Microsoft awarded $14.5 million in Motorola's 'fair and reasonable' patent licensing case

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Image Credit: Microsoft

Microsoft and Google were locked in a serious court battle over the fair licensing of patents for some time now. As of July 30, 2015, The Ninth Circuit United States Court of Appeals put an end to the dispute by upholding a 2013 jury verdict in favor of Microsoft and awarding the company $14.5 million. The original case started between Microsoft and Motorola back in 2010, when Motorola argued its patents on WiFi and video compressions were worth a 2.25 percent cut of sales from Microsoft products. At the time, Microsoft claimed the 2.25 percent request was too high and refused to pay. During the length of the case, Microsoft shifted its distribution of products using the patents in question out of Germany as part of an injunction Motorola requested. Specific goods in question dealt with the Xbox video game console as well as Windows products that used WiFi and video compression H.264.

Google inherited the legal dispute after its 2012 purchase of Motorola’s mobile division. Google maintained the argument in court even after it sold off Motorola’s handset business that accounted for the patents originally. Google’s continued fight against Microsoft regarding the licensing dispute was partly due to it retaining most of the patents in question after the Motorola sell off.

Unfortunately, for Google and Motorola, two separate courts have found that Motorola’s patents were in such far-reaching use they are now considered standard patents and subject to lower licensing fees. With Motorola asking for an usually high 2.25 percent from every Microsoft product that includes the patents, both courts found Motorola in violation of “fair and reasonable” licensing agreement rates.

“This ruling is a win for consumers, competition, and innovation,” said Charles Duan, a lawyer with consumer group Public Knowledge, which backed Microsoft. “It keeps prices reasonable for old products and allows new products to come to the marketplaces.”

The $14.5 million payout of Motorola to Microsoft includes money Microsoft lost as a result of shifting its manufacturing out of Germany, as well as legal fees. Yesterday’s ruling is undoubtedly a big PR win for Microsoft as well as a nullifier for many companies. With two district courts setting a precedent for the use of standard-essential patents, companies will have think a little harder about engaging in patent warfare in the future.

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