Motorola Fails To Shake Microsoft Claim For Standards Patents RAND Rate

October 10, 2012, by Mandour & Associates, APC

Los Angeles – A Seattle federal judge on Wednesday denied Motorola Mobility’s bid to dismiss Microsoft Inc.’s claim seeking to hold Motorola to a reasonable and non-discriminatory license agreement to be determined by the court for a set of wireless and video standards-essential patents the companies have been feuding over.

“Without the ability to create (or at the very least enforce creation of) the very license Motorola has promised to grant, Motorola’s obligations would be illusory,” Judge James L. Robart ruled in denying Motorola’s motion for partial summary judgment. “The court finds such a result illogical and declines to adopt Motorola’s position.”

Microsoft and Motorola are both members of international standards settings organizations the Institute of Electrical and Electronics Engineers and the International Telecommunication Union.

These organizations have adopted rules related to the disclosure and licensing of essential patents, which require or encourage their members to license essential patents on RAND terms to anyone who requests a license.

The current lawsuit involves two standards, the IEEE 802.11 wireless local area network standard and the ITU H.264 advanced video coding technology standard. Motorola has submitted numerous communications to the standards setting organizations that it will grant licenses on RAND terms for the patents essential to those two standards.

Microsoft sued Motorola in 2010 claiming that Motorola was seeking unreasonable royalty rates for the patents and so was breaching its obligations to the IEEE and ITU to grant license on RAND terms. Microsoft is seeking a declaration that it is entitled to a license on RAND terms for all of the patents and a judicial accounting of a RAND royalty rate.

In its counterclaims, Motorola is seeking a judgment that it has not breached any RAND obligations and that Microsoft repudiated or rejected the benefits of Motorola’s RAND obligations, thereby sacrificing its entitlement to a license to the standards-essential patents.

Judge Robart previously ruled that Motorola’s statements to the ITU and IEEE did indeed constitute binding agreements to license its essential patents on RAND terms, and that Microsoft has a right to such a license.

“The court has already twice rejected Motorola’s contention that Motorola’s agreements with the ITU and IEEE only require it to negotiate towards a RAND license,” the judge said.

“The RAND license must eventually execute between the parties, and interminable good faith negotiation by Motorola will not uphold its end of the bargain,” he said. “As the court previously explained, any other conclusion would be contrary to the purpose of Motorola’s commitments to the IEEE and ITU, which is to ensure widespread availability to standard essential patents to all implementers on RAND terms.”

Judge Robart said he will conduct a bench trial beginning Nov. 13 to determine a RAND royalty rate, to be followed by a jury trial on Microsoft’s breach of contract claim.