Microsoft has announced the filing of a complaint with the European Commission over Motorola Mobility's royalty demands, relating to H.264 video. It said that Motorola Mobility is trying to block the sale of Windows PCs and laptops, as well as the firm's Xbox 360 console because they, "enable people to view videos on the Web and to connect wirelessly to the Internet using industry standards."
At the core of its complaint, Microsoft accuses Motorola Mobility of breaking promises made to other firms in the industry when it comes to patents essential to common technical standards. These standards are developed by the industry for a very important reason, so that the greatest amount of interoperability and compatibility can be achieved between products developed by different firms.
Microsoft says that the industry came together years ago to define common technical standards that every firm can use to build compatible products for video and Wi-Fi, and that each firm involved (including Motorola) committed to making patents essential to the standards available on fair and reasonable terms.
For example, a $1,000 laptop running Windows software will cost Microsoft 2 cents in royalties for the use of 2,300 patents related to the H.264 video standard. The patents were made available from a group of 29 companies that came together to offer their H.264 patents to the industry on fair, reasonable and nondiscriminatory (FRAND) terms. Microsoft does benefit from a Volume discount, but points out that no firm has to pay more than 20 cents per device.
Motorola holds 50 patents related to the H.264 standard, and Microsoft says it wants royalties of $22.50 for a $1,000 laptop. If the price of the laptop is $2,000, it says Motorola is demanding $50 even though the Windows software on both would be exactly the same, and any hardware upgrades such as a bigger HDD, faster processor or more memory have nothing to do with the H.264 video standard.
Microsoft also says that Google, as Motorola Mobility's new owner, is unwilling to change course and points out that Google has not committed to avoid seeking injunctions against other firms' products on the basis of standard essential patents, like Microsoft, Apple and Cisco have recently done.
The situation has gotten attention from the U.S. Department of Justice (DoJ) and also the European Commission.
"I can assure you that the Commission will take further action if warranted to ensure that the use of standard essential patents by all players in the sector is fully compliant with EU competition law and with the FRAND commitments given to standard setting organisations."
European Commissioner for Competition, Joaquin Almunia.
"Imagine if every firm acted like Motorola," said Microsoft's Vice President & Deputy General Counsel, Corporate Standards & Antitrust Group, Dave Heiner. "Windows implements more than 60 standards, and a PC supports about 200. If every firm priced its standard essential patents like Motorola, the cost of the patents would be greater than all the other costs combined in making PCs, tablets, smartphones and other devices."
Written by: James Delahunty @ 22 Feb 2012 9:18
