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Jury Finds Google Guilty of Standards-Essential Patents Abuse Against MS
recoiledsnake writes "A federal jury in Seattle ordered Google to pay Microsoft $14.5 million in damages for breach of contract for failing to license at reasonable terms standard essential patents covering wireless and video technology used in the Xbox game console. Motorola had demanded Microsoft pay annual royalties of up to $4 billion for use of patents that are part of the H.264 video and 802.11 wireless standards, which are baked into Windows and the Xbox video game console. Microsoft said it was willing to pay royalties but not at the 2.25 percent of the product price that Motorola sought. We previously covered Motorola's exorbitant demands."
As far as I know thins is the sequence of the events: Microsoft asked Motorola for a quote on a licence for the patents in object. Motorola quoted a 2.25% licensing fee on the product price. Microsoft sued motorola. Now, generally here someone acting in good faith would at least first complain that the fee is too much, and ask for a renegotiation. Microsoft just sued, as if this was their intention right from the start. (IIRC at this point Motorola countersued in Germany and won a temporary injunction on sales, that was overruled by an US judge. Apparently the US justice system overrules the european courts, but that's nothing new, I guess.)
That would be a problem... ...if $4 billion weren't an initial offer that MS never bothered making a counter offer on.
The missing information is that Google bought Motorola Mobility, the Motorola unit involved in this case, in 2011.
Actually, 2.25% was the opening request - the same opening request they made to Nokia, Sony, and a bunch of other companies. MS ran to the courts to complain rather than negotiate. Not sure how it's abusive to make an initial offer that's higher than you expect to get. Now, had Motorola/Google refused to negotiate that 2.25%, it might be abusive - but that's not what happened.
Motorola.
If you bought a company that did something prior to your buying it, are you evil?
In any case, Microsoft is the evil one in this case because, if you followed the case at all, you would have noticed that Motorola actually asked for a reasonable amount by industry standards but Microsoft didn't even attempt to negotiate and, instead, went straight to a court challenge arguing things that aren't quite even law.
22%? um 2.25% as an opening bid with the normal ending point of 1.2% or 0% depending on cross licensing agreements. At no point was there a 22% offer on the table.
Agreed. It's a pretty common tactic to open negotiations that way though. Patent holder says 2.25%, Licensee counteroffers 0.0001%, and eventually they arrive at a reasonable number. In this case though Microsoft didn't even make a counteroffer, they just went straight to the courts.
--- Most topics have many sides worth arguing, allow me to take one opposite you.
And, the argument being made by Microsoft and Apple is that patents on rounded corner or bouncing when you slide for a page, or any number of other non-SEP patents should cost more than the patents for the standard and that when a patent is contributed to a standard under FRAND terms that holder loses there ability to enforce that patent via injunction when others choose not to even negotiate a royalty rate. The end result is no patents being contributed to standards, and ending the standard process entirely because the standards can't avoid patents.
Basically, Microsoft and Apple are killing the goose that lays the golden eggs because without standards the whole ecosystem on which their non-essential patents gain their value goes away.