A lawyer for Motorola urged a jury in Seattle this afternoon to consider the company’s October 2010 patent licensing offer to Microsoft in the context of the broader discussions and disputes taking place between the companies at the time — saying that Microsoft was “trying to put Motorola out of business.”
That was a reference to a patent lawsuit filed by Microsoft against Motorola earlier that month over the smartphone maker’s use of Google’s Android operating system. Motorola, which was subsequently acquired by Google, remains an exception among Android makers in declining to concede to Microsoft’s assertions that Android violates its patents.
Motorola lawyer Bill Price, of the law firm Quinn Emanuel, said today that Microsoft’s Android patent suit put Motorola under “huge time pressure” when the smartphone maker sent letters quoting royalty rates of 2.25 percent for patents essential to implementing video and wireless standards in Windows and Xbox.
Without explicitly accusing Microsoft of retaliation, he noted that Motorola had shifted away from Microsoft’s Windows Mobile software and embraced Android, while Microsoft was preparing to launch Windows Phone. By attacking Motorola over Android patents, he said Microsoft was putting Motorola’s business in jeopardy.
The situation “has to be looked at in the context of the realities of the dynamics of the engagement between the two companies,” he said. “The idea here was to meet and put all the patents on the table, and reach a business resolution in light of the fact that Microsoft was trying to put Motorola out of business.”
In the current suit, filed separately, Microsoft alleges that Motorola’s offer breached its legal commitments to standards-setting organizations to license the H.264 and 802.11 patents on fair and reasonable terms.
U.S. District Judge James Robart, who is presiding over the jury trial, ruled previously that a fair and reasonable licensing deal would require Microsoft to pay only a fraction of what Motorola originally offered — less than $1.8 million a year, compared with $4 billion a year if Motorola’s original offers were taken at face value, Microsoft says.
Microsoft lawyer Art Harrigan, of Calfo Harrigan Leyh & Eakes, had earlier told the jury that Motorola’s offer letters by themselves breached Motorola’s commitments to the standards groups.
“Every offer, even the first offer, has to comply with the covenant of good faith and fair dealing,” he said — describing Motorola’s contribution as “only a sliver” of the technology required to implement the standard, making its initial offer all the more outlandish, in Microsoft’s view.
But Motorola lawyer Price said the company fully expected to engage in back-and-forth with Microsoft over a whole set of patents, taking into account Microsoft’s own patents covering standardized technology. ”What Motorola expected was the custom and practice in the industry — that you then talk,” he said.
Microsoft lawyer Harrigan said the company is seeking damages including $23 million to recover the cost of moving a distribution center to the Netherlands after Motorola won an injunction in Germany.
In his opening statement, however, Price previewed evidence from a Microsoft employee who cited benefits to moving the facility, including increasing the company’s distribution capacity — implying that the move was to Microsoft’s benefit regardless.
The case continues Tuesday with the first of Microsoft’s witnesses, including Windows executive Jon DeVaan and Xbox executive David Treadwell.