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November 22, 2012

Microsoft-Motorola Patent Trial Wraps Up

It is all over but the ruling.

Microsoft’s and Google’s Motorola Mobility patent trial wrapped up Nov. 21 with an expert witness testifying Microsoft will make roughly $94 billion in revenue over the next four years through use of Google’s patented wireless technology, according to Reuters. Microsoft’s Xbox and Surface tablet both use the technology.

Michael Dansky, an expert for Google’s Motorola Mobility unit, included a wireless adapter Microsoft no longer sells in the $94 billion, Reuters reported.

Microsoft, Reuters said, declined to comment on the $94 billion figure.

The trial, which kicked off Nov. 13 in Seattle federal court, could set a precedent in how to price patents that are part of industry standards.

The patents at issue are standards-essential patents that cover inventions that are part of industry standards. Such patents are to be licensed under fair, reasonable, and non-discriminatory (FRAND) terms.

Microsoft said it sought to license the patents associated with H.264 video and the 802.11 Wi-Fi standard in 2010, adding it would have to shell out up to $4 billion a year to use video streaming and Wi-Fi technology in its Windows and Xbox products if Motorola has its way.

The software giant has said it is prepared to pay a royalty, but added the 2.25 percent of the product price Motorola wants is not only unfair, but violates its promise to license the patents fairly. Microsoft has suggested a $1 million fee.

U.S. District Judge James Robart attempted a settlement between the rivals earlier this year to no avail, causing him to schedule the trial.

Robart, who reversed an earlier decision to make public testimony about patent license agreements between Microsoft, Motorola and other tech companies, cleared the courtroom to hear two hours of testimony in private.

During the public portion of his testimony, Dansky said Motorola’s video patents are vital to Microsoft and other such companies and, therefore, merit hefty royalties, Reuters reported.

Robart is not expected to make his ruling for a number of weeks because both companies must still file additional legal briefs.

This trial is not the first time Motorola has been accused of leveraging unfair patent fees.

The Federal Trade Commission is currently investigating Google’s handling of patents it attained in its $12.5-billion deal to purchase Motorola Mobility in May, sources told the Wall Street Journal (WSJ).

It is alleged Google declined its mobile device rivals’ patent licenses and obtained court injunctions against them to keep their products from being sold.

FTC lawyers have threatened to charge the company under Section 5 of the FTC Act —which prohibits unfair or deceptive business practices —for using Motorola’s patents as ammunition against rivals such as Apple and Microsoft, the source told WSJ.

Microsoft and Motorola have filed several patent violation lawsuits against each other in the U.S. and Germany.

In October, Motorola won its app patent case against Microsoft. A German court ruled Motorola did not breach Microsoft’s patent that makes apps work on various handsets, meaning a developer is not required to produce independent codes and apps for different Smartphones.

Microsoft Corp. vs. Motorola Inc., 10-cv-1823 can be read here.