News

Microsoft Wins Nearly $15 Million in Motorola Patent Dispute

• By Kurt Mackie
• September 09, 2013

Last week, a jury awarded Microsoft $14.5 million in damages stemming from a dispute with Google-owned Motorola Mobility.

The dispute concerns the licensing of standard-essential patents held by Motorola Mobility. Motorola Mobility had sought 2.25 percent of Microsoft Xbox sales to license its intellectual property associated with the 802.11 Wi-Fi standard, as well as the H.264 video codec standard.

Standard-essential patents are supposed to be licensed under "fair, reasonable and nondiscriminatory" (FRAND) terms. Those terms aren't set in stone, but standard-essential patents do get established via various standards bodies. The idea is that companies can use the technology by paying a royalty that's considered "fair," although the amount isn't typically specified. In this case, a jury in the U.S. District Court in Seattle unanimously decided that Motorola Mobility had breached its IEEE and ITU contractual commitments, according to an account by The Seattle Times, as well as the jury verdict (PDF).

The award to Microsoft consists of $3 million in legal costs plus $11.5 million for Microsoft's costs in relocating a product distribution center from Germany. Microsoft relocated the distribution center after receiving an injunction in German courts against selling products that used Motorola Mobility's standard-essential patents.

Microsoft had claimed that the 2.25 percent royalty on Xbox sales sought by Motorola Mobility would have amounted to $4 billion in payments per year. In an earlier phase of the trial Judge James L. Robart had tried to estimate the royalty rate. Based on that reformulation, Microsoft estimated that the royalty rate actually should have amounted to $1.8 million per year, according to The Seattle Times.

A statement from a Motorola Mobility spokesperson suggested that the company might appeal the award.

"We're disappointed in this outcome but look forward to an appeal of the novel legal issues raised in this case," stated Motorola Mobility spokesman William Moss.