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Featured: Microsoft Offering “Patent Peace” with Motorola

July 31, 2012 - Written By Matt Pedigo
Microsoft vs Motorola

In case you’re not sick of patent disputes yet, Microsoft has decided to push your stomach to the brink. In a statement by their head lawyer-types, Brad Smith and Horacio Gutierrez, they seem to be attempting (I use this word loosely) to extend an olive branch to Google and Motorola. On a Microsoft blog, Mr. Smith and Mr. Gutierrez lay down the foundation of how they wish to see conversations develop between the world’s largest search engine and the world’s largest software maker.

In it, they express frustrations with Google’s “public relations and lobbying campaign” saying it is “deflecting attention from its refusal to honor its promise to standards bodies.” They continue to claim that Google’s “diversionary tactics” are causing its difficulties with regulators in both the United States and Europe.

Essentially, Google is being investigated by the Federal Trade Commission and the FTC’s overseas counterparts for not offering up licenses under free, reasonable, and non-discriminatory terms (FRAND). Simply, Google bought Motorola and acquired a load of patents. Now, instead of charging a fair market value, Microsoft contends Google is price gouging. Some of these patents include 3G, Wi-Fi, and H.264 video encoding, all extraordinarily important in today’s mobile landscape. Microsoft simply wants to use these technologies at a fair price. Reasonable, huh? Yes. However…

Microsoft is also on the flip side of the coin, owning various technologies deployed in Motorola devices and the Android ecosystem, among the largest being Exchange ActiveSync. This protocol helps synchronize contacts, calendars, tasks, and email with mobile devices. It is currently licensed by iOS, webOS, and some Android devices. It appears Motorola didn’t see the need to pay for it. So Microsoft gave them an ultimatum, “patent peace will be found through good faith engagement that is based on two simple, common sense principles.”

These expectations are:

First, any agreement must be comprehensive. Any approach that does not lead to the cessation of all the pending litigation will be short lived. Motorola’s public proposal to take a license for only a small sub-set of the large number of Microsoft patents used in its products will not result in durable patent peace. That proposal was cleverly designed by Motorola to sidestep the ITC exclusion order by “cherry picking” the ActiveSync proprietary technology that gave rise to that order, while continuing the remaining lawsuits against Microsoft in the U.S. and Germany. This is not a recipe for patent peace, but only for selectively disarming an opponent.

Second, any agreement must be based on market rates. There are good objective benchmarks to value the patents involved in our disputes. For example, Motorola has asserted patents that it claims are essential to the H.264 industry standard, a video codec standard that is used to encode and decode more than 80 percent of the video on the Internet. Twenty-nine companies owning more than 2,400 patents essential to the standard license them via a patent pool, and more than 1,100 companies (including Google) are licensees. Clearly, this pool provides a widely accepted market rate for H.264 patents. Likewise, Microsoft has licensing agreements with makers of a majority of Android handsets sold in the U.S. These agreements show broad industry acceptance of our licensing rates. These and other well-established market rates, along with appropriate safeguards to ensure Google lives up to its FRAND commitments in the future, provide the basis for a durable settlement between the parties of their existing patent disputes.

If you don’t care for legalize, don’t worry, nobody does. Microsoft wants to cease any and all litigation against it. They’re saying that if Google/Motorola want to play nice, Google needs to be the first to lay down arms. Secondly, they are wondering that if Microsoft can get along with most of the other Android manufacturers, shouldn’t they play well with Motorola as well?

When I first started writing this, I thought it was just another stupid battle in the ongoing patent wars. In doing a little research, I can’t say I disagree with Microsoft. If they have successfully licensed many of their technologies to other Android phone makers, why should Motorola not pay up? And if Google is under investigation for antitrust concerns in several countries and multiple continents, could they not be playing fair?

In a statement, Motorola rebutted, claiming that Microsoft “undercut Motorola’s industry-leading patent portfolio” and is “seeking inflated royalties tied to standards that Microsoft alone controls.”

Well, Motorola Google, I have to admit. You may have a point but your biggest ally right now, Samsung, is in bloody combat with the world’s most profitable company, Apple. As we all have learned, Apple will stop at nothing (including “thermonuclear war”) to take out your darling mobile operating system. If it were me, I would go buy Microsoft a beer and see what it’d take to send out the doves of peace. Because do you really want to have a war with the world’s largest software maker, too?