April 27, 2013 in Business

Ruling on royalties a win for Microsoft

Judge sets formula for Motorola payments
Janet I. Tu Seattle Times
 

SEATTLE – A federal judge in Seattle, in a case that has potentially wide-reaching ramifications for tech companies worldwide, has issued a ruling favorable to Microsoft Corp. in its ongoing patent battle with Google Inc.’s Motorola Mobility.

U.S. District Court Judge James Robart on Thursday made public his ruling determining how much Motorola may charge Microsoft for using certain patented Motorola technologies in its products.

The royalty rates and ranges set by Robart are far closer to Microsoft’s proposal than Motorola’s asking price.

Motorola had asked initially for 2.25 percent of each Xbox and Windows sale, a rate Microsoft said would amount to paying Motorola $4 billion per year.

Microsoft had said $1.2 million annually might be a reasonable amount to pay Motorola.

Robart set royalty rates that Microsoft says would amount to the company paying Motorola about $1.8 million annually.

“This decision is good for consumers because it ensures patented technology committed to standards remains affordable for everyone,” David Howard, Microsoft’s deputy general counsel, said in a statement.

A Google spokesman issued a statement saying that: “Motorola has licensed its substantial patent portfolio on reasonable rates consistent with those set by others in the industry.”

The patents in this case involve standard-essential patents, patents for technologies deemed so essential that they have become standard use in the industry.

This case has wider ramifications for the tech industry because it’s the first time a federal judge has ruled on reasonable royalty rates or ranges for such standard-essential patents.

Robart’s ruling this month marks only the end of the first part of the trial.

The second part is scheduled to start Aug. 26, with a trial that will focus on whether Motorola actually did breach its contract to provide those standard-essential patents on fair and reasonable terms.


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