Microsoft, Motorola Millions Apart on Royalty Payment Case

Microsoft Corp and Google Inc's Motorola phone unit remain millions of dollars apart in their respective valuations of video and wi-fi patents at issue in a pivotal case before a federal judge in Seattle.

The outcome, expected sometime next year, could be a key development in the balance of power between Microsoft and Google - and the rest of the technology industry - in the running battle over ownership of the technology underlying increasingly popular smartphones, tablets and game consoles.

A trial, held November 13-20 in the Western District of Washington federal court, was designed to settle the matter of how much Microsoft must pay Motorola for use of two of its standard, essential patents used in its Xbox game console and other products.

In redacted post-trial filings made public on Monday - essentially its final arguments before the judge - Microsoft argued that it should pay no more than $502,000 per year for Motorola's H.264 video compression patent, and no more than $736,000 per year for Motorola's 802.11 wi-fi technology.
Motorola - acquired by Google earlier this year, partly for its valuable patent portfolio - submitted a far larger valuation.

In its filing, also made public in redacted form on Monday, Motorola said it was due payment of 2.25 percent of the selling price of Microsoft products such as the Xbox and Windows 7 operating system that use the patents in question.

Motorola argued that a fair cross-licensing deal would result in net payments to Motorola which it would be willing to cap somewhere between $100 million and $125 million per year, solely for the H.264 patent portfolio.

For the 802.11 patents, it claimed a net payment of 1.15 percent to 1.73 percent of Microsoft end-product prices, which would mean millions of dollars more per year.

U.S. District Judge James Robart is expected to rule on the case early next year. 

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