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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.

May 7, 2012 at 10:02 AM

Judge reserves ruling in Microsoft-Motorola case; calls both companies’ legal maneuvering arrogant

[Update 12:14 p.m.: Judge Robart says he will reserve his judgement on the motions as he needs more time to consider the arguments. He will issue a written ruling. He said his preliminary view is that he will likely deny Microsoft’s motion that Motorola breached its contract, and that he would likely deny as well Motorola’s motion that Microsoft gave up its right to licenses under reasonable terms.

Robart also had some strong words for both parties: “The court is well aware it is being used as a pawn in a global, industry-wide business negotiation.”

The conduct of both Microsoft and Motorola, he said, “has been driven by an attempt to secure commercial advantage. To an outsider looking at it, it has been arbitrary, it has been arrogant and frankly it has been based on hubris.”

Update 1:10 p.m.: Microsoft issued this statement: “We look forward to seeing Judge Robart’s decision on today’s hearing and we are pleased the temporary restraining order remains in place pending the further ruling from the court.”

Update 2:34 p.m.: Motorola issued this statement: “We remain confident that Motorola Mobility has honored its FRAND commitments, and have a long history of successful and amicable cross-licensing relationships with more than 50 companies. Despite this, Microsoft has refused to negotiate and has instead initiated and continued to pursue an aggressive litigation strategy aimed at attacking Motorola Mobility and the Android platform. Regardless of their transparent tactics, we are focused on resolving this matter in a way that fairly compensates Motorola Mobility for the use of our valuable IP and protects the interests of our stakeholders.”.]

From earlier:

I’m at a hearing this morning at the federal courthouse in Seattle where Microsoft and Motorola are battling over whether Motorola is demanding unreasonable licensing fees from Microsoft for some of its patents. (This post will be updated throughout the morning.)

What Judge James Robart of the U.S. District Court of Western Washington decides may play a big part in the larger, global patent battle between the two tech companies.

The case in Seattle could ultimately play a role in whether Microsoft will be able to import Xbox consoles – which are made in China — into the U.S. and whether Xbox and Windows products can be sold in Germany.

At issue in today’s case is Microsoft’s contention that Motorola demanded unreasonable licensing fees from Microsoft for some of its standards-essential patents – patents for technologies that have become standard-use within the industry.

Motorola is in the process of being acquired by Microsoft competitor Google.

Motorola sent Microsoft a letter in 2010 asking for 2.25 percent of the sale price of products that the patents in question are involved in: namely Xbox and Windows.

Microsoft considers that rate outrageous, saying it would amount to $4 billion annually.

In arguments this morning, Microsoft’s attorney said Motorola’s patents formed a very small percentage of the Windows operating system, much less of the laptop itself.

Motorola disputes the $4 billion figure, with one of its attorneys saying in court this morning that Microsoft “stacked” the figures to get to that amount – counting the 2.25 percent multiple times if multiple patents were involved in a product. “Motorola has never stacked its licensing,” the attorney said.

Judge Robart today is hearing arguments today on several main issues:

Microsoft contends that Motorola violated its agreement to provide its standards-essential patents on reasonable terms when it sent its letter demanding the 2.25 percent. “This was a take it or leave it” offer, Microsoft’s attorney said.

Motorola contends that that letter was merely an opening offer to further negotiations and that Microsoft gave up its rights to Motorola’s standards-essential patents on reasonable terms when it didn’t negotiate and proceeded directly to suing Motorola. In the real world, “people negotiate — whether it’s buying a house or a car,” Motorola’s attorney said.

Microsoft is also asking the judge to decide that Motorola is not entitled to any injunction against Microsoft importing products that feature Motorola’s standards-essential patented technology.

The two companies have also been battling in courts in Germany and Washington, D.C. Last week, a German judge decided Microsoft infringed on some of Motorola’s patents in some of the technologies used in Xbox and Windows and granted an injunction against the sales of those products in Germany. But Judge Robart had issued a temporary restraining order last month preventing Motorola from enforcing any such injunction until he reaches a decision in the Seattle case.

Further, the two companies are battling in the U.S. International Trade Commission in Washington, D.C., where Motorola contends the Xbox infringes on some of Motorola’s standards-essential patents and has asked for an injunction preventing Microsoft from importing Xbox consoles into the U.S. An ITC judge has ruled that Microsoft violates four of those patents but a six-member commission will make the final ruling on any injunction.

Judge Robart asked questions today about whether Motorola offered the 2.25 percent in good faith or whether it was an opening gambit; whether Microsoft had an obligation to negotiate in good faith; and the timing of both companies’ claims and counter-claims.

He also pondered how to harmonize the positions coming out of this court with that of the German court and about determining what reasonable terms are for such patents.

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