Motorola Loses Out on Patent Payments to Microsoft

A US District Court judge has ruled that Microsoft will have to Motorola a royalty of $1.8 million (£1.1m) per year for technology used in the Xbox 360, substantially less than the $4bn originally sought by the Google-owner smartphone maker.

Motorola Mobility, which was purchased by Google last May for £7.9bn, was originally seeking $4 billion in royalties for Microsoft's use of video coding and wireless patents in the Xbox 360 consoles and Windows Phone smartphones. Microsoft offered to pay $1m per year.

The $1.8m awarded represents just 0.045% of Motorola's original claim.

Motorola was demanding royalties on all standard essential patents (SEPs) that are used by Microsoft, and that are part of the H.264 video and 802.11 wireless standards. District Judge James Robart resolved the dispute by setting a fixed rate for royalty payments from Microsoft to Motorola.

"This decision is good for consumers because it ensures patented technology committed to standards remains affordable for everyone," said Microsoft Deputy General Counsel David Howard in a statement.

Motorola was contacted for a comment but at the time of publication has yet to say anything on the ruling.

Judge Robart ruled that Microsoft will have to pay a minimum of 0.555 cents on devices sold that use technology from Motorola's H.264 portfolio, with payments will vary from device to device, with the upper limit set at 16.389 cents.

For Motorola's 802.11 patents, the maximum royalty Microsoft will have to pay is 3.471 cents per unit sold, which applies only to Xbox products. For other products using Motorola's 802.11 patents, royalties will again vary, though Robart set a lower bound of 0.8 cents per product sold.

This ruling represents only the first half of on-going legal battle between Microsoft and Motorola. In November, 2010, Microsoft sued Motorola claiming it had failed to set a specific rate for royalty payments. Though one has now been set, Microsoft's case against Motorola over its original failure to set one is still open with a trial set to be held in Seattle in the summer.