Motorola has been trying to bag $4 billion from Microsoft as royalty fee for using the former’s standard-essential patents. However, a federal court has ruled that the maximum sum Microsoft may pay to Motorola for using its standard-essential patents is $1.8 million a year.
Naturally, Motorola’s hefty fee demands are fairly ludicrous. The patents in question involve the H.264 video standard and the 802.11 wireless standard. In enabling 802.11 networking, which Microsoft used in Xbox, the company used patented technologies from 92 different entities.
Therefore, if Microsoft was to pay huge fees to each of them, that would put Microsoft’s Xbox business in jeopardy. In fact, even if Microsoft was told to pay 1.15 percent to 1.73 percent of its Xbox earnings in royalties to each, that would exceed even the actual price of Xbox.
In light of these calculations, the court has ruled that Motorola may not get any more than $1.8 million a year as royalties for the patents in question. According to Microsoft Deputy General Counsel David Howard, “This decision is good for consumers because it ensures patented technology committed to standards remains affordable for everyone.”
Motorola refused to comment directly on the issue and dished out a rather general statement which read, “Motorola has licensed its substantial patent portfolio on reasonable rates consistent with those set by others in the industry.”