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6 September 2013Patents

Motorola faces damages for Microsoft FRAND breach

Google-owned Motorola Mobility has been fined $14.5 million for failing to license patents to Microsoft on fair, reasonable and non-discriminatory (FRAND) grounds.

A jury at the US District Court for the Western District of Washington made its decision on Wednesday after the case began on Monday.

The case was dealing with standard-essential patents (SEPs) covering the H.264 video and the 802.11 wireless industry standards, used by Microsoft’s Xbox console and Windows software.

In the first part of the dispute earlier this year, Judge James Robart found that Microsoft owed about $1.8 million a year for using Motorola’s patents, rather than the $4 billion claimed by the Google-owned company.

Microsoft accused its rival of breaching an agreement to license the disputed patents on FRAND grounds, and sought about $23 million in damages.

These claims were mostly based on costs from a tandem German dispute in which Microsoft had to relocate some of its Xbox production facilities to the Netherlands after being sued by Motorola. A German court issued an injunction against Microsoft but Judge Robart in the US later blocked that order.

Motorola said it was disappointed by Wednesay’s decision but told WIPR that it will file an appeal.

It is the first time a US court has decided a remedy for the breach of a FRAND licence covering SEPs.

Holders of such licences now see that broken promises can backfire, said Florian Müller, author of the FossPatents blog.

“It’s a clear signal to other standard-essential patent holders: there's a potential liability if you renege on your promises, and damages could be much greater in cases in which someone actually does obtain and enforce injunctive relief, or in which an implementer, at point blank, bows to threats.”

He added: “Even though Google can easily afford this in financialterms, the legal impact of this outcome is very significant. Having been found to have breached its FRAND licensing commitment, Google’s Motorola faces an uphill battle in the further dispute.”

Motorola and Microsoft are embroiled in a wider dispute over patents. Next week there will be separate hearings in Germany on injunctions against Microsoft for using Motorola’s SEPs and Microsoft’s claims that Motorola infringed a non-SEP.

The US ruling may also have implications for other lawsuits involving companies such as BlackBerry, which may have signed licensing deals under the threat of litigation, according to the AllThingsD tech news website.

As part of a dispute that began in 2008, BlackBerry, then called Research in Motion, alleged Motorola claimed unreasonable royalties for use of SEPs. The case later settled after Motorola sued for patent infringement at the International Trade Commission, with BlackBerry paying a one-off sum as well as continuing royalties to Motorola.

“If Motorola Mobility is found to be in breach of its FRAND commitments as a result of the trial, BlackBerry might conceivably be able to argue that it suffered similar transgressions,” AllThingsD said before the decision.

“It might even be able to make the case for paying a lower royalty rate going forward — or a rebate on fees already paid.”

Apple has also brought FRAND claims against Motorola.

Microsoft did not respond to a request for comment.

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