Microsoft Corporation v. Motorola, Inc.

2013 WL 2111217 (2013)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

There are two international standard-setting organizations at issue in this suit. They are the Institute of Electrical Electronics Engineers (IEEE) and the International Telecommunication Union (ITU). They create standards for use in designing and manufacturing technology products. By adopting the standards set by these and other such organizations companies can agree on common technological protocols so that products complying with the standards will work together. At issue in this case are standards that involve 'WiFi,' and video coding technology. The IEEE wireless local area network (WLAN) standard called the '802.11 Standard' and an ITU advanced video coding technology standard called the 'H.264 Standard.' They both involve patented technology. Any company that wants to practice the standard must make provisions to license patented technology. These patents are called standard-essential patents, or SEPs. Those parties writing and developing the standards seek commitments from the owners of SEPs to license their patents to standard-users on RAND (reasonable and non-discriminatory) terms. Motorola owns patents that are essential to the 802.11 and H.264 Standards and has committed to license them on RAND terms. P claims that D breached its RAND obligation by making an unreasonable offer in a negotiation to license Motorola's 802.11 and H.264 SEPs. D sent P a letter offering to license its patents at what it considered the RAND rate of 2.25% of the price of the end product. P initiated this breach of contract action against D. In a separate prior order, the court interpreted D's commitments to the ITU and IEEE as requiring initial offers by D to license its SEPs to be made in good faith. The court has also held that initial offers do not have to be on RAND terms so long as a RAND license eventually issues. The court held a bench trial to determine: (1) a RAND royalty range for D's SEPs; and (2) a specific RAND royalty rate for D's SEPs. The purpose of this is to enable a fact-finder in a later trial to determine whether D's offer letters breached D's RAND obligation to offer a license for its patents in good faith.