Motorola And Microsoft Continue Patent Disputes, Argue Over Royalties
December 19, 2012

Motorola And Microsoft Continue Patent Disputes, Argue Over Royalties

Michael Harper for — Your Universe Online

Microsoft and Motorola are still battling their own patent dispute in Seattle and now remain at odds with how much they should be paying one another in royalties.

Redmond-based Microsoft kicked off the fight more than a year ago when they claimed Google´s Motorola was violating some of their patents relating to their ActiveSync technology. Motorola returned fire, claiming Microsoft violates their patents relating to the H.264 video codec and Wi-Fi patents. As one might expect, these two companies have differing opinions when it comes to royalties to use these patents. Microsoft has been claiming that Motorola refuses to license these standards essential patents on fair, reasonable and non-discriminatory (FRAND or RAND) terms.

To rebut, Motorola is claiming Microsoft has been asking too high a price for these patents, as high as 2.25%.

The two came together in a Seattle courtroom in November to hammer out the details. The redacted filings have just been made public and reveal that the two companies were unable to reach an agreeable decision.

Motorola claims Microsoft should be paying them $100 million annually for use of their patents. Microsoft understandably disagrees, saying $1.2 million a year is a fair price.

In fact, if Microsoft had to pay the 2.25% Motorola has been asking for, they´d end up writing a $4 billion paycheck each year for the rights to use these standard essential patents.

Judge James Roberts is presiding over this case and is expected to hand down his final decision early next year. He will also be the first federal judge to determine a royalty rate.

As the two companies wrapped up their arguments, Microsoft stuck with their now familiar stance: When it comes to determining a reasonable royalty rate, the court should look to other patent pool rates. When looking at these rates, Microsoft says they should have to pay no more than $1.2 million for the H.264 and 802.11 Wi-Fi patents. Broken down, this number comes from $502,000 for the video codecs and $763,000 for the Wi-Fi privileges.

Google´s Motorola believes they should look to settlements they´ve reached with other companies. In some of these agreements, Motorola has received 2.25% off the top of any product purchased which uses these patents. They´ve even offered Microsoft a deal, saying they´ll place a cap on the final payments, ensuring that the Redmond company will never pay more than $125 million for the H.264 patents alone. Motorola is also asking for 1.15% to 1.73% of the sale price for every Xbox 360 sold for use of their Wi-Fi patents.

Interestingly, Google had participated in such a patents pool in 2005 with their H.264 patent. Microsoft claimed in their post-trial briefings that this previous willingness to participate in the pool destroys Motorola´s “excessive H.264 demands.”

Motorola, on the other hand, claims that Microsoft´s proposed rates do not match those found in this patent pool. Furthermore, Google had not yet owned Motorola in 2005, a point which Motorola says makes Microsoft´s argument invalid.