Microsoft and Motorola Mobility will face off in court today for the start of a patent trial that could help establish how royalty rates are calculated for standards-essential patents.
Microsoft sued Motorola’s smartphone division, which is now part of Google, two years ago, claiming it demanded an unreasonable royalty rate for the use of its patents related to the 802.11 wireless and H.264 video standards.
According to Microsoft, Motorola now wants too much money for the use of the patents, chargin 2.25% of the price for each product that implements the standards, including the Xbox 360 game console and Windows OS.
For the 802.11 patents alone Microsoft argued it should pay only $0.05 on each product it sells.
Since Microsoft and Motorola can’t reach agreement, Judge James Robart of the US District Court in Seattle has decided he has no choice but to step in and determine a royalty rate for them.
The trial will be in two parts. In the first, Robart will calculate a royalty rate for Motorola’s patents. He’ll make that decision on his own, without a jury. In the second part, expected to begin next week, a jury will use that rate to decide whether Motorola is in breach of contract by overcharging Microsoft.
It won’t be the first time a judge has determined a FRAND royalty rate for patents, but Robart’s decision nevertheless could set a precedent, both in a narrow sense and potentially in a broader sense too.
In the narrow sense, his decision will establish a royalty rate for Motorola’s standards-essential patents that could be applied to other cases involving the same technology. For example, the 802.11 patents were part of a case that was dismissed last week between Motorola and Apple.
In a broader sense, the case could establish a methodology for calculating royalty rates for standards-essential patents, which could then be used in other cases. That’s less certain, however, since individual cases differ, in terms of the number of patent holders involved and the relative contribution of any one company’s patents.
Google inherited this lawsuit when it bought Motorola Mobility last year, and a Google spokeswoman declined to comment on it. Microsoft called it "an important issue for consumers and industry" and said it was glad of the chance to present its case.
In trial briefs filed last week, each company advances its own method for calculating the royalties. Motorola advocates for a "hypothetical license," or figuring out how much Microsoft would have had to pay if the companies had sat down to make a deal two years ago.
Microsoft prefers to look at royalty rates established by companies in other patent pools, such as the one established for the MPEG LA standard.
IDG News Service
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