Motorola vs. Microsoft: Motorola’s Revenge Backfires

Written By Heather

Create a Google alert for “patents” and pretty much all you’ll see is information regarding the latest antitrust complaint from Microsoft against Motorola. In this particular battle, Microsoft is the “infringer” of a few patents, but is complaining about the large fees for the patents. Of course, the two-year long Microsoft vs. Motorola war is really just a part of the Microsoft vs. Google war, especially now that Google has partnered with Motorola Mobility.

Microsoft and Motorola have participated in a petty patent battle since Microsoft filed a few surprise patent infringement complaints against Motorola in the fall of 2010, but Motorola may have gone too far in its extreme royalties for use of their technologies that fall under their standard-essential patents (SEPs), or patents that are necessary to use in order to implement standards-based technologies. These standard-essential technologies are supposed to be licensed on “reasonable and nondiscriminatory”, or RAND, terms in the United States (US), and “fair, reasonable and nondiscriminatory”, or FRAND, terms in the European Union (EU). Microsoft filed an antitrust complaint to the European Commission (EC) on Wednesday, claiming that Motorola’s SEPs did not meet FRAND terms due to their excessive royalties for using H.264 video codec technologies- Motorola has apparently demanded $22.50 for every $1,000 laptop! In addition, Motorola has also tried to block sales of Xbox consoles for using wireless LAN technology. Dave Heiner, the man behind the complaint, blogs that the royalties charged for using the H.264 video codec technologies could “Kill Video on the Web”, but Heiner’s response seems a bit extreme and also a bit hypocritical, given that Microsoft charges Android and Samsung excessive royalties for using its own SEPs.

Motorola responded that it is willing to resolve the issue, but this response is probably induced from Apple’s filing of a similar antitrust complaint to the EC concerning Motorola’s violation of FRAND terms. Samsung is also in that mix due to some of its questionable licensing terms, which essentially makes Europe the center stage for the major on-going patent wars in IT. This location makes sense, however, because the demand for smartphones and tablets in Europe is just starting to soar, while the demand in the US has been soaring for a while.

Using patent infringements as weapons against competitors is no new tactic, and Microsoft and Google have been battling this way since mid-2010, hoping to win influence in the US Federal Government and also in other developed countries. In fact, the number of mobile patents owned by Motorola was probably a huge driving force in Google’s decision to partner with the company. However, it’s a little ironic that Motorola has warped the meaning of FRAND to attack Microsoft by arguing that “fair and reasonable” is to force others to recognize the value of industry standards by paying excessive royalties, which is the opposite intent of FRAND.

It will be interesting to see what the EC rules and also to see if it affects Google’s acquisition of Motorola Mobility, currently still in progress. Perhaps excessive royalties in SEP licensing terms are in fact “fair and reasonable” in today’s world, especially since both companies seem to be making a huge amount of money anyway. However, I think it is more likely that both Motorola and Microsoft will have to slightly revise their licensing terms, so Google may want to start thinking about that…