The jury in a long-running patent trial between Microsoft and Motorola has decided in Microsoft’s favor, saying that Motorola breached its agreements to provide licenses to certain of its patents on fair and reasonable terms.
The U.S. District Court jury in Seattle, which deliberated for about three hours, awarded Microsoft about $15 million in damages — about half of what Microsoft had sought.
This means that Microsoft has won both rounds of a patent battle in which the court decided that Motorola’s patents in the case were worth far less than Motorola Mobility, now owned by Google, had initially asked Microsoft for.
“This is a landmark win for all who want products that are affordable and work well together,” David Howard, a Microsoft deputy general counsel, said in a statement. “The jury’s verdict is the latest in a growing list of decisions by regulators and courts telling Google to stop abusing patents.”
Motorola spokesman William Moss said in a statement: “We’re disappointed in this outcome but look forward to an appeal of the novel legal issues raised in this case. In the meantime, we’ll focus on building great products that people love.”
The trial is the second of two stemming from a lawsuit Microsoft filed in November 2010, claiming Motorola breached its agreements to provide, at reasonable rates, use of its patented technologies that have become part of industry standards in online-video viewing and wireless usage.
(Private companies that hold such industry-standard patents agree, as part of joining international-standards groups, to license them under “fair, reasonable and nondiscriminatory” — or FRAND — terms.)
In its offer, Motorola had asked Microsoft for 2.25 percent of the sale price of each Xbox and Windows. Microsoft had said that would mean paying Motorola $4 billion annually.
Microsoft had suggested that $1.2 million a year would be a reasonable amount for the company to pay to Motorola for use of those patents.
After Round 1 of the trials, which took place in Seattle last November, U.S. District Court Judge James Robart issued an April ruling setting what he deemed to be reasonable royalty rates and ranges for Microsoft to pay for use of the Motorola patents at issue.
According to Microsoft’s calculations, the rate set by the judge would amount to the company paying about $1.8 million annually to Motorola — a figure far closer to what Microsoft had proposed than what Motorola had initially offered.
Motorola has said that that the initial offer was just a starting point, subject to further negotiations.
A long-running patent battle between Microsoft and Motorola finally went before the jury for deliberation after a morning of closing arguments.
Microsoft and Motorola each reiterated their main points during the seventh day of Round 2 of a U.S. District Court trial in Seattle in which Microsoft is accusing Motorola of breaking an agreement to license certain of its patents on fair and reasonable terms. Attorneys for each side also managed to get in a few zingers.
Microsoft argued that the rate Motorola proposed for licensing its patents was so outrageously high that it was done precisely so Microsoft would say no. That would give Motorola an excuse to file for injunctions against the import of Xbox and Windows products.
Motorola’s offers were “sham offers,” Microsoft’s attorney Art Harrigan of Calfo Harrigan Leyh & Eakes told the court.
Motorola has said that its initial offer was a just a starting point, subject to further negotiation.
Harrigan referred to that when he told the court that Motorola had said its offer was “just a piece of paper.”
“Well,” Harrigan continued, “so is a ransom note.”
Motorola argued that its initial offer had to be taken in the context of the relationship between the two companies and painted a picture of a Microsoft that was out to make an example of Motorola for deciding to turn away from Microsoft’s mobile phone platform to Google’s Android. (Motorola is now owned by Google.)
Motorola’s attorney Bill Price of Quinn Emanuel Urquhart & Sullivan said Microsoft refused to pay a dime for use of Motorola’s patented technologies until it came under the threat of injunctions.
Microsoft “put Motorola through the hoops,” Price said, adding that the case was an illustration of “a large powerful company playing hardball and stage managing litigation.”
And though much of the trial involved dry and complicated technical or legal issues, the eight-member jury did manage to liven things up a little with theme days. On Tuesday, jury members decided to wear green. Today, they wore sports shirts.
Microsoft is seeking $29 million in damages: $23 million of that is for moving a distribution center from Germany to the Netherlands after Motorola won an injunction in Germany involving some of the same patents at issue. The other $6 million is for attorneys’ fees.
Round 1 of the trial took place last November, with Judge James Robart issuing an April ruling setting what he decided were reasonable royalty rates and ranges for Microsoft to pay for use of the Motorola patents at issue. Robart’s figures were far closer to what Microsoft had said would be reasonable than what Motorola had initially asked for.
A verdict is expected sometime later this week.