News

Seattle Court To Examine 'Essential Patents' Issues in Microsoft v. Motorola Case

• By Kurt Mackie
• 05/16/2012

A Seattle judge's preliminary injunction in a patents dispute, issued on Monday, appears to be putting the brakes on a German court's ruling that favored Motorola over Microsoft.

The case was decided earlier this month by a Regional Court in Mannheim, Germany. That court issued an injunction on the sales of Microsoft's Xbox 360 gaming console, Windows 7, Internet Explorer and Windows Media Player 12 in Germany. Those products were found to have infringed Motorola Mobility's patents associated with H.264 standard's video codec technology. However, this new order from the Seattle judge is designed to postpone the German sales ban until an issue concerning "standard essential patents" gets resolved.

Judge James L. Robart of the U.S. District Court for the Western District of Washington noted that his preliminary injunction order potentially imposes on the German court's ruling in favor of Motorola. However, he rejected this contention because Microsoft had filed for relief in the Seattle court six months before Motorola brought its suit in Germany.

Robart suggested in his April 14 order (Case No. C10-1823JLR) that Motorola may have been "forum shopping" by bringing its suit to Germany. 

"The court finds that the timing of the filing of the German Action raises concerns of forum shopping and duplicative and vexatious litigation," Robart wrote.

Motorola Mobility wants 2.25 percent of each Microsoft Xbox gaming console sold, based on patents that are issued under "fair, reasonable and nondiscriminatory" (FRAND) terms. Microsoft argues that the sum would amount to a $4 billion payment annually, and that Motorola's offer isn't in keeping with FRAND principles.

Under the FRAND concept, patents deemed essential to a standard are supposed to be available to all companies on "reasonable" terms. What that means is somewhat determined by different standards bodies. In this case, it's the International Telecommunication Union, which shepherded the H.264 standard. The European Commission is also looking into FRAND issues associated with this case.

Microsoft was required by the Seattle court to post $100 million bond against any damages Motorola might suffer under this preliminary injunction. In addition, Judge Robart has set a trial date for Nov. 19, 2012 to determine "the RAND royalty" rate, as well as whether Microsoft had relinquished its rights to license the technologies in question, as Motorola contends.

This legal skirmish between Motorola and Microsoft appears to be happening in broader competitive context that extends beyond a dispute over H.264 FRAND royalties. For instance, Google is currently engaged in seeking final regulatory approvals to acquire Motorola Mobility. The acquisition will provide Google with legal ammunition against Microsoft's extraction of royalties from hardware manufacturers that use the Android Linux-based mobile operating system, which Google fostered. Microsoft claims to have gotten 70 percent compliance from original equipment manufacturers with regard to agreements on non-FRAND intellectual property that Microsoft claims is associated with the use of Android. Microsoft makes the competing Windows Phone mobile OS product, but it is badly eclipsed by Android's marketshare.

Google has already concurred with Motorola Mobility in seeking the 2.25 percent royalty rate from Microsoft in the German FRAND patents case. So, potentially, Google could be seeking a little payback, based on Microsoft's success in its non-FRAND settlements. Google doesn't make money on Android directly (the OS is offered royalty free), but it does profit from broader use of mobile search through its online advertising business.