Yesterday, the International Trade Commission judge issued his Initial Determination of a lawsuit by Motorola Mobility, Inc. against Microsoft, stating that the Xbox violated four out of five of Motorola’s patents.
These patents, which concern data encryption techniques, Wi-fi technology, and digital video encoding and decoding methods, are alleged to be infringed by Microsoft’s Xbox gaming console. As such, Motorola Mobility demanded that Microsoft give it a 2.25% royalty rate on the end price of products that infringe the patents, a category that would include items in both the Xbox and Windows product lines.
Microsoft felt this was a breach-of-contract and a violation of Motorola’s promise to license these industry-standard patents in reasonable and non-discriminatory terms. In response, Microsoft filed a lawsuit against Motorola Mobility. A hearing for this lawsuit is scheduled for May 7.
Furthermore, Microsoft went on to file a patent infringement claim against Motorola Mobility, suggesting that the phone company was using seven Microsoft patents in its Android-based line of phones. An ITC judge ruled recently that the company was only violating one of those seven patents.
Motorola Mobility then sued Microsoft over alleged infringement of its patents with regard to the Xbox, which culminated in yesterday’s Initial Determination that ruled in Motorola Mobility’s favor. Because of this success, Motorola Mobility’s lawsuit moves to the next level, where a full ITC committee will review the case. The ITC committee expects to complete its investigation by August 23.
If the ITC rules in Motorola Mobility’s favor, the company could have the power to call for an import ban on Xbox products, which would significantly harm Microsoft. The division of Microsoft responsible for the Xbox recorded $8 billion in income for the fiscal year of 2011, a number which accounts for approximately 13% of Microsoft’s total revenue.
This new set of lawsuits by Motorola Mobility and Microsoft is the latest dispute between the companies. Previously, both Microsoft and entertainment technology giant Apple have complained to the European Union about Motorola Mobility’s unfair use of standard-essential patents.
The Initial Determination is embedded after the article.
Analysis: Following the bitter back-and-forth between Microsoft and Motorola can be a headache, and it becomes worse when you try to track in the other players that participate in the bigger picture, like Apple and Google. With all these multiple and simultaneous lawsuits, along with complaints that filing these kinds of cases to the ITC is making the body exceed its jurisdiction and allegations that each company is violating patents owned by the other company, it can be hard to know who said what and why they said it.
However, despite all the obfuscations and complexities involved, what’s happening between the companies is essentially a money battle over patents.
What seems to be happening is that Microsoft is trying to operate within an industry standard, which is where companies cooperate to make cross-platforming possible, but Motorola Mobility is claiming that Microsoft is overstepping its boundaries and infringing Motorola’s patents. However, Microsoft says that Motorola is unfairly using its patents within the industry standard to block competition and that, if it’s violating Motorola’s patents, then Motorola’s violating Microsoft’s patents. Additionally, all of this is being done due to Google’s recent purchase of Motorola (due to its interest in Motorola’s impressive portfolio of patents), which makes any potential infringement of Motorola’s patents especially egregious to its new boss.
All in all, it’s a giant industry pissing-fest and the latest debacle in the long, turbulent history of patent concerns within the scope of industry standards (which has occassionally suffered from the notorious practice of patent hold-up). Ultimately, though, it’s unlikely that the average gamer has much to worry about. It would be surprising if Microsoft would let the Xbox receive an import ban since the company would probably prefer to just settle its differences with Motorola rather than have the Xbox cut off. Because of that, it seems like this is just more company in-fighting rather than sweeping arguments that would trickle down to the consumer.