Homecourt Judge: Microsoft's Patents are ~1,000x More Valuable Than Motorola's
April 26, 2013 12:03 PM
Seattle federal judge rules that developing standards is pretty much worthless
Imagine you are a company who has the expertise and experience to develop and patent crucial technologies that are subsequently embraced by your market segment. You'd think that'd be the ticket to big royalties. But you'd likely be wrong.
I. Local Judge Deals Big Win for Microsoft
this week Federal Judge James Robart of the
U.S. District Court, Western District of Washington
ruled that Microsoft Corp. (
) had to pay next to nothing -- a mere $1.8M USD -- to license Google Inc. (
) subsidiary Motorola's
portfolio of video and wireless patents
, which likely cost tens of millions (if not more) to develop.
At a courthouse in Seattle, just 16 miles east of Microsoft's Redmond campus, the home-court judge dealt the big win for Microsoft on Thursday. The royalties ruling comes nearly in line with Microsoft's requested figure -- $1M USD -- and falls far from the $4B USD Google Inc. (
) was hoping for.
demands much higher royalties
from phonemakers who use Google's Android platform. In Q1 2013 Samsung Electronics Comp., Ltd. (
shipped 70.7 million Android smartphones
, and reportedly paid a toll of
$15 USD per handset
-- indicating that Samsung alone may have paid Microsoft over a billion dollars in licensing royalties for the quarter.
Microsoft has to pay virtually nothing to license Google's video codec patents, yet can demand billions from Android OEMs. [Image Source: WP Central]
Add in royalties from LG Electronics, Inc. (
) -- the second, fourth, and fifth largest Android phone sellers, respectively -- and Microsoft is likely making $1-1.5B USD or more from royalties alone.
While one can certainly argue the respective merits over Microsoft's largely API and UI based operating system portfolio versus Motorola's mobile firmware and codec centered patent portfolio in terms of good versus better, the court's ruling does not compare the portfolios in relative terms -- it gives Google orders of magnitude less.
One might argue that the Android OEMs should have challenged Microsoft's high licensing fees and took the case to court. But Samsung learned first hand that outcome is often just as bad. It was ordered to pay Apple, Inc. (
over a billion dollars in a Calif. jury verdict
for three utility and three design patents.
II. Punish Those Who Cooperate
On the surface this all seems to suggest that Motorola and its fellow Android phonemakers' patents are pretty much worthless, while Microsoft and Apple have tapped some sort of special brilliance. But on a deeper level it appears to be that the judge's ruling -- combined with Apple's Californian court win over Samsung -- give an effective ruling that cooperating among companies via the development of patented standards is basically worthless.
Historically patents developed as part of a standard and licensed under
fair-reasonable and non-discriminatory
(FRAND) terms have had lower royalty rates, so there's no arguing that the amounts in question do have a historical basis. What has changed, though, is the tremendous inflation in valuation of non-FRAND patents. Decades ago non-FRAND patents might be worth up to 10 times more than FRAND patents, but carried risk in that you had to take the infringer to court and win. Now with the value of non-FRAND patents worth around 1,000 times more than FRAND patents, that risk is essentially a moot point.
Recent federal rulings have pretty much told the phone industry to adopt an "every man for himself" model and abandon cooperation. [Image Source: 123rf]
If FRAND patents are being licensed for approximately 1,000 times less than non-standards patents, it basically means that
a company would be insane to cooperate with its peers
. It's an issue that we've discussed here before, and it's an issue that remains very real and provocative.
David Howard, Microsoft's Deputy General Counsel, bragged in a statement, "This decision is good for consumers because it ensures patented technology committed to standards remains affordable for everyone."
But ultimately if this precedent sticks in the U.S., the long-term outcome may be that there will be no more standards work and no more standards patents in the mobile industry (and potentially other industries as well).
bad news for Google
, a company who has promoted cooperation and exchange of ideas in the smartphone industry. The recent federal court verdicts seem to send a clear message to the smartphone industry -- every man for himself. Google doesn't fit with that model, and is being punished to the tune of billions for trying to promote cooperation and equal licensing rates.
Because according to this and other recent rulings, FRAND patents are pretty much worthless, with similar patents not developed as part of a standard being around 1,000 times more valuable.
Google is appealing the decision.
"This is about the Internet. Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis
Samsung, Apple Stay on Top as Smartphone Sales Pass Feature Phone Sales
April 26, 2013, 10:35 AM
Another One Bites the Dust: ZTE Caves to Microsoft's Android Licensing Demands
April 24, 2013, 11:27 AM
Foxconn's Parent Settles With Microsoft Over Android Licensing
April 17, 2013, 12:33 PM
Google v. Microsoft Lawsuits Wrap Up Under Cloak of Secrecy
November 21, 2012, 4:24 PM
Doomsday for Samsung in U.S., Jury Rules it Slavishly Infringed Apple's Patents
August 24, 2012, 5:56 PM
Xiaomi Mi 6 - Flash Sale on April 28 in China
April 26, 2017, 7:45 AM
Apple Watch NikeLab Limited Edition unveiled.
April 22, 2017, 6:20 AM
What is the Apple’s iPhone 8 specifications and release date?
April 14, 2017, 5:43 AM
Xiaomi Mi Pad 3 tablet with Hexa –Core SoC, Android Marshmallow
April 6, 2017, 6:40 AM
Vivo launches V5 Plus IPL edition smartphone
April 4, 2017, 11:10 AM
Samsung S8 and S8 Plus: On Sale April 21 at Major Wireless Dealers
March 30, 2017, 7:35 AM
Most Popular Articles
Surface Pro 5 Rumors - New Release Date and Price
April 22, 2017, 6:45 AM
SAPPHIRE PULSE Radeon RX 580 8GD5 – Great Value for the Money
April 20, 2017, 7:47 AM
Dell Inspiron 17 7000 – A Premium Laptop featuring 7th Gen Intel Core i7 in a 2-in-1 Frame.
April 19, 2017, 7:45 AM
Tesla will announce electric lorry in September
April 19, 2017, 6:20 AM
Meet the Smartphone with four cameras - Alcatel Flashphone
April 5, 2017, 11:20 AM
Latest Blog Posts
Google Co-Founder, Sergey Brin has an Airship
Apr 26, 2017, 6:43 AM
Samsung Galaxy S8 and S8 Plus – Lots of Glass that Breaks Easily
Apr 25, 2017, 7:20 AM
Samsung Galaxy S8 – Warning for Pet Owners
Apr 24, 2017, 5:59 AM
Sound Bars and the Costs?
Apr 23, 2017, 6:30 AM
Link your Brain to Your Computer – In Four Years…Maybe
Apr 22, 2017, 7:03 AM
Google Home can now identify users by their voice.
Apr 21, 2017, 7:15 AM
Amazon Lex – Now Available for Developers.
Apr 20, 2017, 6:58 AM
You can now use Instagram offline on your Android Smartphone
Apr 19, 2017, 8:00 AM
Now you can livestream to YouTube from your mobile device.
Apr 18, 2017, 8:05 AM
Google Home – Is It a Spy Device?
Apr 17, 2017, 7:30 AM
Apple added to self –driving test permit list
Apr 15, 2017, 6:21 AM
Project Scorpio – Coming on June 11
Apr 14, 2017, 6:20 AM
Looks Like Samsung Has Been Forgiven.
Apr 13, 2017, 6:50 AM
United Airlines - Blasted on China’s Social Network and the Stock Market
Apr 12, 2017, 6:50 AM
Amazon's Third-Party Sellers Hacked
Apr 11, 2017, 6:25 AM
Microsoft Surface Pro5 Details Revealed
Apr 9, 2017, 6:41 AM
Own An Android Phone? Then you could be hacked over Wi-FI
Apr 7, 2017, 6:47 AM
Apple confirms iOS 10.3 bug and its effect on iCloud Services
Apr 6, 2017, 6:30 AM
Apple Rolls Out New Version of Apple Music
Apr 5, 2017, 10:35 AM
Apple in the News
Apr 4, 2017, 9:03 AM
Apple iPhones Will Soon Feature Graphics Chips Designed BY Apple
Apr 3, 2017, 6:23 AM
More Blog Posts
Copyright 2017 DailyTech LLC. -
Terms, Conditions & Privacy Information