Microsoft and Google subsidiary Motorola Mobility have been trading blows in pre-trial maneuvering for some time now. Most recently, Microsoft had been opposed to Motorola’s chance to defend its 2.25% royalty in a FRAND (fair, reasonable, and non-discriminatory) rate-setting trial start on November 13th.
Motorola has the chance to give its explanation, but Judge James L. Robart has already announced that he is “skeptical of Motorola’s position.”
That’s never a good sign when the judge tells you even before you get to present your side that he’s skeptical of what you can do to convince him on the matter.
Specifically, Google / Motorola Mobility is setting out to defend its royalty rates based on the end selling price of devices that use patents owned by the search / mobile phone giant. Microsoft argues that Motorola should only be allowed to have a percentage of the market value that is directly attributable to the patents.
This is a huge difference. Analyst Florian Mueller clarified the matter by putting together a hypothetical scenario that could happen in the future, depending on the outcome of the Microsolt / Motorola case. Say a company started suing an airline over WiFi patents. If the suing company were awarded a percentage of the end product (every passenger ticket), then an airline could go under due to the enormous fees they would have to pay out. Contrast that with simply winning a percentage of the value provided by allowing passengers access to Wi-Fi. The profit for the patent winner is much, much lower.
Let’s take a look at how that applies to the Microsoft / Motorola case.
A court order expressed the judge’s skepticism over Motorola’s defense, stating that “Motorola’s standard essential patents only relate to the 802.11 and H.264 capabilities, which in turn only constitute a portion of Microsoft’s end products”. The order goes on to say that “[i]t would thus seem illogical to turn around and base a [F]RAND royalty on the end product price”.
Translated: Motorola Mobility is going to have a tough time proving its point of view.
One key point of all of this deliberation is that the first part of the trial will appear before only the judge. Bench trials do not require a jury, so neither company will be able to manipulate the jury’s opinions on the matter. Judge Robart is more than familiar with the stakes of this case, and he will be hard to sway.
The trial goes to court on November 13th, and it is likely to be an important point for FRAND rates for all mobile tech companies to know about in the future.