A trial that starts tomorrow morning in federal court in Seattle will focus on how much Motorola Mobility can reasonably charge Microsoft for a set of patents considered essential to implementing industry standards.

It might sound like a dry legal topic, but the stakes are huge. Microsoft says the annual bill would add up to $4 billion if it accepts Motorola’s royalty demands for wireless and video technologies used in the Xbox 360, Windows and other software, not counting back payments. And Google’s acquisition of Motorola makes this a rare courtroom battle between Microsoft and Google.

The trial comes after HTC and Apple over the weekend announced a settlement of their patent litigation over Android, showing that it’s possible for tech giants to resolve their patent disputes.

But a Microsoft-Motorola settlement appears unlikely. The technology industry will be watching the Microsoft-Motorola case closely as a blueprint for determining reasonable royalties for “standard essential patents.”

The technologies at issue in the case are the H.264 video and 802.11 wireless standards — and specifically patents owned by Motorola that are required to implement those standards.

Microsoft argues that Motorola’s offer to license the patents to Microsoft for 2.25 percent of the end product price was outrageous, considering Motorola’s promise to standards bodies to offer access to the patents on reasonable terms. Motorola contends that Microsoft gave up its right to a reasonable royalty by filing the lawsuit in response.

The trial will be heard and decided by U.S. District Judge James Robart, focusing on determining a reasonable and non-discriminatory rate for the patents.

Robart in May scolded the companies for arrogance and hubris, saying from the bench that the court was “well aware that it is being played as a pawn in a global industry-wide business negotiation.”

GeekWire will be in court tracking the case — stay tuned for more starting tomorrow.

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Comments

  • guest

    If MS’s legal department can’t show how 2.25% of the end product price is ridiculous for standards essential patents, then they should probably fire themselves.

    • Mat_t

      exactly. They charge 10x this and are trying to say that this is too high somehow? It’s almost comedy.

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