Microsoft tastes victory in Motorola SEP dispute

The US Court of Appeals for the Ninth Circuit has upheld a $14.5 million damages award in favour of Microsoft in its standard-essential patent (SEP) licensing row with Motorola.

In a judgment handed down yesterday, July 30, the court re-affirmed a lower court’s ruling that former telecoms company Motorola had breached its reasonable and non-discriminatory (RAND) licensing commitments to Microsoft.

Motorola, which was bought by Google in 2012 but has since been sold off, had appealed against a 2013 decision by the US District Court for the Western District of Washington.

At the centre of the dispute are a number of Motorola’s SEPs related to the H.264 video and the 802.11 wireless industry standards that had been used by technology in Microsoft’s Xbox games console.

Motorola had demanded that Microsoft pay $4 billion in royalties ever year, a move that prompted Microsoft to file for a declaratory judgment in 2010 that the request violated RAND terms.

The patents, which were owned by Motorola at the beginning of the dispute, were transferred to Google after it bought Motorola.

In 2014, Google sold its Motorola business to China-based technology company Lenovo for just under $3 billion, but retained the rights to the patents.

Judge James Robart, presiding over the 2013 case at the Washington district court, split the hearings into two parts with him and jury ruling on different aspects.

In the first part, Robart ruled that a “reasonable royalty” was  about $1.8 million a year.

In the second part, a jury determined that Motorola had breached RAND licensing commitments concerning the SEPs and was subsequently fined $14.5 million, $3 million of which covered Microsoft’s attorneys’ fees.

Motorola appealed against the ruling, arguing that the district court overstepped its mark by judging what would be a reasonable royalty rate and that the court also erred in awarding Microsoft the damages and attorneys’ fees.

On the question of whether the court overstepped its mark, Judge Marsha Berzon at the ninth circuit said Motorola consented to Robart determining the reasonable royalty rate before the jury trial on damages.

Berzon added that the jury trial “analysed that evidence in its exhaustive findings of fact and conclusions of law, in a manner consistent with the federal circuit’s recent approach to establishing damages in the RAND context”.

“The jury’s verdict was supported by substantial evidence, and its damages award was proper,” she concluded.

Neither Microsoft nor Motorola had responded to a request for comment at the time of publication but we will update the story should either company get in touch.