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May 8, 2012 at 6:51 AM

Judge scolds Microsoft, Motorola in latest court feud

(This story is running in the print edition of The Seattle Times May 8, 2012. – Janet I. Tu)

A Seattle courtroom hearing in a patent case fought Monday between Microsoft and Motorola may have involved lots of technical and legal jargon, but a few times the two companies’ arguments sounded more like a playground dispute.

“They started this,” Motorola’s attorney, Jesse Jenner, said at one point about one of many rounds of litigation waged between the two companies. “We didn’t start this.”

And U.S. District Judge James Robart, who said he was reserving his ruling until later, ended up scolding both companies..

“The court is well aware it is being used as a pawn in a global, industrywide business negotiation,” Robart said at the end of the three-hour hearing.

The conduct of both Microsoft and Motorola, he added, “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.”

Among the issues before the judge at Monday’s hearing was Microsoft’s contention that Motorola breached a contract by demanding unreasonable licensing fees for use of some of its industry-standard patents. The judge was also asked to rule on Motorola’s claim that Microsoft gave up its rights to license those patents at reasonable rates when it sued, rather than negotiated with, Motorola.

Microsoft also asked the judge to decide that Motorola is not entitled to any injunction against Microsoft importing products featuring Motorola’s industry-standard patents under dispute.

In reserving his ruling, Robart said he would issue a written ruling on an unspecified later date.

The judge indicated his thinking when he said his preliminary view was that he would deny Microsoft’s motion that Motorola breached its contract and Motorola’s motion that Microsoft gave up its rights to licenses at reasonable rates.

If the two companies don’t reach a settlement, a jury trial in the case is scheduled for Nov. 19.

The Seattle case is one of several patent battles being waged in cities around the world between Microsoft and Motorola, which is being acquired by Microsoft competitor Google.

The case here could help set licensing rates that Microsoft would pay Motorola in order to keep selling Xbox and Windows products worldwide. Motorola had asked courts in the U.S. and Germany to issue injunctions against the sales of some of those products.

Last week, a German judge ruled that Microsoft infringed on Motorola’s patents in some of the technologies used in Xbox and Windows 7 and granted an injunction against the sales of those products in Germany.

But the injunction was unenforceable — at least for the time being — since Robart 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 before the U.S. International Trade Commission in Washington, D.C., where Motorola contends the Xbox infringes on some of Motorola’s patents and has asked for an injunction preventing Microsoft from importing Xbox consoles into the U.S.

A trade-commission judge has ruled Microsoft violates four of those patents — three of which are standards-essential patents — but a six-member commission is to make the final ruling on any injunction Aug. 23.

The dispute heard Monday stems from a letter Motorola sent to Microsoft in 2010 asking for 2.25 percent of the sale price of each device that uses Xbox and Windows, since the technologies contain standards-essential patents belonging to Motorola.

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

In arguments Monday, Microsoft’s attorney, Art Harrigan, said Motorola’s patents formed a very small percentage of the Windows operating system.

Motorola disputed the $4 billion figure, with one of its attorneys asserting that Microsoft “stacked” the figures to get to that amount. “Motorola has never stacked its licensing,” the attorney said.

The company said after Monday’s hearing that it’s had a long history of licensing its patents with more than 50 companies but that Microsoft has refused to negotiate, opting instead for “an aggressive litigation strategy.”

Microsoft, too, issued a statement saying it was pleased that the temporary restraining order against Motorola enforcing an injunction in Germany remains in place.

Robart pressed both sides on issues ranging from the timing of the lawsuits to whether licensing rates were offered, and negotiations attempted, in good faith.

He also noted wryly that the legal fees alone in the two companies’ dispute “could finance a small country.”

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