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back to article Microsoft off the hook for billions in Motorola Mobility payout

Microsoft has triumphed in a court battle after a judge dismissed claims it owed Motorola Mobility billion-dollar royalties for technology used in the Xbox 360. The judge broke new ground by determining specific royalty fees to be paid for the use of standard-essential patents, which he said should amount in the millions rather …

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How many people...

I wonder how many people are actually surprised at this decision, and what's wrong with them.

Incidentally, this is not only a decision on how much Microsoft owes Google/Motorola, and not only a decision about how much those specific Motorola patents are worth, but also a verdict on the stupidity of The Three Assholes who run Google and who pretty much wasted $12.5 billion for a patent portfolio that was already proven to be non-deterring before Google bought them.

And they bought Motorola from desperation born out of their refusal to be part of the consortium that bought the Nortel patents because buying into that consortium would have preventing Google from asserting them against anyone else.

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How many people... - Addendum

Here's what Google said at the time they decided to not join the Nortel patent consortium:

"Making sure that we would be unable to assert these patents to defend Android – and having us pay for the privilege – must have seemed like an ingenious strategy to them. "

I think that they can now change the words "must have seemed like" to "certainly was (and in fucking spades, too)".

( http://www.theregister.co.uk/2011/08/04/microsoft_hits_back_at_google_conspiracy_claims/ )

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Re: How many people... - Addendum

You should have read that quote before you asserted it to defend an illogical argument.

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Linux

The sickening stench of The Beast is everywhere

Compare and contrast.

This case, where microsoft use Motorola tech:

Judge: "Yup, you're guilty of infringement. Hold out your wrist whilst we lightly brush it with a feather as punishment."

Android, where no one knows what tech alleged infringers use because microsofts bully boys threaten all kinds of pain if they even hint at going to court: "That's $5-$15 per device then, please".

The only hope is when it does finally get to court, the extortionists lose and have to repay every penny they fleeced from their victims over the years, and then some. Hell, yeah! All they'll have left in mobile is their hated bright yellow comedy phone, the shareholders will have long given Elop the boot and the hints at Android kit we're seeing now will be in full swing. Minus any royalties to the bastards, natch.

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Anonymous Coward

Re: The sickening stench of The Beast is everywhere

The smell is the rotting corpse decomposing.

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FAIL

Re: The sickening stench of The Beast is everywhere

The rules of the game for standards essential patents are different from regular patents, by contractual agreement between the parties. Your comparison is flawed on the basis of this alone.

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Can someone grow a pair

and let take microsoft take them to court over the Android patents they think they own?

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Re: Can someone grow a pair

they think they own, or do own?

Is Motorola Mobility any less evil than Microsoft? And, is Google any less evil for owning patents?

Or is the whole concept of patent trolling the problem here, regardless of who ever appears to be fashionably evil at the time?

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h3
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Re: Can someone grow a pair

Barnes and Noble were willing to until they got a £300 million payment.

I think the Microsoft position might be smoke and mirrors as well.

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Anonymous Coward

Re: Can someone grow a pair

"Barnes and Noble were willing to until they got a £300 million payment."

Are you confusing that Barnes and Noble sold 17% of their equity to Microsoft?

They still pay Microsoft for patent rights...

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Headmaster

Re: Can someone grow a pair

Well, funnily enough Samsung had no problem going to the mattresses against Cupertino (and are still engaged in that struggle - a struggle in which I wholeheartedly support them). However, Samsung one of the most cash-rich and powerful companies in the entire industry reached a negotiated agreement with Redmond. I am in no way arguing that that indicates that Redmond's cause is necessarily just but I do have to ask you why you think that a company like Samsung (who was willing to take on the most cash-rich company in the world) would "roll over and play dead" for Microsoft, hmm? Any explanation for that? Other than the impression one gets around here that many of the commentariat believe that the "fat chair-throwing mad bastard" known as "Demon-Lord Ballmer" is indeed in league with The Old One.

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Re: Can someone grow a pair

And, is Google any less evil for owning patents?

Algebra of evilness.

Definition A company is evil in the sense of its patent portfolio, if it uses its patents to attack other companies without being threatened by them and to compensate its competition failures. A company is not evil when using its patents to protect itself against evil companies.

Theorem. Microsoft is evil in the sense of its patent portfolio.

Proof: Since MS uses its alleged patents to threaten OEMs using Android and Chrome OS and subsequently coerces them to to sign non-disclosure license agreements. MS is not threatened by any of these companies in any way other than being unable to compete with them. QED

Remark Even if the aforementioned companies don't pay MS a single penny, the MS actions are evil since those would qualify as FUD used to thwart competition.

Theorem. Google is not evil.

Proof:Google is not yet known to use its patents in initiating attacks against others. It does use patents though to protect against attacks from evil companies when it can.QED

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an explanation

Samsung (who was willing to take on the most cash-rich company in the world) would "roll over and play dead" for Microsoft, hmm? Any explanation for that?

Since neither you nor me nor anyone else has the actual figures of how much is paid, who among the two is the payer and payee, it's not correct to call the Samsung's behavior as "rolling over and playing dead". How do you know if MS is not actually the payer here?

It might be that Samsung simply agrees to admit they are licensing some MS technology in exchange of continuing their "good relations" and some other incentives. Google is only one that suffers here, not Samsung.

In the case of B&N, MS at first apparently tried some harsher and more impudent means and might have demanded some actual or more money because B&N is a much smaller company that wouldn't afford substantial legal resources that, e.g., Samsung got. It was a blunder though anyways, since MS never thought B&N would be so resolute in defending and go as far as complaining to the anti-monopoly authorities.

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Linux

Re: Can someone grow a pair

I feel it won't be long now.

B&N came close by disclosing what microsoft tried so hard to keep quiet about. When all this does get to court, the real fun begins when ms lose - will they have to repay all they extorted?

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Roo
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FAIL

The maths don't add up...

Apparently Moto asked for 2.25% of the revenue generated by Xboxen.

"According to Redmond, which reported $73.7bn in revenue over the course of 2012, Motorola's fees would mean Microsoft would have to hand over more than $4bn a year."

2.25% of $73.7bn = $1.66bn, not $4bn.

I am pretty sure that the XBox doesn't generate all of MS's revenue so the licensing fees would be substantially lower in practice. I would love to see the judge call MS on those figures. :)

That said even the 0.5% of revenue fee is pretty nasty, the manufacturing cost of the components that require the license are very likely to be dwarfed by the royalty payments.

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Re: The maths don't add up...

4 Billion includes damages I believe

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>> manufacturing cost ... likely to be dwarfed by the royalty payments.

Absolutely - Wikipedia has an "incomplete list" of companies with patents in the H264 patent pool, with 26 names! So if all of them decided to nominate 2.25% as their slice then 60% of the purchase price would go just on movie compression licensing - hardly "fair and reasonable" and in practice suicidal since such predation would collapse the market entirely. Two things might drive a company to decide otherwise (a) tragedy of the commons-esque scenario where each individual owner persuades themselves that they have to be the greediest one at the table or perish, or (b) this is a means for a FRAND contributor to attempt to refuse to licence their tech to a rival, by naming an intolerable price (though sticking it to just one rival fails the non-discriminatory aspect)

Having it tied to the price of the containing device rather than being a flat fee also seems curious - if MS decide to shove an SSD in the XBox 721 for an extra $100, should Moto really get $2.25 more for their WiFi+compression tech?

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Re: The maths don't add up...

The lawsuit covered Windows 7 as well not just The Xbox.

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Re: The maths don't add up...but neither do yours :)

The wording from the article about the judge's approved royalties is "... half a cent per unit for the video-decoding patent and three-and-a-half cents for the wireless patent, amounting to about $1.8m a year." Those are "cents" (1/100 of a $US), not "percents", so the judge's total royalty works out to $US 0.005 + 0.035 = $US 0.04 per unit. At $US 1.8 million total, that implies ($US 1.8 million / $US 0.04) = 45 million units sold. At the $US 0.04 per unit royalty rate, the grand total is $US 1.8 million. Cost of an Xbox 360 is about $US 200, so the judge's royalty *rate* is $US 0.04 / 200.00 = $US 0.0002 or 2 hundredths of one percent.

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Linux

http://www.theregister.co.uk/2011/07/06/motorola_samsung_patent_shakedown/

MS "seeking $15 for each device Samsung ships loaded with Google's Android smart-phone operating system."

How come Moto's real patents are worth so much less than MS bogus patents?

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Stop

All depends

and what US judge you have in your back pocket accepting party donations.

America likes to THINK it's moved on since Enron, but it's gone backwards, and Microsoft and Apple are they key corrupter on all this.

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Holmes

>> How come Moto's real patents are worth so much less than MS bogus patents?

Because Moto agreed to licence them on FRAND terms, thereby making them part of an essential standard. It's a pretty simple deal - get a modest payment for every single device using the tech in return for giving up the right to discriminate between users. If you don't like that then don't contribute the tech to a standard and try to licence it on a "voluntary" basis, charging whatever you like or just refuse to licence at all to certain rivals. Of course a standard will still be issued, but solving your part of the puzzle in some different way, probably using a competitor's patented tech instead. So when deciding whether to be FRANDly you've got plenty to think about: different investment models, just how essential is your tech, do you want to retain the "nuclear option" of injunctions. Oh, and even do you want to seem like a nice reasonable mature part of an ecosystem of companies creating the future? (of course in reality you're a vicious rodent that eats babies whenever it thinks noone is looking coz that's how the system works, but how do you want to seem?)

So MS gets its big FAT32 payouts precisely because it isn't part of a core standard. Instead they are a de facto standard that everybody cheerfully went along with because it made mounting disk-like devices on a Windows box easy and that made a large and lucrative group of users happy to buy such devices.

(of course it's a bundle of patents beyond FAT32, and quite likely others are similarly straightforward to bypass by other tech but also have strong roots in commercial inertia: it's notable that rich and feisty Samsung elected to licence rather than fight. But since the terms are all confidential maybe MS gave it away for a song simple to maintain the illusion of invulnerability and to get a better cudgel against other competitors...)

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Re: >> How come Moto's real patents are worth so much less than MS bogus patents?

It's unfortunate that judges can force discriminatory terms for those who wish to use the standards and would rather pay lawyers than inventors. Makes a mockery of FRAND.

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Depends if they're necessary patents or not. If its not then they can get away with charging more because you don't need it. If everyone needs it then you get a smaller chunk per company but probably make more over all.

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@Mongo

...with because it made mounting disk-like devices on a Windows box easy and that made a large and lucrative group of users happy to buy such devices.

That is even worse than the celebrated browsers case. MS purposely wouldn't supply drivers for other filesystems to create an artificial standard out of some poorly designed technology.

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Anonymous Coward

>>> How come Moto's real patents are worth so much less than MS bogus patents?

Standards essential patents. That's why. If a company engages in and contributes to an industri standard and hold some patents that are essential to the standard (i.e. you cannot implement the standard without licensing the patents), the standards body will typically require said company to commit to FRAND licensing terms. Fair, reasonable and *non distriminatory*.

If the company does not commit to FRAND the standard will not be completed. If they *do* commit they are legally estopped from using the patents to *discriminate* against certain companies, i.e. competitors. If they offer some terms to one company at least the same terms must be offered to any other who requests a patent license. Furthermore, the terms must be *fair* and *reasonable*. Asking 2.25% of a product where the Wifi capability is just one minor facet is not fair neither reasonable. Asking more from MS than from any other company is discriminatory.

That's why Moto lost: They were using the patents as wedge tools, thus discriminating. They were asking an unreasonable price.

MS patents (for what we know) are not standards-essential. MS has not pushed anyone to use those patents through some standards process, like Moto has for the Wifi patents. Thus they are not obliged by the same FRAND limitations.

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Mushroom

Re: @Mongo

But Microsoft doesn't own the patents or licenses for 'other file systems'! There is nothing to stop a third party writing any such driver...

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Flame

See previous post.. Commentards here in general would do well to brush up on what FRAND standards patents are and how they are administered and charged for vis-a-vis specific patents.

The ignorance demonstrated here gets tiring to read.

Bootnote: Your opinion that MS's patents are bogus is not shared by MS themselves, or apparently the companies that pay for them. I have no direct knowledge of them, so I don't have an opinion on the matter. MS may not be the "good boy" in the room, but they are entitled to negotiate whatever they can for their patents with users of said patents.

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Re: >> How come Moto's real patents are worth so much less than MS bogus patents?

" force discriminatory terms"

Please explain how you draw this conclusion.

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Anonymous Coward

"How come Moto's real patents are worth so much less than MS bogus patents?"

? Microsoft's patents have been tested many times in court. Hence why pretty much all the Android manufacturers have licenced them.

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FAIL

Actually, no they haven't. The litigants settled because MS had deeper pockets and could not afford the litigation. Besides, WHAT patents are MS asserting against Android? I've been looking and I have yet to see ANY patents listed from MS - only smoke and mirrors against players that can't afford 10+ years to litigate.

Not to mention - since when does the court system decide rates? and BTW - 2.25% is the opening offer - MS decided to sue rather than negotiate. Think about that next time you want to talk to MS.

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Incorrect, MS' patents have never gone to court

The closest they ever came was Barnes & Nobel, when a discovery phase began, but MS almost immediately settled by buying a stake in B&N.

If that isn't a "smoking gun" I don't know what is - if you actually have a case, you don't literally buy out the opposition!

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Here's the official press release for the patents Microsoft is claiming

http://www.microsoft.com/en-us/news/press/2010/oct10/10-01statement.aspx

It's essentially patents that cover the functionality of Exchange ActiveSync.

Microsoft also did not "sue" Motorola, they made an official complaint that Motorala's initial "offer" did not meet RAND requirements because they were extortionate and far above the rates for such patents (Microsoft also has patents in those standards). Microsoft's complaint did not include damages just a request to have RAND enforced. Under RAND you opening offer cannot be extortion, every offer must be reasonable.

Also rather than give a reasonable offer Motorola's response to the complaint was to get an injunction on Microsoft's products for patent infringement. So we've got Motorola using their standards patents to extort money and then when someone complains they try to have their products blocked and you are trying to say be wary of talking to Microsoft?

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IT Angle

Standard essential patents are crucial in technology?

Far be it for me to defend the Microsoft legal department, but is there anything in the X-Box that MS engineers stole from Motorola. If not, then what the heck are MS paying for their FRAND license?

`Standard essential patents are crucial in technology. They are maintained by standards-setting organisations, who seek commitments from companies to supply technology fitting these standards at "fair, realistic and non-discriminatory rates" (FRAND)'.

Would you please not parrot wholesale, publications from the Microsoft legal department ...

"The court case started in 2010, when Microsoft claimed Motorola had breached its FRAND obligations"

Actually the case started whem Microsoft sued Motorola over breaching Microsofts' Android patents ...

--

'Who was it who ran away from the Circus to become an accountant`

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Go

Good

Anything that limits payments on patents is a good thing. Now I wish it was possible to limit payments on non-FRAND pseudo-patents that effectively make it impossible to develop new technologies.

Some of these are a bit like claiming property on a one-micrometer wide strip of land going across all of the US, and asking $1000 for anybody wishing to "cross your private property".

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Anonymous Coward

Re: Good

"...Some of these are a bit like claiming property on a one-micrometer wide strip of land going across all of the US, and asking $1000 for anybody wishing to "cross your private property"...."

I reckon most people could probably jump that, so you'd need a pretty tall fence with designated crossing points. Also, upkeep would be a pain. The costs would soon mount up.

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Anonymous Coward

"In a statement, David Howard, deputy general counsel for Microsoft, said: “This decision is good for consumers because it ensures patented technology committed to standards remains affordable for everyone.""

So Microsoft is going to reduce what it charges for every Android device produced then, right?

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Facepalm

"...patented technology committed to standards...."

Is the key bit here. You had it in there and yet still managed to get 5 from 2+2. None of that stuff that the Android vendors are licensing is part of a standard. This can be safely assumed as, if it were, it would be subject to FRAND terms and the costs would be known and applicable to all rather than negotiated individually.

Any body approving a standard without first ensuring that all the relevant patents are available on a FRAND basis isn't doing its job.

An obvious one here is the MS proprietary Long Filename extensions to FAT. FAT itself is a standard and something that anyone can use (I don't think there's even a license cost). However, if you want to go beyond the 8.3 file naming of standard FAT and do so in such a way as to be compatible with Windows, you have to pay MS for the privilege as that bit is theirs and theirs alone.

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