The Microsoft and Motorola trial ends in Seattle

The patent trial between Microsoft and Motorola which was held earlier this month in a U.S. District Court in Seattle has drawn to a close, and no closing statements have been issued yet. However, post-trial briefs which will serve as each side’s closing statements are due to the court by December 14th with Judge James Robart expected to issue his ruling at some point in the spring.

This trial is one of many of the patent battles between Microsoft and the Google-owned Motorola Mobility. Microsoft claims that Google is asking too much money for use of some of its patents which are essential to current industry standards. Motorola had asked 2.25 percent royalty on the end price of Xbox and Windows devices. Motorola has stated that that was only an opening offer, and negations for the royalty cut were meant to transpire soon after.

Judge Robart will have to issue a ruling on what a reasonable royalty rate would be for Motorola when Microsoft uses its patents. Interestingly, this is the first time a federal judge would be issuing a ruling based on their views of royalty.

Source: Seattle Times

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16 Comments

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I hope Moto gets awarded more than 2.25%, screw MS...unless they back off of Android and Android device makers, then yeah screw them

Sonne said,
I hope Moto gets awarded more than 2.25%, screw MS...unless they back off of Android and Android device makers, then yeah screw them

And this story has what to do with Android exactly?

jamieakers said,

And this story has what to do with Android exactly?

Nothing really outside of the fact that we're talking about patents. The key difference is when MS makes these licensing deals with Android OEMs it's not about FRAND patents, and in no case is MS charging 2.25% of the total device cost that you hear Motorola asking for.

I hope the judge in this takes it serious because the ruling for this case has a long reaching effect on any FRAND covered essential patents going forward. If out of some fluke Motorola wins then we're all pretty much screwed in the end.

Sonne said,
I hope Moto gets awarded more than 2.25%, screw MS...unless they back off of Android and Android device makers, then yeah screw them

.....that's quite a compelling argument you've got there....

/s

jamieakers said,

And this story has what to do with Android exactly?

Because Microsoft is currently extorting Android using ancient invalid patents, and this is the consequence of that extortion. Microsoft doesn't like the taste of its own medicine.

M_Lyons10 said,
Essential patents should really be viewed differently. The patent system is really a mess...

I agree. However, I do think Motorola's 2.25 percent demand for royalties is reasonable, but maybe that's just me.

Zeikku said,

I agree. However, I do think Motorola's 2.25 percent demand for royalties is reasonable, but maybe that's just me.

it's just you...it's a FRAND patent that means everyone should pay the same amount.

Zeikku said,

I agree. However, I do think Motorola's 2.25 percent demand for royalties is reasonable, but maybe that's just me.

ms would be paying motorola an annual pay-out of $4 billion. That's quite a large sum of money for a FRAND patent for just one year...

Zeikku said,

I agree. However, I do think Motorola's 2.25 percent demand for royalties is reasonable, but maybe that's just me.

It is just you. Think of it this way, if I recall Motorola is claiming two different patents are being violated, one on WiFi and another on video decoding. If Motorola wants 2.5%, then Motorola is getting paid for other people's patents. It is not 2.5% of the cost of the individual component, but 2.5% of the device.

For sake of argument, lets suppose that an Xbox costs $100 for materials, shipping, and labor. And, for argument, let's suppose the plastic they use for the case is patented and Microsoft pays $1 to a company for that patent. Microsoft then adds $1 to the price of the Xbox. Well, since Motorola is demanding 2.5%, that means that the additional price is now $102.53. Motorola is getting 2.5% of the $100, plus $0.025 for the $1 Microsoft paid to the patent holder. In other words, Motorola is getting paid for somebody else's patent.

Windows is a large set of code, with WiFi and video decoding being only a small portion of that code. Let's suppose the FRAND patents Motorola claims is only 0.01% of the overall codebase in Windows. Rather than paying 2.5% of the part of Windows that uses Motorola's patents, they want to take 2.5% of the entire price of the computer. You buy a Dell laptop for $1000, Motorola gets $25 - simply because the computer uses WiFi and decodes video.

Companies have many patents, and Motorola licenses some of Microsoft's - they have negotiated a flat price as per articles on the web. Let's suppose Microsoft did this to Motorola for the patents Motorola license. Well, that would be 2.5% of the device. Most phones sell for around $500. Then data plans, which are part of the cost of the overall device, just as a DVD drive is in an Xbox, Microsoft would get a cut of that also. So at $80/month, * 24 months, that would mean that a total of $2400 is spent, and Microsoft gets $60.50 of that. Would you think that is fair? And you can bet that additional $60.50 would be passed on to the consumer. Would you like to pay with cash or credit?

Thanks thats an extremely good explanation
No way will Motorola get what they are asking, but it sounds like Microsoft didn't play ball by making what they consider a reasonable offer, and should have licensed the patents in the first place (on terms more facorable to them) to avoid this coming up in the first place where Motorola or a judge sets the price, providing that Microsoft were even aware or should have been aware of them. I think that Microsoft should expect to pay a premium even if not as high as asked, otherwise it would send a message to other patent users that the can use patents without licensing them first, and if thry are caught only need to pay the same as another company who did bother to license them.

Simon- said,
Thanks thats an extremely good explanation
No way will Motorola get what they are asking, but it sounds like Microsoft didn't play ball by making what they consider a reasonable offer, and should have licensed the patents in the first place (on terms more facorable to them) to avoid this coming up in the first place where Motorola or a judge sets the price, providing that Microsoft were even aware or should have been aware of them. I think that Microsoft should expect to pay a premium even if not as high as asked, otherwise it would send a message to other patent users that the can use patents without licensing them first, and if thry are caught only need to pay the same as another company who did bother to license them.

Microsoft agreed to pay the standard FRAND licensing fees that everyone else pays, Motorola turned it down. I don't know what those prices are, but consider that Microsoft sells millions of Xboxes and copies of Windows. Right now I am watching a Blu-Ray movie on a Samsung player. They sell what, a million, maybe two million players? And the entire purpose of a Blu-Ray player is decoding video. Motorola will get a little bit from Samsung for that player. When Microsoft sells multi millions of Windows and Xboxes generating much more money for Motorola, and Windows does much more than decoding video, why should they need to pay an even higher rate than other companies?

That was a great response . I did completely overlook the fact it was a FRAND patent when I posted the comment, even though I subtly hinted at it in the article (slow day) . I'm actually very intrigued to see what the royalty percentage should be when the judge Declares his ruling. I find patent lawsuits involving companies other than Apple a lot more interesting.

Zeikku said,

I agree. However, I do think Motorola's 2.25 percent demand for royalties is reasonable, but maybe that's just me.

2.25 % is what Microsoft is offering as reasonable. How do they justify $ 15/= for every Android device regardless of price ? They should be complaining !!!