Microsoft, Google square off over patent royalty rates - milsapmustrien

Microsoft and Motorola Mobility will expression off in tourist court on Tuesday for the starting line of a patent test that could help constitute how royalty rates are calculated for standards-necessity patents.

Microsoft sued Motorola's smartphone division, which is today part of Google, two years ago, claiming it demanded an unreasonable royalty rate for the use of its patents indirect to the 802.11 wireless and H.264 video standards.

Standards are important because they can lead to lower costs, by increasing manufacturing volumes, and increment competition, by making it easier for consumers to swap to a rival company's cartesian product.

But companies often personal engineering science patents related to industry standards, complicating their carrying out. To ease matters, patent holders agree to license these essential patents on "feminine, reasonable and nondiscriminatory terms," which is what Motorola engaged itself to do with the patents in this case, court records prove.

Motorola straightaway wants besides a great deal money for the exercise of the patents, Microsoft says. Motorola wants Microsoft to pay 2.25 percent of the price for each product that implements the standards, including its Xbox 360 game console and Windows OS.

Microsoft says that's far excessively more. For the 802.11 patents, for instance, IT says it should wage only $0.05 on each intersection information technology sells. Information technology cites individual arguments, including one based happening a "stacking" theory, which says that if every society contributing patents charged every bit much as Motorola, the textbook would be too expensive to use.

Since Microsoft and Motorola can't reach accord, Judge James Robart, of the U.S. District Court in Seattle, has decided He has no more choice but to substitute and determine a royalty rate for them.

The visitation testament constitute in ii parts. In the first, Robart will calculate a royalty rate for Motorola's patents. He'll make that decision on his have, without a jury. In the second part, likely to begin next week, a panel will use that rate to decide whether Motorola is in breach of contract by overcharging Microsoft.

It won't beryllium the basic time a judge has ambitious a FRAND royalty rate for patents, said Mark McKenna, a law prof at Notre Chick Practice of law Cultivate. Simply Robart's decision notwithstandin could set a common law, both in a narrow mother wit and possibly in a broader sense excessively.

In the narrow sense, his decisiveness volition establish a royalty rank for Motorola's standards-requisite patents that could be practical 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.

If the court orders Motorola to license the patents at a particular rate, Motorola should past turn to Apple and offer them the same rate, McKenna said. "Malus pumila can then take or leave it."

In a broader sense, the case could establish a methodology for calculating royalty rates for standards-necessary patents, which could then be used in other cases. That's less certain, however, since individual cases dissent, in price of the number of patent holders involved and the congeneric share of whatever one company's patents.

It's not clear that judges are in the best position to set royalty rates, in particular because they're often not experts in the area of technology Byzantine. But standards bodies aren't necessarily the best choice, either.

"There are concerns that standards bodies tend to be henpecked by the parties who hold the most standards-essential patents," McKenna said.

Google inherited this lawsuit when it boughtMotorola Mobility last year, and a Google spokeswoman said the company declined to comment on it. Microsoft called IT "an important issue for consumers and industry" and aforesaid it was glad of the chance to present its case.

In trial Jockey shorts filed last week, each company advances its own method acting for calculating the royalties. Motorola advocates for a "hypothetical licence," or figuring out how much Microsoft would take up had to pay if the companies had sat down to make a cope two years ago.

Microsoft prefers to look at royalty rates established aside companies in past plain pools, such atomic number 3 the one established for the MPEG LA standard.

The outcome is unlikely to affect the prices consumers pay for Microsoft's products, said David Mixon, a married person with the law firm Bradley Arant Boult Cummings, which is not a political party in the case. Even if Motorola were to account a big win, Microsoft in all probability would absorb the extra costs rather than pass them onto consumers, atomic number 2 said, disposed the cost-sensitive markets information technology plays in.

Mixon doesn't think a king-sized win for Motorola is likely, however. Using its hypothetical permission theory probably would lead to an coloured royalty value that would arrive at the standards too costly to carry out, he aforementioned.

"I imagine they'll fixate something closer to what Microsoft is advocating, but in all likelihood at a slightly higher rate than Microsoft is offering," Mixon aforesaid.

James Niccolai covers data centers and general technology news for IDG News Service. Follow St. James the Apostl on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com

Source: https://www.pcworld.com/article/455626/microsoft-google-square-off-over-patent-royalty-rates.html

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