Motorola litigation forces Microsoft to pull distribution out of Germany

Microsoft has decided to move its European software distribution center out of Germany and into the Netherlands, in response to fallout from its patent battle with Motorola Mobility. Reuters reports that the move is already underway, and that Arvato, the German company that has handled European distribution so far, will no longer be responsible.

Thomas Baumgaertner, a Microsoft spokesman, said that even though the company would've “preferred to keep our European distribution centre in Germany, where it has been for many years... the risk from disruptions from Motorola's patent litigation is simply too high.”

Microsoft's patent battle with Motorola Mobility centers on streaming and wireless patents, which Microsoft says Motorola is using unfairly to hurt its competition. According to Microsoft, Motorola is demanding exorbitant royalties for use of its H.264 codec – about $22.50 for every $1,000 laptop sold, and that it is essentially trying to block the competition entirely.

Google, of course, is currently in the process of acquiring Motorola Mobility, not only for its hardware production, but also for its vast patent library. Apple is in on the action as well, finding itself on the same side as Microsoft as part of its 'thermonuclear war' on Android.

Microsoft's withdrawl from its German distribution center is the most notable effect that we've seen from the litigation so far, but it would pale in comparison to the blow back that would come with a Motorola victory.

Report a problem with article
Previous Story

IBM and Microsoft's OS/2 turns 25 today

Next Story

Bing debuts new video search features

21 Comments

Commenting is disabled on this article.

What goes around comes around. Just sayin'

A company can't be an aggressive patent litigator, then expect sympathy when they get sued. Apple is the same.

simplezz said,
What goes around comes around. Just sayin'

A company can't be an aggressive patent litigator, then expect sympathy when they get sued. Apple is the same.

Yes, but this time it's slightly different and more serious since these patents Moto has are used in industry standards. You might wish to consider reading the above comments to find out more.

resol612 said,

Yes, but this time it's slightly different and more serious since these patents Moto has are used in industry standards. You might wish to consider reading the above comments to find out more.

He wont, like most of people, will bash MS without reading the article and Razorfolds posts.

kavazovangel said,
Forget the companies, that is a big loss for those that just lost their jobs. Way to go, stupid patent system.

No wonder everyone wants to be a lawyer...

This is a consequence of (and a commercially prudent reaction to) the particular system of patent litigation in Germany, in which patent "infringement" is tried separately from, and in practice much earlier than, patent validity.
If the German infringment court finds infringement, it can order an injunction and it may be a year or so later before everyone finds out that the patent was invalid after all.

In most other systems, the invalidity defence will be heard at the same time as the infringement claim. Both sides get their cases considered before injunctions bite.

One may well wonder why Germany continues to adopt a system that is damaging to its own domestic industry. No doubt the German jobs lost by this move will be Holland's gain.

still1 said,
Go Go Motorola... oh Google...
Google is in strong position with all those patents from Motorola

That is my worry.
Motrola are supposed to keep the bulk of their patent portfolio. Will these essential h.264 patents transfer to Google when the Motorola Mobility acquisition is finalized?

dotf said,

That is my worry.
Motrola are supposed to keep the bulk of their patent portfolio. Will these essential h.264 patents transfer to Google when the Motorola Mobility acquisition is finalized?

If those patents are with Motorola mobility then yes... and MS battle is with Motorola Mobility so yes, it would be transferred to Google.

still1 said,
Go Go Motorola... oh Google...
Google is in strong position with all those patents from Motorola

I am not sure stepping out of MPEG-LA is a good idea but I guess they had to counter Microsoft somehow.

still1 said,
Go Go Motorola... oh Google...
Google is in strong position with all those patents from Motorola

Wat? So you think ripping people off with FRAND patents is a good thing?

MPEG-LA patents are licensed under FRAND terms, and you can license the entire set for a maximum of $0.20 per use or something along the lines. Motorola is charging $22.50 per $1000 laptop for just 5 patents in MPEG-LA, essentially disregarding FRAND terms. Not to mention, what does the cost of a laptop have to do with streaming and wireless patents? And also not to mention, Microsoft doesn't control the cost of the laptop.

Microsoft's patent war with Android isn't under FRAND terms, they can charge whatever they want for it (not saying that's a good thing but w/e). Don't even know why Android was mentioned in this article since it has nothing to do with anything.

Razorfolds said,

Wat? So you think ripping people off with FRAND patents is a good thing?

MPEG-LA patents are licensed under FRAND terms, and you can license it for like $0.20 per use or something. Motorola is charging $22.50 per $1000 laptop for a few patents, essentially disregarding FRAND terms. Not to mention, what does the cost of a laptop have to do with streaming and wireless patents? And also not to mention, Microsoft doesn't control the cost of the laptop.

Microsoft's patent war with Android isn't under FRAND terms, they can charge whatever they want for it (not saying that's a good thing but w/e). Don't even know why Android was mentioned in this article since it has nothing to do with anything.


then why is MS moving out of germany??? they obviously think they might not win it.

still1 said,

then why is MS moving out of germany??? they obviously think they might not win it.

Would you take the risk even if you had a feeling you might win? If they win, they can move back. If they lose, it could be disastrous.

While I dislike the current patent system just like most people on this forum, what Motorola doing is rather cheap. MPEG-LA is an industry standard, and if everyone else who's part of the group can follow the FRAND terms set in place, Motorola should be able to as well. Charging $22.50 is absurd for something Microsoft doesn't even control. Not to mention what does hardrive space, cpu, gpu etc (all which increase the price of a laptop) have to do with streaming and wireless patents anyways? So why should the price of them increase?

If the patents weren't under FRAND terms and weren't an industry standard then Motorola could charge whatever the hell they want for them, and then even though it may be absurd its more "understandable"

Razorfolds said,

Would you take the risk even if you had a feeling you might win? If they win, they can move back. If they lose, it could be disastrous.

If i am confident enough I wouldn't.. but it shows they are not confident enough and they are trying to avoid it.. There are a lot of people in MS who knows a lot better about this than you and me who made this decision.
Also, they are charging for only PC more than $1000 so i think its fair.

Razorfolds said,

Wat? So you think ripping people off with FRAND patents is a good thing?

MPEG-LA patents are licensed under FRAND terms, and you can license the entire set for a maximum of $0.20 per use or something along the lines. Motorola is charging $22.50 per $1000 laptop for just 5 patents in MPEG-LA, essentially disregarding FRAND terms. Not to mention, what does the cost of a laptop have to do with streaming and wireless patents? And also not to mention, Microsoft doesn't control the cost of the laptop.

Microsoft's patent war with Android isn't under FRAND terms, they can charge whatever they want for it (not saying that's a good thing but w/e). Don't even know why Android was mentioned in this article since it has nothing to do with anything.

Ripping off ANYBODY with patents at all isn't a good thing, but they all do it, no matter what the license is. It's all semantics. MS tries to screw everyone over with patents, without even disclosing what those patents are to the public, then they want to ignore them when it doesn't work in their favor.

This is also yet another reason why people should adopt "open" standards, or at least work with companies that license them openly and freely. If it's a standard, then there shouldn't be anyone getting rich off of them at the expense of others.

Edited by farmeunit, Apr 2 2012, 8:29pm :

still1 said,

Also, they are charging for only PC more than $1000 so i think its fair.

No its $22.50 for every $1000. So I assume that would involve PCs less than $1000.

And why does it matter what the cost is? A windows license doesn't change depending on the cost of the PC. Microsoft doesn't earn more money if a PC is $5000 as opposed to one thats $100.

MS tries to screw everyone over with patents, without even disclosing what those patents are to the public, then they want to ignore them when it doesn't work in their favor.

You should learn what FRAND means. The patents under MPEG-LA are FRAND and are part of an industry standard. The patents Microsoft are using against Android aren't and aren't part of any standard.

The FAT file system and Exchange aren't industry standards and hence aren't licensed under FRAND terms. So Microsoft can charge whatever the hell they want for them. If companies don't want to pay for it, don't use Exchange or the FAT fs (yes I know there are other patents involved in it too but just simplifying) MPEG-LA stuff are industry standards and licensed under FRAND terms, so Motorola SHOULDN'T be able to price them depending on whatever they want.

This is also yet another reason why people should adopt "open" standards, or at least work with companies that license them openly and freely. If it's a standard, then there shouldn't be anyone getting rich off of them at the expense of others.

That's what FRAND terms are for though. There are some 1500 patents in the MPEG-LA portfolio and they're licensed under FRAND terms. Now Microsoft pays $0.02 per license for access to all those patents (volume discount). The max any company pays for access to them is $0.20 per license. Motorola holds 5 patents or something that are part of MPEG-LA and they want $22.50 for use of them.

You see the absurdity of it? Get access to 1500 or so patents for $0.02 - $0.20 regardless of the cost of the PC. Or get access to 5 patents for $22.50 based on the cost of the PC.

Razorfolds said,

No its $22.50 for every $1000. So I assume that would involve PCs less than $1000.

And why does it matter what the cost is? A windows license doesn't change depending on the cost of the PC. Microsoft doesn't earn more money if a PC is $5000 as opposed to one thats $100.


You should learn what FRAND means. The patents under MPEG-LA are FRAND and are part of an industry standard. The patents Microsoft are using against Android aren't and aren't part of any standard.

The FAT file system and Exchange aren't industry standards and hence aren't licensed under FRAND terms. So Microsoft can charge whatever the hell they want for them. If companies don't want to pay for it, don't use Exchange or the FAT fs (yes I know there are other patents involved in it too but just simplifying) MPEG-LA stuff are industry standards and licensed under FRAND terms, so Motorola SHOULDN'T be able to price them depending on whatever they want.


That's what FRAND terms are for though. There are some 1500 patents in the MPEG-LA portfolio and they're licensed under FRAND terms. Now Microsoft pays $0.02 per license for access to all those patents (volume discount). The max any company pays for access to them is $0.20 per license. Motorola holds 5 patents or something that are part of MPEG-LA and they want $22.50 for use of them.

You see the absurdity of it? Get access to 1500 or so patents for $0.02 - $0.20 regardless of the cost of the PC. Or get access to 5 patents for $22.50 based on the cost of the PC.

So $22.50 per Windows PC vs. $15 that MS extorts from Moto (and every other Android vendor) for every Android device they sells. I say it's just MS getting what was coming to them.

SharpGreen said,

So $22.50 per Windows PC vs. $15 that MS extorts from Moto (and every other Android vendor) for every Android device they sells. I say it's just MS getting what was coming to them.


Its more like $5-10 and like I've said about 3 times now, those aren't FRAND patents. And like I also said stuff like Exchange and the FAT file system aren't industry standards, so Microsoft can (whether its fair or not) charge whatever the hell they want for them.

h.264 IS an industry standard and all the members of MPEG-LA agreed (yes including Motorola) to license them under FRAND terms: http://en.wikipedia.org/wiki/R...on-discriminatory_licensing
Hence by vastly overcharging for patents that are related to h.264, Motorola is going against the very license agreement they signed. Which is why Microsoft and Apple are against them. I think for Apple, Motorola wanted 3% of Apple's iPhone revenue for 1 patent.

This has got nothing to do with Android so I honestly don't know why the article mentions it apart from bait.

SharpGreen said,

So $22.50 per Windows PC vs. $15 that MS extorts from Moto (and every other Android vendor) for every Android device they sells. I say it's just MS getting what was coming to them.

Sigh what selective reading. Typical fanboys.

resol612 said,

Sigh what selective reading. Typical fanboys.

Thats what i noticed, he ignored all parts, and bashed MS lol