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Microsoft Wins Patent Case Against Motorola
Microsoft Wins Patent Case Against Motorola

By Seth Fitzgerald
September 7, 2013 8:42AM

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Motorola had agreed to offer the licensing at a lower rate, but then asked for 2.25 percent of the sale price of each Xbox and copy of Windows Microsoft sold. Microsoft refused to pay, and as a result Motorola sought an injunction in Germany against the company. To avoid distribution problems in Europe Microsoft moved a warehouse from Germany to the Netherlands.
 


A federal jury has ruled in Microsoft's favor in a patent case against Motorola, which had been brought on by Motorola's decision to go against an agreement to license essential patents at a reasonable rate. The ruling has resulted in Microsoft receiving $14 million, however, that is only half of what the company was asking for in court.

The jury that made this decision was involved in the second of two rounds in U.S. District Court in Seattle between Microsoft and Motorola over the patents. In the first round a judge decided on reasonable royalty rates for Microsoft to pay Motorola, amounting to an estimated $1.8 million annually. Before the trial, Motorola, owned by Google, had sought rates that Microsoft estimated would have cost it $4 billion a year.

"This is a landmark win for all who want products that are affordable and work well together," said David Howard, Microsoft deputy general counsel, in a statement after the jury's decision. "The jury's verdict is the latest in a growing list of decisions by regulators and courts telling Google to stop abusing patents."

The Patents

Microsoft had argued the patents in question were "standard-essential," meaning that the licensed technology was commonplace and necessary and not "unique" to a device from one specific company. Although the patents are valid, companies are required to offer licensing at lower rates.

Motorola had agreed to offer the licensing at a lower rate, but then asked for 2.25 percent of the sale price of each Xbox and copy of Windows Microsoft sold. Microsoft refused to pay, and as a result Motorola sought an injunction in Germany against the company. To avoid distribution problems in Europe Microsoft moved a warehouse from Germany to the Netherlands, which it said cost it $23 million to accomplish.

Relocating the warehouse constituted $11 million of the Jury-awarded settlement, with the remaining $3 million attributed to Microsoft's legal fees related to fighting a ban on its products.

Abuse of Patents

This is not the only standard-essential patent case to make headlines recently. Samsung lost a back-and-forth battle with the U.S. International Trade Commission last month after the panel ruled that Samsung had infringed on Apple patents. However, a ban on Samsung products as a result of the ruling will not go into effect until after a 60-day presidential review period expires.

Apple and Samsung have been involved in a number of patent battles in venues worldwide over the last several years, with one side or the other occasionally gaining advantage.

The real issue in most of these cases, whether they involve Microsoft, Motorola, Samsung, Apple or another company, is standard-essential patents. There are few that argue with the idea that patents are great at protecting unique and innovative ideas, but standard patents have recently come under fire.

Most people that criticize these patents bring up the valid point that just because someone was first to do something does not mean that other companies should be prevented from doing it. For example, if someone patented the use of a physical home button on a smartphone, should all other companies be prevented from using a home button without paying a fee? With the U.S. still handing out patents for ideas like this, more and more court cases continue to appear.
 

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