Motorola proposes patent settlement, Microsoft balks

Motorola Mobility, a Google subsidiary, has proposed a settlement to Microsoft regarding the two companies' ongoing patent dispute, Bloomberg reports. Motorola publicly announced the offer, but Microsoft "questioned whether the offer was serious," according to Bloomberg.

The two companies have been in separate legal battles involving Motorola's industry standard video compression patents (relating to H.264) and Microsoft's ActiveSync patents. Motorola's proposal would see Microsoft paying Motorola 50 cents for each copy of Windows sold (it continues to demand a 2.25 percent royalty for each Xbox 360 sale), while it would pay Microsoft 33 cents for any phone that uses Microsoft's ActiveSync software, Bloomberg revealed. Both Motorola and Microsoft are facing potential import bans for products associated with the lawsuits; if the bans are put in place, neither company would be able to sell its infringing products in certain territories, including the United States and some European countries.

Microsoft's reaction to the proposed settlement has been one of bemusement. In a statement, Horacio Gutierrez, Microsoft’s deputy general counsel for intellectual property, said Motorola's proposed settlement isn't a legitimate offer. Guiterrez and Microsoft have continued to claim that Motorola's demands don't fit industry standards for reasonable patent rates, particularly in regards to standards-essential patents.

"While we welcome any good faith settlement effort, it's hard to apply that label to a demand that Microsoft pay royalties to Google far in excess of market rates, that refuses to license all the Microsoft patents infringed by Motorola, and that is promptly leaked to the press," Guiterrez said. 

Motorola is also involved in patent discussions with Apple regarding the same H.264-related patents. Motorola's patents in questions are widely used in the industry, and Microsoft has argued the company needs to use FRAND (fair, reasonable and non-discriminatory) rates to all companies seeking to use the patents, which it claims the proposed settlement still lacks. If the settlement doesn't go through, both the Xbox 360 and some of Motorola's phones could be barred from sale in the coming months, pending any decisions issued by the respective governing bodies where the injunctions were requested.

Source: Bloomberg

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23 Comments

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I wonder where math has disappeared. Apparently M$ would be paying for the number of xBoxes they sell and Google would be paying for the number of Android devices. Judging by the actual market numbers M$ would still come out far ahead in terms of $$$$.

You know whats Ironic about this whole situation is Google removed H.264 from their browser because they thought H.264 was patent encumbered and replaced it with (Webm?). And know they are ones who are going around suing people (microsoft) with it.

Melfster said,
You know whats Ironic about this whole situation is Google removed H.264 from their browser because they thought H.264 was patent encumbered and replaced it with (Webm?). And know they are ones who are going around suing people (microsoft) with it.
lol, so true.

cybertimber2008 said,
Why is H.264 valued higher than ActiveSync?
h.264 is valued higher since it encodes silly videos on the interwebs..!! hahahah...

ahhell said,
Motorola is the new Oracle.

That position is already occupied by Microsoft, and the $15-20 per Android device extortions.

Opening bids are usually ridiculous. Just go to any house auction and you will see that some comedian starts the bidding at $1 even though there is obviously a reserve price in play.

Ball is in Microsoft's court to make an offer that they would consider serious.

Why is this openly happening now? They need to grow up and just work it out instead making their bidding public. I'm not sure what Microsoft's endgame is here to release this information, because it makes themselves look bad for not coming to the table at all, not Google for their bid.

Simon- said,
Opening bids are usually ridiculous. Just go to any house auction and you will see that some comedian starts the bidding at $1 even though there is obviously a reserve price in play.

Ball is in Microsoft's court to make an offer that they would consider serious.

Why is this openly happening now? They need to grow up and just work it out instead making their bidding public. I'm not sure what Microsoft's endgame is here to release this information, because it makes themselves look bad for not coming to the table at all, not Google for their bid.


I get what you're saying, but I don't even remotely agree.

Negotiations generally start out highly in favor of one side, but not ridiculously so -- it shows you're not even willing to negotiate, you're just trying to make a statement. Let's say you were going out and looking for a new car with a standard MSRP of $25,000. If the salesperson told you -- in all seriousness -- he wanted $75,000, would you continue to negotiate, or would you just leave? I think most of us wouldn't waste our time.

What if he yelled, "WAIT! I'll sell it to you for $45,000!" as you were leaving? It's a big knock-off, sure, but that's just an illusion since it's clearly not within market value. Most of us wouldn't waste our time with tactics like that. I think Microsoft needs to be willing to negotiate, but Motorola isn't giving very serious offers here. The fact that they still want a 2.25 percent royalty for each Xbox sold is absolutely insane.

Simon- said,
Opening bids are usually ridiculous. Just go to any house auction and you will see that some comedian starts the bidding at $1 even though there is obviously a reserve price in play.

Ball is in Microsoft's court to make an offer that they would consider serious.

Why is this openly happening now? They need to grow up and just work it out instead making their bidding public. I'm not sure what Microsoft's endgame is here to release this information, because it makes themselves look bad for not coming to the table at all, not Google for their bid.

"Motorola publicly announced the offer"
You mean Moto's endgame! It seems like everyone's position is to make MS look as bad as possible because of the good ol' days. Public Opinion could go a long way though.

This is getting ridiculous.
Motorola is dommed, forget about them. Same with Sony in the mobile market.
They made the choice to go Android and this is what happen.

boumboqc said,
This is getting ridiculous.
Motorola is dommed, forget about them. Same with Sony in the mobile market.
They made the choice to go Android and this is what happen.

What the hell does that have to do with this...?

mikeyx12 said,

What the hell does that have to do with this...?

Because MS is suing Motorola for using it's patents in it's Android based devices? So Motorola doing the only thing it could turned around and sued using it's h264 patents. But this will backfire, h264 has now become a wide spread default standard and Motorola will be forced to stick to the FRAND pricing the rest of the industry has agreed on years ago instead of trying to charge MS more.

I don't see Motorola coming out of this on top.

boumboqc said,
This is getting ridiculous.
Motorola is dommed, forget about them. Same with Sony in the mobile market.
They made the choice to go Android and this is what happen.

Yep, they should have taken your advice and gone the same route as Nokia. Bet they are slapping themselves now seeing how well Nokia is doing.

recursive said,

Yep, they should have taken your advice and gone the same route as Nokia. Bet they are slapping themselves now seeing how well Nokia is doing.

Considering that Motorola Mobility doesn't actually exist anymore (swallowed up by Google before it finally died) I'd say Nokia who's still kicking and hasn't been taken over by anyone is doing better.

GP007 said,

Considering that Motorola Mobility doesn't actually exist anymore (swallowed up by Google before it finally died) I'd say Nokia who's still kicking and hasn't been taken over by anyone is doing better.

Yep, they haven't mellowed enough for MS to swallow them whole yet.

-Alex- said,
50 cents doesn't seem much...

Those are FRAND patents.

Under FRAND, Microsoft currently pays 2c per Windows copy to license the 2300 patents for H.264 from 29 different companies.

That's 0.0008 cents for each patent.

Motorola was originally asking for 2.25% for their 50 H.264 patents.

That's 45 cents per patent on a $1000 notebook.

In other words Motorola wanted Microsoft to pay more than 5,100,000% the going rate.

FoxieFoxie said,

Those are FRAND patents.

Under FRAND, Microsoft currently pays 2c per Windows copy to license the 2300 patents for H.264 from 29 different companies.

And yet Microsoft wants $15-20 per Android device. Time to pay up Microsoft

simplezz said,

And yet Microsoft wants $15-20 per Android device. Time to pay up Microsoft

People like you need to be served a punch through your monitor for failing to read.