Transfer Pricing Associates

Motorola and Microsoft in Patent Dispute in Germany

post Tuesday April 17, 2012

court case

Recently, Microsoft decided to move its logistics and distribution center from Duren, Germany to the Netherlands claiming that the German system for litigating patent disputes is harmful to Microsoft’s business.  Microsoft cited that a recent claim brought against it by Motorola Mobility claiming that Microsoft employs a video streaming technology that actually belongs to Motorola could threaten Microsoft’s European business market.  Motorola has filed a complaint with German courts urging them to stop Microsoft from distributing its Xbox game consoles and Windows 7 operating system software which allegedly use Motorola’s technology. 

Apparently the German litigation system makes it easy for a company to block the sale of a rival’s product even before an infringement claim is verified.  Therefore, to avoid getting its whole pan-European distribution of software packaged blocked by Motorola’s claim, Microsoft decided to quickly move its logistics center just across the border into the Netherlands. 

In the past two years, other companies such as Apple, Samsung, Nokia, Microsoft and Motorola Mobility have become subject of Germany’s system of patent litigation, either by introducing or defending themselves against patent claims in Germany.  Some of these companies have had mixed fortunes in the German patent litigation system.  Apple, for example won a ruling in German courts to ban the sale of a Samsung’s tablets but now is the defendant on a patent claim by Nokia. 

Microsoft, however, is not taking any chances on Motorola’s claim possibly disrupting Microsoft’s pan-European distribution.   After learning of Motorola’s claims in Germany, Microsoft asked a U.S. District Court in Seattle to thwart Motorola’s claim in German courts until after a U.S. trial can be held on the contract dispute.

The German court in Mannheim was set to issue a ruling on May 2, but it seems that the U.S. District Court in Seattle beat them to the punch.  Last week, according to statements from Microsoft, the U.S. District Judge ruled that Motorola Mobility cannot take any steps to seek such a ban of Windows or Xbox before a trial is held in the U.S. courts. 

In response to the ruling, Microsoft claimed that “Motorola promised to make its patents available to Microsoft and other companies on fair and reasonable terms”.  On the other hand, Motorola responded to the ruling by stating that “the U.S. court has to decide whether Microsoft is entitled to a license that is based on terms that are ‘reasonable and non-discriminatory,’ an obligation that is pledged by participants in standard-setting boards”. 

[Sources: New York Times and Bloomberg Businessweek]


Image courtesy of Salvatore Vuono

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