Microsoft ‘discriminated against’ by InterDigital SEP demands
Microsoft has sued InterDigital claiming that the company has requested a “discriminatory” licensing rate for 3G and 4G standard-essential patents (SEPs) and is in breach of US anti-competition law.
At the centre of the dispute are the licensing rates for 3G and 4G SEPs owned by InterDigital. Microsoft claims the rates amount to an abuse of the licensing company’s “monopoly position”.
InterDigital owns 1,000 of the 40,000 3G SEPs and 800 of the 60,000 4G SEPs that are covered by the European Telecommunications Standard Institute (ESTI) agreement.
The ESTI agreement requires parties to license their patents on fair, reasonable and non-discriminatory terms.
In a complaint filed on Thursday, August 20, at the US District Court for the District of Delaware, Microsoft said: “InterDigital is holding up Microsoft to force it to pay: (1) supra-competitive worldwide royalties on discriminatory terms for InterDigital’s declared SEPs, and (2) for a licence to its non-SEPs as a condition for accessing the declared SEPs.
“InterDigital further ties its supra-competitive royalty demands to the entire value of the cellular devices—typically as an arbitrary percentage of the overall price of the cellular devices,” it added. InterDigital’s rates are not detailed in the complaint but Microsoft said it is charged “higher rates” than its competitors.
According to the complaint, InterDigital refused to show Microsoft pricing proposals made to competitors.
“InterDigital uses the shroud of secrecy over its licensing proposals and discussions to maximise the monopoly profits. InterDigital refuses to disclose relevant licensing information, including royalty amounts, offered to Microsoft’s competitors,” the complaint added.
Microsoft is requesting that InterDigital is found to be in breach of section 2 of the Sherman Act.
Under section 2 of the act, a party found to “monopolise any part of the trade or commerce ... shall be deemed guilty of a felony”.
The software company is also asking for any damages awarded to be tripled.
