For my next post, the United States District Court for the Western District of Washington published a FRAND rate determination for the royalties that Google's Motorola Mobility could charge Microsoft for its use of Google's SEP's- specifically regarding a video codec and a WiFi standard. This was the first time in history that a U.S. court made a FRAND royalty determination on behalf of the implementer of a standard (Google in this case). Previous similar cases have only been regarding damages that were awarded for past infringement. The significance of this case is quite staggering, as it seems more and more FRAND rate determinations will be set by the courts in future, as opposed to the standard model of suing for post-violation damages. Regardless, Google took a major hit with the ruling of Judge James Robart, who decided that regarding the video codec standard, Microsoft would only have to pay Motorola about half a cent (.555 of a cent) per unit produced, as Motorola apparently did provide a significant value add to Microsoft's technology through this specific SEP. Regarding the WiFi standard, Motorola is only to be awarded 3.471 cents per Xbox unit, and .8 cents per unit of all other Microsoft products produced. What is the significance of all of this for Motorola and Google?
Motorola initially went into the case demanding that the FRAND rate be a $4 billion annual payment by Microsoft, however now it is estimated that with Microsoft's current sales Motorola can only expect a payment of around $1.8 million per year. This amount is 50% higher than what Microsoft claimed they were willing to pay - $1.2 million a year - however this is "less than a twentieth of a percent of Motorola's initial demand". Motorola will not even be able to cover their legal fees with this award amount, and it is clear that this determination was a major loss for both Motorola and Google. Moreover, this ruling is only further compounding Google's continued losses against Microsoft (see my previous article), as Google has failed to achieve significant returns of any kind from its purchase of Motorola Mobility. Google paid $12.5 billion to acquire Motorola, with an eye towards bolstering their patent portfolio, but they have seen limited returns (only in the millions of dollars) on the leveraging of Motorola's patent portfolio. It seems Google was fooled into purchasing Motorola due to the sheer number of patents that they possessed they did not examine the relevancy and value of each individual patent. For the time being then, it seems as if Microsoft is dominating Google, and I look forward to seeing how Google fights back.
Link: http://www.fosspatents.com/2013/04/court-determined-frand-rate-for.html
I wrote about this as well, and I agree that this is a huge blow to Google given their original royalty demands and then the subsequent reality of getting millions instead of billions of dollars.
ReplyDeleteI think most people would agree that it was a little ambitious for Google to expect a Hail Mary return on its $12.5Bn buyout through suing Microsoft. What is interesting is the court's concession that the Google/Motorola patents did have some tangible value for the video codec and the WiFi standard--no doubt encouraging Google to leverage these specific patents against other tech giants.
ReplyDeleteAt least some of Google/Motorola patents have been deemed valuble.
ReplyDeletewow, this is an extensive post. Looks like a pretty painful result for Google...seems like this is happening pretty often. Thanks for sharing
ReplyDeleteThis was a miscalculated move on Google's part. They indeed lost out on a lot of money that they thought they would have made.
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