Judge rules that Motorola's patents aren't worth $4 billion a year from Microsoft

A ruling was finally given today over the on-going legal battles between Microsoft and the now Google-owned Motorola, with the judge declaring that the worth of Motorola's patents are worth far less than Motorola seemed to think they were - $3.99 billion a year less, in fact. 

Microsoft and Motorola have had their horns locked in legal battles over Microsoft's use of several of Motorola's patents that are part of 802.11 Wi-Fi and H.264 video standards. The patents have been deemed as standards-essential patents, which mean that they have to be licensed to others at a reasonable and non-discriminatory (RAND) rate. 

Microsoft's attorneys claimed that Motorola violated the RAND pact by asking for too much to use the patents - a massive 2.25 percent of the price of Microsoft products that were sold using the patents, including all Windows 7 computers and the Xbox 360. 

The new ruling now places the RAND rate for Motorola's H.264 patent at 0.555 cents for each end product with a reasonable range stretching up to 16.839 cents per product sold. For the 802.11 Wi-Fi patents, the court ruled that 3.471 cents per unit was to be the rate for Xbox products and 0.8 cents per unit for any other products. 

The new figures place a massive drop in value on the portfolio with the court stating that the new royalty rate would be just $1,797,554 - a significant drop from $4 billion a year. 

If you want to check out all the legal documents, they're available here

Source: AllThingsD | Image via Microsoft

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53 Comments

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Hilarious. Enjoy FAIL for dinner, moto. Hey, maybe if you tell the judge MS's nickname on the internetz is "M$" he'll have a change of heart! /s

Wow so that's why Google bought Motorola... I can't stand those douche bags (Google) anymore. From their phones to their search engine - they can keep it all... I hope Microsoft keeps making a bigger profit of every Android device sold than Google themselves... Patents are patents but 4 billion a year is pure racketeering...

Their only worth 1.8M you losers. I don't think Motorola was trying to be fair, they were trying to shore up all the money they are losing and have lost.

heh I was wondering the same but to be fair the court document uses RAND in most places.
I also noticed the a couple redacted line that would appear to reference the next XBox.

This outcome in line with RAND level rates was inevitable, I don't know why Motorola went down this road, they were never going to get the extortionist rates they were demanding. From what I recall when this all started MS would have settled prior to court for slightly more then what the court wound up setting, so they double screwed themselves. Really smart move there Motorola. :roll:


Google was attempting to use Motorola's patents to force both Microsoft and Apple into cross license agreements to thwart attacks on Android through litigation. Google doesn't want to license MS's patents without some kind of return from them, which MS is under no obligation to give.

It's about leverage, to which Google has very little.

Now they are going to be taken to task for breach of contract for trying to screw MS this way. The same judge has scheduled a second trial for breach of contract for this summer against Google.

Bad Man Duke said,
Google was attempting to use Motorola's patents to force both Microsoft and Apple into cross license agreements to thwart attacks on Android through litigation. Google doesn't want to license MS's patents without some kind of return from them, which MS is under no obligation to give.

It's about leverage, to which Google has very little.

Now they are going to be taken to task for breach of contract for trying to screw MS this way. The same judge has scheduled a second trial for breach of contract for this summer against Google.

oh wow, didn't know that. I mean what can the judge do if he finds google to be in breach of contract? take the patents away? fine then? force them to license at an even lower rate?

@ctrl_alt_delete,
I don't know what the sanction will be but no, he can't take the patents away.
Actually a few of them are already expired anyway and many actually never applied even by Moto's own admission, the pdf is an amusing read if you have an hour or two to waste.

ctrl_alt_delete said,

oh wow, didn't know that. I mean what can the judge do if he finds google to be in breach of contract? take the patents away? fine then? force them to license at an even lower rate?
No, the worst they will probably get is a fine, but that is beside the point. What this does is create a documented history of Google actively breaching commitments. Commitments that are a big deal to the rest of the industry.

ctrl_alt_delete said,

oh wow, didn't know that. I mean what can the judge do if he finds google to be in breach of contract? take the patents away? fine then? force them to license at an even lower rate?

Well, if the judge has a sense of humor, he'll award Microsoft $1.8 million for breach of contract ...

Just kidding.

spudtrooper said,

How are they over priced? They start at 199 bucks on up without contract..

Smartphones regularly cost 2-3 times as much as tablets which have all the same specifications but with larger screens and batteries.

Except they are part of a pool of patents that Motorola submitted to be part of a standard, hence standard essential patent (SEP), to which they agreed to allow other companies to use at a very low rate. Both Motorola and Google committed to this agreement, and the court is now forcing them to adhere to that.

Bad Man Duke said,
Except they are part of a pool of patents that Motorola submitted to be part of a standard, hence standard essential patent (SEP), to which they agreed to allow other companies to use at a very low rate. Both Motorola and Google committed to this agreement, and the court is now forcing them to adhere to that.

Woah woah woah, so people should live up to the standards they agreed to? Perish the thought!

Brony said,
$1m fee per patent is absurdly low. It is not even enough money to pay a small office for a year.


It's about what's fair and reasonable. Fees from a single patent aren't meant to support an entire company.

Brony said,
$1m fee per patent is absurdly low. It is not even enough money to pay a small office for a year.

The FRAND bargain is -- put us in the standard, and we'll charge reasonable fees. Motorola got its patents into the standard. Now the court is forcing them to adhere to the other side of the agreement.

If Motorola felt it wasn't enough, they could've refused to be in the standard. Then people could've implemented the standard without Motorola, and they would've ended up with nothing.

Would you rather have $1.8 million, or nothing?

Hambone72 said,
It'd actually be 1.80M, to the nearest 0.01 million, not 1.79.

;-)

Since you want to be so exact...to round up or down you have to consider all the numbers...so thus 1,797,554 is less than 1,797,555 so you round down. If it was 1,797,556 then you would round up. I chose not to round up to the nearest dollar because 1,797,554 is closer to 1,797,000 than then it is to 1,800,000. Do the math. The different is 554 vs 2446. I went to school bub. In this case you would round down...not up. I graduated in 1987 from HS...maybe math has changed now...so I give you benefit of the doubt...but the way we were taught...i would be correct.

Edited by Hi_XPecTa_Chens, Apr 26 2013, 7:42pm :

considering all the numbers, hambone is still correct. 1797 is greater than 1795 and therefore you round up to 1800 not down to 1790.

HSoft said,
considering all the numbers, hambone is still correct. 1797 is greater than 1795 and therefore you round up to 1800 not down to 1790.
Again you would be wrong. I did round down to 1790. The number is 1797,554. According to this rule - http://www.factmonster.com/math/numbers/rounding.html, you round the number to its nearest whole number. In this case as I stated...when it comes to rounding the last 3 numbers...it is nearest to 500 than it is too 600 because the number is 554 which is less than 555 and not higher. The last number is a 4 so you round down. Thus the whole number would be 1.79M not 1.80M because 556 is closer to 1.79M vs 1.80M.

If it was a 1.54 you would round it to the nearest whole number which would be 1.50...if it was 1.56 you would go to 1.60.

Whoever made that chart clearly needs to go back to High School and learn how to make charts. You have line representing 1 billion, and then two totals that exceed 1 billion, but neither of those totals go over that line.

Troll chart is trolling

Xionanx said,
Whoever made that chart clearly needs to go back to High School and learn how to make charts. You have line representing 1 billion, and then two totals that exceed 1 billion, but neither of those totals go over that line.

Troll chart is trolling

I'm sure you must feel like an idiot right now, right? don't worry it happens to the best of us sometimes after a long night of drinking. but thanks for the laughs this morning :-)

It did, but could have also been a easily misunderstood reading of the graph. All the $ figures are in Billions except the right two bars that are Millions. The scale is also in Billions, so some who read only the chart and not the article might have initially assumed ALL the $ figures were listed in Billions, which some would say is more uniform and logical (ie. having all the $ figures on the same unit/scale). Although in this case, the two smaller bars would be crazy smaller if they were listed in Billions.

Deviate_X said,
Does that mean Google paid too much for Motorola?

Totally, there's no other way to look at it. $12 billion down the drain unless you actually expect any smash hit Motorola phones to take over the market.

Deviate_X said,
Does that mean Google paid too much for Motorola?

Depends what Project X is and if anything comes out of it. If Google didnt buy them, someone else would of.

Edited by techbeck, Apr 26 2013, 12:36pm :

techbeck said,

Depends what Project X is and if anything comes out of it. If Google didnt buy them, someone else would of.

Although it would suck, they can afford the loss. You're right though; we'll have to wait and see what Google/Motorola has up their sleeves. Hopefully is something nice and can make an impact. I was always a fan of Motorola. I'd hate to see them just fold and get absorbed by Google then disappear. I'd think they would merge their Nexus division with Motorola to keep it alive; they'll make a comeback hopefully.

GP007 said,

Totally, there's no other way to look at it. $12 billion down the drain unless you actually expect any smash hit Motorola phones to take over the market.

Considering how Google has been gutting Motorola lately, I think it will be a while before that happens.

That doesn't necessarily mean they expected those ~17000 to generate any significant revenue, my assumption as to the patents and the acquisition is that among other things it was more about having a security blanket against claims being made against themselves.

dead.cell said,
I thought they bought Motorola because of the ~17,000 patents Motorola held against Android.

I think Google originally bought Moto so the patents wouldn't be used against them...then went ahead and tried to use them against others.

techbeck said,

I think Google originally bought Moto so the patents wouldn't be used against them...then went ahead and tried to use them against others.

Quite the opposite. It was openly discussed that Moto's patents would be used to shield Android against litigation. Didn't pan out that way.

Well, that's good to hear.
Though that is quite a drop, I do wonder what motorola was thinking when they were asking for such an insane amount for FRAND patents...

Avi Patel said,
Well, that's good to hear.
Though that is quite a drop, I do wonder what motorola was thinking when they were asking for such an insane amount for FRAND patents...

They were thinking 'must please overlord Google.. yes yes... must must!!'