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Microsoft ends German partnership over Motorola patent suits

Software company was working with a firm named Arvato, but will now move logistics services to the Netherlands over concerns about Motorola Mobility patent suits.

Although many of the world's patent lawsuits have done little to change status quo, the bitter fight between Microsoft and Motorola Mobility is now impacting Germany's workers.

German news agency DPA reported today that Microsoft has ended its relationship with Arvato, which has provided logistics services for the software giant and is a wholly owned subsidiary of Germany-based Betelsmann. Microsoft will now relocate its logistics services to the Netherlands, according to the news agency. Dozens of jobs will be lost in the move.

DPA is reporting that Microsoft made the move for one reason: its legal troubles with Motorola. Later this month, a German court will rule on a lawsuit case Motorola brought against Microsoft over its H.264 video standard. Motorola argues that Microsoft's Xbox 360, Windows 7, and Internet Explorer all violate patents related to the standard. If Motorola wins, Microsoft would be banned from offering those products in the country.

Microsoft has been extremely critical of Motorola's desire to sue companies over the H.264 patent. The intellectual property is an industry standard, essential patent, meaning it must be offered on FRAND (fair, reasonable, and nondiscriminatory) basis.

Microsoft's deputy general counsel last month argued that Motorola is not holding up its end of the bargain. He said that on a typical $1,000 laptop, Microsoft must pay Motorola $22.50 in royalties for 50 patents related to H.264. In order to get full H.264 functionality, Microsoft must also license 2,300 other patents from 29 different companies. The company pays 2 cents for each $1,000 laptop to use those patents.

For its part, Motorola says that it tries to ink licensing deals with any company it's legally engaged with. But sometimes, it said recently, it's left "with no option other than to seek to enforce the company's rights and patent portfolio."

Microsoft's decision to move logistics operations comes just days after the company posted a $300 million bond in a U.S. court to delay any ban that might come down in Germany. The $300 million will cover any revenue Motorola might lose during the period between the German court's ruling and any decision to be handed down on the case in the U.S.

(Via FOSS Patents)