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Judge to Set Fair Royalty Rate for Standards-Essential Patents

post Monday December 3, 2012

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Following the Microsoft-Motorola trials, the federal judge will set the royalty rate for industry-standard patents.

The decision resulted in Microsoft’s lawsuit against Motorola Mobility, claiming that the company was asking too much for its standards-essential patents. The patented technology involves 802.11 wireless LAN and H.264 video standards. The trial currently being held at the U.S. District Court in Seattle includes two parts: determining a fair royalty rate, and determining whether Motorola breached the contract charging Microsoft at an unreasonable rate.

The outcome of the trial would have implications on other industry-standard patents in dispute, as a methodology for calculating royalty rates for standards-essential patents would be established.

Standard-setting organizations are obligated to license their patents under FRAND, namely fair, reasonable, and nondiscriminatory terms. According to Mandour & Associates, Microsoft claims that Motorola required 2.25 percent of the sale price of every Xbox and Windows sale. Motorola disputes that the figure was merely an opening figure for negotiations. The presiding judge, James Robart, is expected to “give an opinion about what constitutes a reasonable royalty fee for all industry-specific patents”. The Jury trial of this case will be held in spring next year.

Source: PC World, San Diego Patent Attorney

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