US judge sets FRAND rates for Motorola patents in Microsoft case

Technology patents

US judge sets FRAND rates for Motorola patents in Microsoft case

Warwick Ashford

A US district judge has ruled that Google’s Motorola Mobility is entitled to $1.8m a year from Microsoft for its use of certain patents in its Xbox and Windows products.

Motorola had been seeking more than $4bn in a legal battle around patents related to the H.264 video standard and the 802.11 wireless standard, both considered standard essential patents (SEPs).

SEPs are considered so basically necessary for a given industry that patent-holding companies are required to license them at fair, reasonable, non-discriminatory prices.

The ruling is significant because it is the first time a judge has determined specific royalty fees for the use of SEPs, according to US reports.

Microsoft sued Motorola in November 2010 after the companies failed to reach an agreement on fair, reasonable and non-discriminatory (FRAND) royalty rates for the patents.

Having set out what the FRAND rates should be in the case, judge James Robart will now consider Microsoft’s claim of breach of contract in the second phase of the case, which is set to begin in October.

Robart said Microsoft should pay a FRAND royalty rate of .0555 cents per product, such as the Xbox and Windows, that use Motorola's H.264 patent portfolio.

He said Microsoft should pay 3.471 cents per unit for use of Motorola's 802.11 patent portfolio for its Xbox products and 0.8 cents per unit for all other Microsoft products using the same portfolio.

Microsoft praised the ruling, but Motorola Mobility said that it had “licensed its substantial patent portfolio on reasonable rates consistent with those set by others in the industry".

Microsoft lawyers said the ruling was good for consumers because it ensured that patented technology committed to standards remained affordable.

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