Microsoft, Motorola patent showdown in Seattle court

Software giant seeks to have a federal judge rule that Motorola's request for 2.25 percent royalty payments -- about $4 billion a year, by Microsoft's estimate -- is unreasonable.

Jay Greene Former Staff Writer
Jay Greene, a CNET senior writer, works from Seattle and focuses on investigations and analysis. He's a former Seattle bureau chief for BusinessWeek and author of the book "Design Is How It Works: How the Smartest Companies Turn Products into Icons" (Penguin/Portfolio).
Jay Greene
2 min read

Microsoft and Motorola are arguing before a federal judge in Seattle today whether the telecommunications company is unfairly seeking excessive royalty payments for a patent that the software giant uses in several products.

While the case delves into technical minutia over industry standards and royalty fees, it pits Microsoft against a company that's soon to be part of its archrival, Google. The Web giant agreed to buy Motorola Mobility for $12.5 billion last August, and is only awaiting approval from Chinese regulators to conclude the deal.

Microsoft is arguing that Motorola is seeking unreasonable fees for technology that has become an industry standard. The patents cover video streaming and Wi-Fi technology, and Microsoft uses them in Windows and the Xbox.

According to a Reuters report, Microsoft contends that royalty payments could amount to as much as $4 billion a year.

Microsoft has argued that Motorola's seeking 2.25 percent of all net sales on the products that use the technology is excessive, given that those products use so many other technologies as well. Motorola has argued that Microsoft rejected its terms without trying to negotiate a better deal.

Last week, a German court granted Motorola's request to halt German sales of Windows 7 and the Xbox 360 over those patent violations. Prior to that decision, the judge in the Seattle case had issued a temporary restraining order that prevents Motorola from enforcing the actions of the German court until he reaches a decision in the matter he's hearing.

Geekwire's Todd Bishop, attending today's hearing, tweeted from the courthouse that U.S. District Judge James Robart is pushing the sides to settle by warning that he will put the matter before a jury otherwise.

Robart ended the hearing taking the matter under advisement. In doing so, Robart said he will likely deny Microsoft's motion that Motorola breached its contract, as well as Motorola's motion that Microsoft gave up its right to patent licenses under reasonable terms, according to a Seattle Times account of the hearing.

And he had harsh words for both sides as they left the courtroom. Robart said the conduct of both companies "has been driven by an attempt to secure commercial advantage," according to the Times report. "To an outsider looking at it, it has been arbitrary, it has been arrogant, and frankly it has been based on hubris."

Microsoft released a statement after the hearing.

"We look forward to seeing Judge Robart's decision on today's hearing and we are pleased the temporary restraining order remains in place pending the further ruling from the court," the company said.

Updated at 12:58 p.m. PT with details on the conclusion of the hearing.