Motorola Mobility Wins Ruling in Microsoft Xbox Patent Case

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Motorola Mobility Holdings Inc. (MMI) won a U.S. International Trade Commission judge’s ruling in its attempt to block imports of Microsoft Corp. (MSFT)’s Xbox gaming system.

See the video of Motorola Mobility

ITC Judge David Shaw said Microsoft was violating four of five Motorola Mobility patents. The judge’s findings are subject to review by the six-member commission, which has the power to block imports that infringe U.S. patents. A second judge at the ITC delayed by one day issuing his findings in a separate Motorola Mobility case against Apple Inc. (AAPL)

The U.S. International Trade Commission Judge David Shaw said Microsoft was violating some of Motorola Mobility’s patent rights.

Motorola Mobility filed the complaint in retaliation for Microsoft lodging patent-infringement claims against Motorola Mobility phones that run on Google Inc. (GOOG)’s Android operating system, the most popular platform for mobile devices. Microsoft has argued that it owns technology used in Android and is collecting royalties from some other Android handset makers, including HTC Corp. (2498) and Samsung Electronics Co.

Motorola Mobility, the Libertyville, Illinois-based creator of the consumer market for mobile phones with the DynaTAC 8000X that cost $4,000 in 1983, has a portfolio of more than 17,000 patents. Google has agreed to pay $12.5 billion to buy Motorola Mobility.

Motorola Mobility contends that Microsoft is infringing two patents that cover aspects of an industry standard for video decoding, two for Wi-Fi technology and a fifth patent on a way that to establish communication between the Xbox and accessories. The second Wi-Fi patent wasn’t infringed, and one aspect of one of the video-coding patents was invalid, the judge said.

Royalty Demand

The judge won’t release the full findings until both sides get a chance to redact confidential information.

Motorola Mobility sent letters to Microsoft demanding a 2.25 percent royalty on the end price of products that use the inventions.

Microsoft, based in Redmond, Washington, has challenged Motorola Mobility’s right to bring patents that the company says cover essential aspects of an industry standard in a case at the agency. Microsoft has accused Motorola Mobility of violating its commitment to license those patents on “reasonable and non- discriminatory” terms.

The software maker filed a breach-of-contract lawsuit against Motorola Mobility before the ITC case was filed. Microsoft claimed that Motorola Mobility’s demand, if met, would result in $4 billion a year in royalties. Motorola Mobility said the numbers were misleading. It said the offer is typical of those it makes to start negotiations and Microsoft never made a counter-offer.

Standard Concern

“Motorola is saying, ‘If you want to go to war with me, that’s ok, but then you can’t say I should play nice in the sandbox,” said Tom Scott, a patent lawyer with Goodwin Procter in Washington. “There really isn’t a standard for fair, reasonable and non-discriminatory.”

In Microsoft’s trade case against Motorola Mobility, ITC Judge Theodore Essex said Motorola Mobility was infringing just one of seven Microsoft patents in the case. The commission is taking a look at those findings and is scheduled to issue a final decision on May 18.

The Motorola Mobility case against Microsoft is In the Matter of Gaming and Entertainment Consoles, 337-752 and the Microsoft case against Motorola Mobility is In the Matter of Mobile Devices, Associated Software and Components Thereof, 337-744, both U.S. International Trade Commission (Washington).


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