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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

April 11, 2012 at 12:23 PM

Judge issues ruling allowing Microsoft to continue selling in Germany

[Update 4:17 p.m.: A federal judge in Seattle has granted Microsoft’s request to prevent Motorola from enforcing a possible upcoming injunction that could stop Microsoft from selling Windows and Xbox in Germany.

Granting Microsoft a temporary restraining order and preliminary injunction, Judge James Robart of the U.S. District Court in Western Washington made the decision Wednesday afternoon in a patent case Microsoft filed against Motorola.

Leading up to his decision, Robart talked about the “irreparable harm” Microsoft could face if a temporary restraining order were not issued: Possibly not being able to sell its products in Germany or facing licensing fee negotiations with Motorola “under threat” of an injunction.”

Robart also set a $100 million bond from which Microsoft would have to pay Motorola in case a court determines later that Motorola should have been allowed to get its injunction in Germany.

Microsoft issued a statement from its deputy general counsel David Howard, saying: “Motorola promised to make its patents available to Microsoft and other companies on fair and reasonable terms. Today’s ruling means Motorola can’t prevent Microsoft from selling products until the court decides whether Motorola has lived up to its promise.”

Motorola issued a statement saying: “As a result of today’s hearing, Microsoft has committed to take a license under MMI’s patents essential to certain standards, in the event the court determines that Microsoft is entitled to a RAND-based license. Our focus from the outset has been to receive fair value for our intellectual property based on Microsoft’s use of MMI’s patented technology.”]

From earlier:

Inside a federal courtroom in downtown Seattle, a judge will issue a decision this afternoon that could ultimately affect whether Microsoft can continue to sell some of its top products in an entire country 5,000 miles away: Germany.

The case is Microsoft vs. Motorola and it’s one of several patent battles being fought between the two companies in courtrooms from Seattle to Washington, D.C. to Mannheim, Germany.

At stake in today’s hearing is whether Motorola would be able to seek and enforce a possible injunction in Germany barring Microsoft from selling Windows and Xbox in that country.

A judge in Mannheim, Germany is expected to issue a decision April 17 on whether Microsoft is violating Motorola’s patents on technologies involving online video delivery used in Windows and Xbox. If Microsoft loses, Motorola can seek an injunction.

[Update April 12: Bloomberg reports that the Mannheim court was scheduled to issue its ruling April 17 but that that ruling has been postponed to May 2.]

Faced with that risk, Microsoft pulled its European distribution center out Germany earlier this month. The company plans to set up its new European distribution center in the Netherlands.

The dispute dates back to a lawsuit Microsoft filed in U.S. District Court for Western Washington in November 2010. That lawsuit claimed Motorola was breaching its contract to provide, at reasonable rates, use of its patented technologies that have become standard in online video viewing and wireless usage.

Typically, companies that own patents involving technologies that have become standard use in the industry — so-called “standard-essential patents” — agree, as part of joining international standards groups, to license them under fair and reasonable terms.

Microsoft contended that Motorola demanded unreasonable royalties for its standard-essential patents used in technologies in Windows and Xbox when Motorola asked for licensing fees of 2.25 percent of the sale price of Windows PCs and Xbox consoles. That would have amounted to about $4 billion annually, according to Microsoft.

(Both Microsoft and Apple have complained about Motorola to the European Commission on the issue; the EC is investigating.)

Motorola, in turn, filed a lawsuit in Mannheim, Germany in July 2011, claiming that Microsoft was violating some of Motorola’s patents. Should the German judge decide next week that Microsoft has indeed violated Motorola’s patents, that could pave the way for an injunction.

But injunctions work differently in Germany than in the U.S.

If the German court issues an injunction, Microsoft could conceivably still sell its products there. It would take Motorola going to court again to enforce that injunction.

So Microsoft is asking U.S. District Court Judge James Robart in Seattle — who is hearing Microsoft’s November 2010 case — to issue a temporary restraining order and preliminary injunction. In doing so, Microsoft hopes to maintain the status quo, temporarily preventing Motorola from enforcing any injunction that might come down until Robart has a chance to rule on whether Motorola is breaching its agreement to provide licensing for its standard essential patents on reasonable terms.

“This case is about Motorola’s broken promise on its standard essential patents,” a statement from Microsoft said. “We have asked the Court to enforce the terms of the contract made by Motorola and remain confident in our case.”

Motorola has opposed Microsoft’s motion for a temporary restraining order and preliminary injunction, saying in a court document that Microsoft was “grossly overreaching” by asking the court to “inject itself into foreign litigation proceedings in an entirely unwarranted manner.”

Motorola had issued a statement earlier saying that it was “confident that it has honored its FRAND obligations. We have long-standing, fair, reasonable and nondiscriminatory (FRAND) licensing agreements with a wide spectrum of companies in the U.S. and around the world.”



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