclusion of Motorolas products at issue, and Customs has then declined to enforce such exclusion as directed by the ITC, there is no occasion to adjudicate these merits. For each of these reasons, Motorola respectfully submits that Microsofts complaint should be dismissed for failure to state a claim for relief or, in the alternative, for lack of subject matter jurisdiction. II. FACTUAL BACKGROUND Microsofts suit urges this Court to command the United States Department of Homeland Security, the Bureau of Customs and Border Protection, the Secretary of the Department of Homeland Security, and the Acting Commissioner of the Bureau of Customs and Border Protection to adopt Microsofts preferred interpretation of an exclusion order issued by the ITC and to upset the status quo by enforcing that order against Motorola products. As matters presently stand, Customs has determined, in consultation with the ITC, that Motorolas redesigned products are not subject to the ITCs exclusion order at issue. (Dkt. 1. 1.) The ITCs exclusion order arose out of a Section 337 complaint that Microsoft filed in the ITC against Motorola in October 2010. In its complaint, Microsoft alleged that certain smartphones and tablet computers that Motorola was importing infringed nine Microsoft patents. (Dkt. 1. 4.) After Microsoft dropped its allegations with respect to two of the asserted patents, presiding Administrative Law Judge Theodore R. Essex held a ten day evidentiary hearing. Following that hearing, Judge Essex issued a 220-page initial determination concluding that

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certain Motorola products infringed one of Microsofts seven asserted patents and recommending that the ITC issue an exclusion order barring importation of infringing Motorola products. After reviewing Judge Essexs initial determination, the full Commission issued its own 36-page opinion affirming the ALJs finding that certain Motorola products infringed a single Microsoft patent. Based upon its infringement finding, the ITC issued a limited exclusion order prohibiting the importation of Motorola products that infringe Microsofts patent. The relevant patent, U.S. Patent No. 6,370,566 (the 566 patent), relates to a mobile device, typically a smartphone, that in includes a calendar application on the mobile device that can generate both meeting objects (calendar entries) and electronic mail scheduling request objects (meeting invites). The 566 patent requires a synchronization component that allows calendar events stored on the mobile device to be synchronized with calendar events stored on a server or desktop computer. From at least the filing date of Microsofts complaint through the present, Motorolas smartphones have been capable of synchronizing their calendar applications with either of two distinct types of remote calendar applications: Microsoft Outlook and Google Calendar. (See Dkt. 7-2 at 7.) When synchronizing with a Microsoft Outlook account (typically used in a corporate or business setting), Motorolas phones communicate with a Microsoft Exchange server using Microsoft Exchange ActiveSync protocols. When synchronizing with a Google Calendar account, Motorolas phones communicate with Googles servers using Googles proprietary synchronization protocol that operates in a manner that is fundamentally different than both the '566 patent claims and the Exchange ActiveSync protocol. (See Dkt. 7-2 at 7.) Although Microsoft initially accused Motorolas products of infringement based upon their use of both the Exchange ActiveSync protocols and the Google Calendar synchronization

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protocols, Microsoft advanced an infringement theory that focused solely on use of the ActiveSync protocols at the ITC. Following issuance of the ITCs exclusion order on May 18, 2012, Motorola promptly re-designed its mobile phones so that they can no longer generate an email meeting request when using the ActiveSync protocol in order to avoid infringing Microsofts patent. (Dkt. 1 at 5-10 & 67.) On May 25, 2012, Motorola presented its redesigned phones to Customs in a ruling request pursuant to 19 C.F.R. Part 177.1 In a ruling dated April 25, 2013, Customs found that Motorola had established that its re-designed products did not infringe the 566 patent and therefore were not within the scope of the ITCs exclusion order. (Dkt.1 at 66-68). In response, Microsoft sought revocation of Customs ruling on two grounds, including the one here at issue: even though Motorolas ruling only addressed the ActiveSync re-design, Microsoft now claimed (a year after the exclusion order went into effect) that the use of Googles Calendar synchronization protocol was specifically accused of infringement and formed part of the ITCs infringement finding, such that the devices at issue in the ruling letter must be refused entry.2 See Dkt. 7-2 at 2. Customs did not agree with Microsoft that the use of the Google Calendar synchronization protocol formed part of the ITCs infringement finding. Indeed, Customs determined that it will not refuse entry on the basis of features that were present on the accused devices at the time of the ITC investigation but were not specifically accused and found to satisfy the limitations in the asserted patent claims identified in the exclusion order, id. at 9; that there Motorola made no changes to the way its mobile phones use the Google Calendar synchronization protocol, and Microsoft apparently raised no issues with Customs about Motorolas use of that protocol until over a year later. Because Microsoft did not submit a copy of its ruling request with its complaint or motion for preliminary injunction, Motorola herein necessarily relies upon Customs characterization of Microsofts ruling request. 4
2 1

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is no dispute that these features were present on [Motorolas] devices before the ITC during the investigation, id. at 11; and, after reviewing the record of the ITC investigation and consulting with the ITC, that the record is insufficient to support a finding that the legacy Motorola devices at the ITC were specifically accused and proven to infringe based on their ability to use Googles servers and Googles synchronization protocol. . . . Id. at 10. Accordingly, Customs declined to take enforcement action against Motorolas products on that basis absent additional guidance from the ITC. Id. at 11. Far from foreclosing Microsofts requested administrative relief, Customs invited Microsoft to obtain guidance from the ITC as to whether the scope of the exclusion order does or does not encompass Motorolas products use of Googles synchronization protocol (rather than the ActiveSync protocol that Motorola was found to infringe). Id. Microsoft did not accept Customs invitation to approach the ITC, but waited more than two more weeks (from June 24 through July 12) before filing its instant suit with this Court, requesting a preliminary injunction that would force Customs to exclude Motorola products without properly pursuing further administrative proceedings. III. ARGUMENT A. Legal Standard

A motion to dismiss pursuant to Rule 12(b)(6) challenges the adequacy of a complaint on its face. Where the complaint establishes that the plaintiff is not entitled to relief under the Administrative Procedure Act, dismissal of such claims is appropriate. In re Long-Distance Tel. Serv. Fed. Excise Tax Refund Litig., 501 F. Supp. 2d 34, 39 n.3 (D.D.C. 2007) (citing Cobell v. Norton, 240 F.3d 1081, 1095 (D.C. Cir. 2001)); Sierra Club v. Jackson, 648 F.3d 848, 853-54 (D.C. Cir. 2011). In ruling on a motion to dismiss for failure to state a claim for relief, the Court may look beyond the face of the complaint in considering any documents referenced or 5

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incorporated therein. Marcelus v. Corrections Corp. of America/Correctional Treatment Facility, 540 F. Supp. 2d 231, 235 n.5 (D.D.C. 2008) (holding that court may consider on motion to dismiss an EEOC complaint referenced in the complaint and thereby incorporated therein), and any documents upon which the plaintiffs complaint necessarily relies, Ward v. D,C, Dept. of Youth Rehabilitation Servs., 768 F. Supp. 2d 117, 119 (D.D.C. 2011) (internal quotation marks omitted; quoting Hinton v. Corr. Corp. of Am., 624 F. Supp. 2d 45, 46 (D.D.C. 2009)); Marshall v. Honeywell Tech. Solutions, Inc., 536 F. Supp. 2d 59, 65-66 (D.D.C. 2008) (quoting Vanover v. Hantman, 77 F. Supp. 2d 91, 98 (D.D.C. 1999)). Federal Rule of Civil Procedure 12(b)(1) requires dismissal of any complaint over which the Court lacks subject-matter jurisdiction. FED. R. CIV. P. 12(b)(1). Federal courts are courts of limited jurisdiction and the law presumes that a cause lies outside this limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). It is Microsofts burden, as the party claiming subject-matter jurisdiction, to demonstrate that such jurisdiction exists. Khardr v. United States, 529 F.3d 1112, 1115 (D.C. Cir. 2008). To determine whether it has subject-matter jurisdiction, the Court may also consider evidence outside the pleadings. Settles v. U.S. Parole Commn, 429 F.3d 1098, 1107 (D.C. Cir. 2005). B. Microsoft Cannot State a Claim for Relief Under the Administrative Procedure Act

Microsofts attempt to hijack an administrative process that is still underway under the auspices of the APA should be dismissed at the threshold. The APA allows for review only of final agency action and only where the plaintiff has no other adequate remedy in court. 5 U.S.C. 704. That standard is not met because Microsofts own initial papers taking issue with Customs decision to refrain from enforcement pending guidance from the ITC make plain that Microsoft has available from the ITC the very relief it is seeking here. Moreover, if

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and when Microsoft were to obtain an adverse determination by the ITC, it would then have recourse directly to the Federal Circuit. In no event, however, does Microsofts complaint belong here at this time and in this posture. Again, Customs noted that the ITC has yet to consider, much less resolve, the issue Microsoft asks this Court to decide: whether Motorolas use of Googles synchronization protocol infringes Microsofts patent. (Dkt. 1 at 25.) And the ITC has provided Microsoft an adequate and appropriate remedy: Microsoft can petition the ITC for enforcement or modification of the exclusion order and then seek review in the Federal Circuit in the event its request is denied. Customs ruling that Microsoft attacks demonstrates the deficiencies in Microsofts complaint. As noted by Customs, it is the ITC that should be weighing in about the exclusion order it issued. (See Dkt. 7-2 at 10 (stating that further guidance from the ITC was required).) Customs found, after consulting the ITC, that there has been no determination by the ITC as to whether the Google Calendar synchronization functionality infringes. (Dkt. 7-2 at 10.)3 Microsoft has an established administrative mechanism for seeking from the ITC the interpretation it urges through a proceeding to enforce the exclusion order. Specifically, 19 C.F.R. 210.75 provides for the ITC to issue such orders as it deems appropriate to implement and insure compliance with the terms of an exclusion order and [m]odify a . . . exclusion order in any manner necessary to prevent the unfair practices that were originally the basis for issuing such order. Microsoft could also petition for expansion of the exclusion order pursuant to 19

Customs ruling is attached to Microsofts motion for a preliminary injunction, but not its complaint. (See Dkt. 7-2.) Because the ruling is discussed and attacked throughout the complaint, however, it is effectively incorporated by reference. (Dkt. 1 at 6-12 & 71-78.) The Court may therefore consider Customs ruling when deciding a motion to dismiss under Rule 12(b)(6). See Ward, 768 F. Supp. 2d at 119; Marcelus, 540 F. Supp. 2d at 235 n.5. 7

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C.F.R. 210.76 so that it encompasses Motorolas redesigned devices.4 Indeed, the ITC is the tribunal best positioned to interpret its own opinion and applying its own procedural rules. Customs finding that the issue had not been determined by the ITC, combined with Customs suggestion that Microsoft seek guidance from the ITC, after which any adverse decision would be directly appealable to the Federal Circuit, hardly presents an instance in which Microsoft has no other adequate remedy in court. 5 U.S.C. 704. Notably, the ITC can even provide the very sort of interim relief that Microsoft is requesting from this Court in the form of a preliminary injunction. Specifically, 19 C.F.R. 210.77, titled Temporary emergency action, allows the ITC to immediately and without hearing or notice modify an exclusion order or issue an appropriate exclusion order to prevent a violation of an exclusion order. Thus, if Microsoft is correct that the existing exclusion order clearly covers Motorolas use of the Google Calendar synchronization protocol, the ITC can grant all the relief that Microsoft seeks (and that Customs has indicated it would enforce) on an expedited basis. Section 704 of the APA makes it clear that Congress did not intend the general grant of review in the APA to duplicate existing procedures for review of agency action. Bowen v. Massachusetts, 487 U.S. 879, 903 (1988). In particular, Congress did not intend that general grant of jurisdiction [in the APA] to duplicate the previously established special statutory procedures relating to specific agencies. Id. An alternative judicial remedy that forecloses resort Microsoft has recently explained why the decision whether a redesigned product falls within the scope of an exclusion order should be decided by the ITC. In a July 20, 2013 submission in response to a Request for Public Comments by the Office of U.S. Intellectual Property Enforcement Coordinator, Microsoft stated, The ITC is best positioned to decide an importers ruling request on whether a redesigned product falls within an exclusion orders scope. (Traupman Decl., Ex. 1 at 3.) According to Microsoft, [t]he ITC is the ultimate arbiter and most experienced decision maker. (Id.) On these points, Motorola agrees. All the more reason, therefore, why this Court should dismiss this suit and leave these matters to the ITC. 8
4

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to the APA need not provide relief identical to relief under the APA, so long as it offers relief of the same genre. Garcia v. Vilsack, 563 F.3d 519, 522 (D.C. Cir. 2009). If the statutory scheme for review of the agency action channels review to the courts of appeals, it eliminates the federal question jurisdiction that the district courts would otherwise enjoy under the APA. Friends of the Earth v. U.S. E.P.A., No. 12-363, 2013 WL 1226822, -- F. Supp. 2d -- (D.D.C. Mar. 27, 2013) (quoting Am. Road & Transp. Builders Assn v. E.P.A., 865 F. Supp. 2d 72, 81 (D.D.C. 2012)). Microsoft has an adequate remedy in court. After it obtains a ruling from the ITC on whether devices that use the Google Calendar synchronization protocol infringe the patent and are included in the exclusion order, Microsoft can appeal that decision to the United States Court of Appeals for the Federal Circuit. See 28 U.S.C. 1295(a)(6) (conferring upon the Federal Circuit jurisdiction over appeals from ITC proceedings relating to unfair practices in import trade). Following a decision by the Federal Circuit, Microsoft could also petition for a writ of certiorari in the Supreme Court. See 28 U.S.C. 1254. In addition to this Courts decisions in Friends of the Earth and American Road & Transportation Builders, numerous courts have held that appellate review of agency decisions in an Article III court of appeals is quintessentially an adequate remedy in court.5 Because Microsoft can seek appellate review of ITC decisions, an original action has no place in district court and this Court should dismiss for lack of jurisdiction. Indeed, permitting Microsoft to proceed on this complaint would amount to providing other aggrieved parties a roadmap for circumventing the ITC and the statutory pathway up to the Federal Circuit that Congress has prescribed. This is the very sort of specter the D.C. Circuit stands vigilant See, e.g., Dresser v. Meba Med. & Benefits Plan, 628 F.3d 705, 710-11 (5th Cir. 2010) (review in the court of appeals of decision of National Transportation Safety Board precluded challenge in district court under APA); In re Russell, 155 F.3d 1012 (8th Cir. 1998) (review of Department of Veterans Affairs decision in Board of Veterans Affairs and subsequent review of Board of Veterans Affairs decision in Federal Circuit precluded jurisdiction in district court under APA); Beamon v. Brown, 125 F.3d 995 (6th Cir. 1997) (same). 9
5

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against in safeguarding comparable administrative processes and statutory schemes for orderly judicial review. See Fomaro v. James, 416 F.3d 63, 68 (D.C. Cir. 2005) (Allowing district court actions challenging how OPM calculates civil service benefits for particular classes of beneficiaries would plainly undermine the whole point of channeling review of benefits determinations to the MSPB and from there to the Federal Circuit.) To the extent that Microsoft would claim that it has no other recourse specifically for challenging the decision by Customs not to enforce the exclusion order as requested by Microsoft for the time being as final in and of itself, such recourse should be altogether foreclosed, including here. The agencys decision to refrain from enforcing a particular order, after consulting the tribunal that issued that order and confirming the need for clarification from the issuing tribunal, would constitute an irreproachable exercise of enforcement discretion by Customs. Thus, Heckler v. Chaney [470 U.S. at 126] is controlling here, and . . . the challenged agency action is not subject to judicial review because it is committed to agency discretion. K-V Pharm. Co. v. U.S. Food & Drug Admin., 889 F. Supp. 2d 119, 132 (D.D.C. 2012) (dismissing APA challenge against FDA for failure to enforce); see Roberts v. Napolitano, 792 F. Supp. 2d 67 (D.D.C. 2011), (Customs selective enforcement of the TSA Global Entry program was not reviewable under Chaney); see also Secy of Labor v. Twentymile Coal Co., 456 F.3d 151, 157 (D.C. Cir. 2006); Drake v. FAA, 291 F.3d 59, 70-71 (D.C. Cir. 2002); Shoshone-Bannock Tribes v. Reno, 56 F.3d 1476, 1481-82 (D.C. Cir. 1995); Block v. SEC, 50 F.3d 1078, 1081-82 (D.C. Cir. 1995); Kisser v. Cisneros, 14 F.3d 615, 620-21 (D.C. Cir. 1994). 6

The same concern sounds in terms of the doctrine of primary jurisdiction so as to foreclose Microsofts complaint and requested relief. Simply put, Microsoft is seeking resolution of issues which, under a regulatory scheme, have been placed in the hands of an administrative body, particularly Customs and the ITC. Total Telecommunications Services, Inc. v. AT&T, 919 F. Supp. 472, 478 (D.D.C. 1996). Applying the traditional[] four factors, 10

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C.

Microsofts Complaint Is In Any Event Unripe

Even assuming arguendo that Microsofts complaint could ever come before this Court, it still would not be ripe for adjudication at this time. In insisting upon prudential ripeness, this Court asks whether fitness of the issue for judicial decision and the hardship to the parties of withholding court consideration make an issue fit for present adjudication, thereby balancing a petitioners interest in prompt consideration of allegedly unlawful agency action against the agencys interest in crystallizing its policy before that policy is subject to review and the courts interest in avoiding unnecessary adjudication and in deciding issues in a concrete setting. City of Houston, Tex. v. Dep't of Hous. & Urban Dev., 24 F.3d 1421, 1430 (D.C. Cir. 1994); see also Am. Petroleum Inst. v. E.P.A., 683 F.3d 382, 386-87 (D.C. Cir. 2012) (letting the administrative process run its course before binding parties to a judicial decision prevents courts from entangling themselves in abstract disagreements over administrative policies, and ... protect[s] the agencies from judicial interference in an ongoing decision-making process.) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967)). Per the D.C. Circuits instruction, this Court should ask specifically 1) whether delayed review would cause hardship to the plaintiffs; 2) whether judicial intervention would inappropriately interfere with further administrative action; and 3) whether the courts would benefit from further factual development of the issues presented. Nevada v. Dep't of Energy, 457 F.3d 78, 84 (D.C. Cir. 2006). The answers, in this case, are easy, and point uniformly towards dismissal for lack of ripeness, if for no other reason. As to (1) hardship, Microsoft cites the determination how a particular ITC order should be enforced on the ground relative to certain products: (1) is not within the conventional expertise of judges; (2) instead lies particularly within the agencys discretion [and] requires the exercise of agency expertise; (3) poses a substantial danger of inconsistent rulings relative to what the ITC might say; and (4) implicates a prior application to the agency. Himmelman v. MCI Communications Corp., 104 F. Supp. 2d 1, 3-4 (D.D.C. 2000). 11

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no specific facts, much less proof, indicating any particular hardship. As to (2) further administrative action, Customs has made clear that it is looking to the ITC even as Microsoft rushes headlong to circumvent the ITC. And, as to (3) benefiting from further factual development, this Court would surely benefit from a record that includes, e.g., the ITCs own views of the ITCs exclusion order that Microsoft wants this Court to interpret. In sum, there is still more to be done in connection with the matters now before the Court, rendering the case not fit for review at this time. Mississippi Valley Gas Co. v. F.E.R.C., 68 F.3d 503, 508-09 (D.C. Cir. 1995). IV. CONCLUSION For the foregoing reasons, Microsofts complaint should be dismissed for failure to state a claim for relief or, in the alternative, for lack of subject-matter jurisdiction. Dated: August 2, 2013 Respectfully submitted, By: /s Paul F. Brinkman Paul F. Brinkman (D.C. Bar No. 441,681) paulbrinkman@quinnemanuel.com Derek L. Shaffer (D.C. Bar No. 478,775) derekshaffer@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 1299 Pennsylvania Ave., NW Washington, DC 20004 Telephone: (202) 538-8000 Facsimile: (202) 538-8100 Charles K. Verhoeven charlesverhoeven@quinnemanuel.com Kevin Smith kevinsmith@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 50 California Street, 22nd Floor 12

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San Francisco, California 94111 Telephone: (415) 875-6600 Facsimile: (415) 875-6700 Edward J. DeFranco eddefranco@quinnemanuel.com Matthew A. Traupman matthewtraupman@quinnemanuel.com QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Avenue, 22nd Floor New York, New York 10010 Telephone: (212) 849-7000 Facsimile: (212) 849-7100 Counsel for Proposed Intervenor-Defendant Motorola Mobility LLC

13

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EXHIBIT 1

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Comments of Microsoft Corporation on the Interagency Review of the Exclusion Order Enforcement Process
Microsoft Corporation (Microsoft) appreciates the opportunity to submit these comments in response to the Office of U.S. Intellectual Property Enforcement Coordinators (IPEC) Request for Public Comments: Interagency Review of Exclusion Order Enforcement Process, 78 F.R. 119 (June 20, 2013). Our experience with the exclusion order enforcement process demonstrates that current procedures are wholly inadequate and ineffective. Microsoft welcomes an open dialogue on exclusion order enforcement. In addition to our answers to the questions below, we have also attached as an Appendix a short document that summarizes the three key issues we see with the current process for enforcing exclusion orders namely, U.S. Customs and Border Patrols (CPB) failure to comply with its statutory obligations, its failure to provide a fair and transparent process, and its bias against enforcement of ITC exclusion orders. We ask that IPEC also consider the points raised in that document, and encourage IPEC to review and consider the GAO report and the article by former International Trade Commission (ITC) Chairwoman Deanna Tanner Okun that are cited. 1. Please describe your, positive or negative, experience with the exclusion order enforcement processes. In Microsofts experience, enforcing exclusion orders at CBP is highly problematic. CBPs enforcement process lacks transparency, notice and continuity with the proceedings before the ITC, making the process prone to error. CBPs enforcement process lacks transparency at all stages. When an importer initiates a request to CBP to allow importation of a new design, the importer makes that request ex parte. CBP does not disclose the existence of the request to the patent holder. CBP does not disclose the importers alleged basis that any new product is not subject to a pending exclusion order. The ex parte nature of communications continue throughout the ruling process. Microsofts experience is the patentee does not learn of any request until after CBP issues its ruling on that very request. During its review process, CBP seeks no input from the patentee on a pending request. CBP thus inevitably receives a less objective interpretation of the record before the ITC. An interpretation that could otherwise be balanced, were the patentee to receive notice and become engaged in an open process. Compounding the lack of transparency is a structural impediment: two different agencies enforce intellectual property rights, but lack continuity in the decision making process conducted separately by each. CBP does not participate in the ITC proceedings, and those proceedings form the substance that defines the scope of the exclusion order that CBP administers. CBP is necessarily less familiar with the

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substance of ITC decisions; the arguments of the parties leading to those decisions; or testimony at trial, all of which can bear on the scope of any exclusion order. CBP is also less familiar with the complex technology at issue in the ITCs investigations; this is particularly important where the importer seeks to import an alleged re-designed product that the importer did not put before the ITC. Necessary background knowledge of the record before the ITC develops throughout the course of the investigation, but CBP does not participate in those proceedings. A process predicated on one-sided, ex parte discussions and complex records developed before a different agency necessarily is prone to result in unnecessary, erroneous rulings. Relevant portions of the ITC record may be overlooked or taken out of context. Claim scope and counter-balancing arguments cannot fully form for a particular issue to allow proper resolution. As detailed below, an inter partes process with notice to resolve pending ruling requests could substantially improve enforcement. Finally, ITC involvement would advance the quality of rulings and the efficacy of enforcement of exclusion orders drafted by the ITC. 2. Are the procedures, criteria, and regulations utilized by CBP when enforcing exclusion orders clear, accessible, and understood? As detailed above, CBPs process from commencement to decision is opaque, and conducted in an ex parte manner. Further, CBP only notifies the patentee and the public of its decision after the decision is issued, and may not even provide a post-decision notice in a timely manner. The patentee thus has no notice that any request is pending or the scope of any such request, and therefore has no meaningful opportunity to participate in any procedures established by CBP. For this reason, the procedures, criteria and regulations that CBP employs are not clear, accessible or easily understood. a. Please provide recommendations for enhancements to procedures, criteria, and regulations used during enforcement of exclusion orders? Microsoft recommends that an expedited, inter partes process be implemented. The ITC is best positioned to administer such a process. To achieve transparency, an importers request for a ruling should be disclosed immediately to all parties in the ITC proceeding. A protective order, such as the order already issued in the ITC proceeding, would protect any confidentiality concerns. Further, the process should allow for meaningful input from both the importer and patentee. To that end, the importer should provide sufficient detail about any proposed redesign, license defense, or other basis as to why a product is claimed to be exempt from the exclusion order. Such disclosure would be safeguarded by protective order. With the pertinent information exchanged, the parties could then submit two rounds of briefing. Both parties submitting their initial briefs as to exclusion order coverage, followed by a second set of briefs responding to initial briefs. With the briefing in hand, the parties could

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then participate in a hearing to present their positions and respond to further questions if the ITC deems it beneficial. Additionally, ITC participation in the process would provide for greater predictability and continuity. With familiarity of the ITC record and the technology at issue in the investigation, ITC participation would prevent re-litigation of issues previously before the ITC. An expedited process also would be important. An importer is entitled to import legitimate, noninfringing re-designs. To promote this legitimate business activity, which the patent laws are intended to encourage, expedited procedures should be implemented. Microsoft recommends that the evaluation process be concluded in two months or, for cases deemed more complicated, three months. The ITC is best positioned to decide an importers ruling request, if consideration were expedited and procedure provided. To do so, expedited procedures for exclusion order enforcement must be implemented to allow the ITC to rule on an importers request for an import ruling. Ultimately, an effective expedited process before the ITC would be preferable because the ITC has superior experience with the relevant technology, and superior knowledge of its prior proceedings and decisions. The ITC is the ultimate arbiter and most experienced decision maker. 3. Are the procedures and criteria used by CBP to evaluate the scope of an exclusion order effective and clearly understood? Microsoft incorporates its response to Questions 1 and 2. a. If not, please provide a description of the problem experienced? Microsoft incorporates its response to Question 1 here. b. What improvements could be made to the procedures and criteria used by CBP when evaluating the scope of an exclusion order to assist with the determining whether an import is covered by the claims of the infringing patent? Much of Microsofts response to Question 2 responds to Question 3.b. As detailed above, inter partes proceedings based on full notice, and ITC involvement would improve the enforcement process. Assuming CBP were to conduct all enforcement processes, Microsoft recommends that the ITC provide a recommendation to CBP based on the parties briefing suggested in accordance with Microsofts response to Question 2. Again, the ITC is most familiar with its orders, the technology and the proceedings at the ITC. c. Under CBPs current ruling request process, 19 CFR part 177, an importer may seek a prospective ruling on whether a redesigned or new product falls within the scope of an exclusion order. Determinations of this kind are often initiated at the request of the importer (typically the product manufacturer) and are conducted through ex parte proceeding. Would development 3

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of an inter partes proceeding involving relevant parties to the ITC investigation enhance the efficiency, transparency and efficacy of the exclusion order enforcement process with respect to determining the scope of the exclusion order? Microsoft incorporates its response to Question 3.b. 4. Are the processes used by CBP timely and effective in notifying interested parties, for example, ITC litigants, importers and the general public, of determinations made regarding the scope of an exclusion order and, in turn, applicability to the imported product? Microsoft incorporates its response to Question 2. 5. What further procedural changes or collaborative steps could be undertaken between the ITC and CBP to improve the efficacy of exclusion order enforcement efforts? Microsoft incorporates its response to Questions 2 and 3. 6. Do exclusion orders currently provide sufficient level of detail and direction necessary to assist CBP with the challenges of enforcement? Exclusion orders, in combination with the record before ITC, do provide sufficient detail. As a practical matter, drafting additional language in an exclusion order to address future issues that may arise in a ruling request is infeasible. Those issues may not be developed or anticipated until a ruling request is made. Nevertheless, the full ITC record should provide the detail and direction needed to enforce the order. Ultimately, the ITCs orders and the intellectual property at issue provide the context necessary to ensure proper enforcement. ITC involvement, at some level, however, would aid the process as the ITC is best positioned to determine the scope of exclusion. 7. Please identify any additional areas of consideration regarding improvements that could be undertaken by CBP or the ITC to further improve upon the exclusion order enforcement processes? Balanced review of CBP rulings is an additional area of consideration and concern. Currently, the importer participates in any review of a CBP ruling by the United States Court of International (CIT), while other interested parties may not resort to the CIT. More specifically, 28 U.S.C. 2631 denies standing to all but the importer. Norcal/Crosetti v. United States, 15 CIT 60 (1991) (denying standing to the domestic industry, because the members of that industry were not importers), revd on other grounds, 963 F.2d 356 (Fed. Cir. 1992). As a result, where CBP prohibits import, the patentee may not be permitted to participate as a party in the CIT appeal. Similarly, where CBP permits import, the patentee lacks standing to bring suit before the CIT, and thus has limited recourse. To balance the review process, the patent holder and any other ITC litigant, should be granted standing in the CIT. To be sure, this expansion of jurisdiction would likely require an amendment 4

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to Section 2631. Nevertheless, as would a transparent process before CBP, providing all litigants the ability to participate in or bring suit before the CIT would improve the enforcement process. Respectfully submitted,

Jason Albert Assistant General Counsel, IP Policy & Strategy Microsoft Corporation

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Appendix: The Need for Transparent, Effective, and Efficient Customs Enforcement of Exclusion Orders
Issue: The process at CBP for enforcing ITC exclusion orders is broken and needs urgent attention. These problems are similar to enforcement of other trade remedy statutes and raise serious policy concerns about the effectiveness of Section 337 as a trade remedy that protects American companies and jobs. Without meaningful changes to CBP enforcement procedures, American companies and workers will lack adequate protections against unfair competition from misappropriation of their intellectual property. CBPs Approach to Enforcement Microsofts experience with Section 337 and exclusion orders has convinced us that the system is not working and needs immediate attention. In Microsofts particular case, in May 18, 2012, the ITC issued an exclusion order blocking importation of Motorola smartphones and tablets found to infringe a Microsoft patent. That order became effective in July 18, 2012 after expiration of the Presidential review period. Notwithstanding this order, CBP has continued to permit Motorola to import infringing devices, leaving Microsoft no choice but to file suit. Ours is not the only case. A Government Accountability Office (GAO) report from 2007 details the manifold challenges companies face in getting CBP to enforce exclusion orders.1 The report noted that CBPs exclusion activities have declined, in part due to procedural weaknesses, and went on to state that companies spend millions of dollars in legal fees to win [an ITC] ruling . . . but that the effectiveness of the ruling is weakened by poor enforcement at CBP. Hard numbers support these conclusions: GAO found that [t]he number of orders with targeting instructions dropped from 25 in fiscal year 2003 to 10 in fiscal year 2006 far fewer than the number of orders in force at that time. Plainly, this is a systemic problem, and it has only gotten worse with time. Unless the CBP enforcement process becomes more transparent, effective and efficient, infringers will learn that they have little to fear from misappropriating the intellectual property of U.S. companies. CBPs Approach Raises Serious Policy Concerns There are three policy issues raised by CBPs conduct in our case and similar cases: CBPs failure to comply with its statutory obligations. CBP statutory obligation is to enforce exclusion orders. It is not to re-litigate issues already decided by the ITC the body entrusted by Congress with the responsibility for determining infringement and that have been reviewed by the President. For example, in our case, the ITC had expressly rejected the idea of a transition period in its ruling, yet CBP provided one.

Government Accountability Office, Intellectual Property: Federal Enforcement Has Generally Increased, but Assessing Performance Could Strengthen Law Enforcement Efforts (GAO-08-157) (March 2008).

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CBPs failure to provide a fair and transparent process. CBP has proceeded in both our case and other cases on an entirely ex parte basis. As Deanna Tanner Okun, former Chairwoman of the ITC, has noted, the intellectual property rights owner . . . is barred from participating in informal Customs enforcement determinations.2 As a result, CBP issues decisions finding that proposed design-arounds address infringement subject to the exclusion order without giving the party that has obtained the exclusion order any notice or opportunity to address the proposed designaround. The party with the best knowledge and information about the technology and the ITCs decision is the party that brought the infringement case in the first place. CBPs bias against enforcement of ITC exclusion orders. Both the prior policy concerns appear to reflect a larger bias by CBP against enforcement. Whatever the reason, it reflects a policy judgment that that exceeds CBPs authority to make. Congress established Section 337 to protect American companies and jobs against unfair competition from infringing products imported from abroad. In creating the statute, Congress gave the ITC and the President the authority to consider the public interest in deciding whether an exclusion order should issue. Once the ITC issues an exclusion order and Presidential review is closed, CBP has just one obligation: to enforce the exclusion order.

Free trade works only if the protections build into our agreements and laws for American industry against unfair competition are effective. CBPs inaction upsets this important balance that has long been realized as essential to Americas trade interests. The White Houses proposal is an important first step, but increased focus and oversight on this issue is needed to ensure that Section 337 is an effective trade remedy against unfair competition based on misappropriation of American intellectual property.

Deanna Tanner Okun, ITC Can Take Steps to Enforce Its Own Exclusion Orders, National Law Journal (June 10, 2013), available at http://bit.ly/10PxuCH.