Microsoft vs. Motorola in Patent Royalty Rate Case
An epic courtroom battle between Microsoft and Motorola began on Tuesday after a suit filed back in 2010 claimed that Motorola had breached its contract to offer use of its patented technologies at a reasonable rate. The technologies in question are what many consider a part of the industry standards for online-video viewing and wireless usage.
Now, it’s for the judge to decide what that reasonable rate is. Motorola is asking a 2.25 percent royalty rate on the sale price of all Xbox and Windows, though Microsoft contends that this asking price would add up to $4 billion each year- a price too high to pay for such “standard-essential patents.”
This case marks the first time a federal judge will decide what is reasonable when it comes to royalty rates for industry-essential patents. So what does Microsoft think is fair? About $1.2 million per year for the rights to use Motorola’s patented technology.
While there’s plenty at stake for each of these tech-industry giants, they aren’t the only ones eager for an answer. The courtroom was standing-room only on Tuesday, packed with lawyers and other spectators, and there’s no doubt that all of the technology industry is following the case from a distance.
A common rule that applies to standard-setting patents is that it must be adopted on “reasonable and non-discriminatory terms,” also referred to as RAND. The “reasonable” usually refers to the licensing rates, while the “non-discriminatory” generally refers to treating all potential licensees equally.
While the trial may only last for another week or so, a decision might not be announced until the New Year.