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Summary:

What happens if a company has a standards-essential patent and doesn’t play nice with it? A federal judge explained why a $14.5 million jury award is reasonable punishment.

A federal judge refused to overturn a $14.5 million verdict that a Seattle jury awarded to Microsoft earlier this month as compensation for rival Motorola’s refusal to license standard-essential patents for Wi-Fi and video technology.

In a ruling that will please Microsoft and contract law enthusiasts (and cause everyone else to glaze over), U.S. District Judge James Robart found that Motorola’s arguments were frivolous and repetitive of the ones the company had made earlier to the the judge and the jury.

The case is significant from a technology and legal standpoint because it explores how companies should be punished if they don’t play nice with so-called FRAND patents — patents that are part of an industry standards pool and that must be licensed on Fair, Reasonable And Non-Discriminatory terms.

After a brief trial, the jury concluded that Google-owned Motorola acted in bad faith when it sent Microsoft letters demanding 2.5 percent royalty rates, and also sought to obtain injunctions against Microsoft products in Germany. The jury awarded Microsoft damages based partly on the company’s claims that it had to move a factory from Germany to Holland. The jury also awarded attorney’s fees; such fee awards are fairly rare in America, but the judge noted that “RAND litigation is a different animal” from ordinary cases.

Unlike most patent trials, this one was based on contract law, not patent infringement; though Microsoft and Motorola didn’t have a contract, the judge found earlier that Microsoft could benefit as third party from contracts between Motorola and standards-setting agencies.

If you like this stuff, here’s the court ruling with some key parts underlined:

Microsoft Motorola

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  1. John Roberts, perhaps you should have handed this story to someone who does care and understand this stuff. Particularly so, because the patents hairball is at the center of the mega mobile market share war.

    1. David, I’m not sure I get your position. I’m simply relating news of the ruling — this doesn’t mean that I don’t understand or care about the role of patents in the smartphone industry. (If you’ve seen my other coverage on the issue, you’ll detect that I’m not a fan)

      1. Nothing obscure in my point. The tone or your post implied a lack of interest. That is fine but then perhaps you should not be covering this area. I am sure that there are people who are more interested than you. It is obviously an extremely important issue in the mobile industry that deserves analysis. I agree with Vin Cerf and others that these patent wars are a detriment to the industry, but they nevertheless exist and continue to shape the industry’s direction.

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