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Motorola refuses royalty, retains Microsoft $100 million FRAND deposit

updated 06:10 pm EDT, Wed June 19, 2013

Motivation of deposit retention unclear, royalty offer $6.8 million

Following April's court ruling that Microsoft need only pay several millions of dollars, rather than the billions that Motorola Mobility was seeking, Microsoft offered Motorola's counsel a $6.8 million dollar payment for all outstanding licensing debts owed for H.264 standards-essential patents used in Windows 8 and the Xbox 360. Motorola has refused this offer, and is retaining a bond paid by Microsoft -- despite judicial orders not requiring a payment even close to the $100 million bond payment.

A letter from Microsoft filed with the court shows that a June 5 correspondence between Microsoft and Google suggested the offering paying the licensing debt in full, in exchange for Motorola releasing the $100 million bond paid in 2012. Additionally, Microsoft offered future royalty payments that arise based on future rate-setting rulings. The court filing notes that Motorola did not accept the terms of the deal and states that Motorola will fight any effort to release the bond.

Patent analyst Florian Mueller believes that "from a purely commercial point of view, it would actually make far more sense for Google to accept Microsoft's payments. It's better to physically receive money than to have merely a bond, especially when the debtor's ability to pay is beyond reasonable doubt anyway."

Motorola's H.264 (and the previously included Wi-Fi) patents are considered standards-essential, and licensing for these patents must be attempted on a fair, reasonable and non-discriminatory (FRAND) basis by law. Motorola was on the losing end of statements given to the ITC by industry magnates in support of both Apple and Microsoft's use of Motorola's standards-essential patents. As a result of the 2.25 percent royalty request (considered wildly excessive for an SEP) and other issues, both Motorola and parent company Google were under investigation by the FTC for FRAND patent abuse, with a light reprimand issued to parent company Google.

by MacNN Staff



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