Apple Claims Potential Injunction Against iCloud Could Result in $2.7 Billion Loss

23rd November 2011

FOSS Patents reports that a pending court case in Germany could have significant ramifications for Apple, with a potential injunction shutting down the company’s iCloud service there over infringement of a Motorola Mobility patent being pegged as a $2.7 billion risk to Apple.

In brief, Motorola asserted last year that Apple’s MobileMe service infringes upon a Motorola patent related to data synchronization. Motorola amended the suit to include iCloud once that service was introduced later in the year. While an official ruling on an injunction isn’t due until February, Motorola has already won an initial default judgement involving the patent and FOSS Patentsreports that the presiding judge is not looking terribly favorably on Apple’s defense so far.

The court doesn’t appear to buy any of Apple’s defenses at this stage. It may still change mind until the ruling, which is scheduled for February 3, 2012, 9 AM local time, but if it had had to rule today, I have no doubt that Apple would have lost.

If Motorola wins its case and an injunction is granted, Apple could be forced to pull all of its products in Germany that contain the infringing iCloud integration. It is typical in German courts to require winning parties to post bonds in order to guarantee repayment of lost income should the defendant win an appeal of the ruling, and Apple has asked that Motorola be required to post a 2 billion euro ($2.7 billion) bond in this case.

The court was wondering whether that hefty amount truly reflects the economic damages Apple would suffer from enforcement, given that the iCloud is only one Apple offering and doesn’t correspond to the entire value of its products. But Apple’s lawyers insisted that an enforcement against its product sales in Germany could result in damages of that magnitude.

The judge raised the possibility of Apple developing a workaround for iCloud to avoid infringing Motorola’s patent, but Apple’s lawyers pressed their case that the risk to Apple’s business was indeed still severe.

Apple obviously has a vested interest in setting as high a bond as possible, forcing Motorola to put up a significant amount of money if it wishes to press forward with an injunction. The figure represents a substantial commitment on Motorola’s part and makes clear that Apple will move to recover that money should an injunction be granted and later overturned, thus increasing Motorola’s own risk in the proceedings. But while Apple may be artificially inflating its risk somewhat, it does still have to justify the figure to the court and is clearly working to do just that.