Microsoft Xbox faces potential ban over Motorola patent infringement
Motorola Mobility has won an injunction against Microsoft potentially banning sales of the Xbox 360 games console and Windows 7 operating system over patent infringement claims.
A court in Mannheim, Germany, found Microsoft had infringed two Motorola patents dating back to the early 1990s and relating to the H.264 compression standard. They describe a way of reducing the size of video files that is used very widely, including by YouTube and on Blu-ray discs.
The decision follows a ruling last week by the International Trade Commission, a United States authority, which also found Microsoft’s Xbox 360 infringed Motorola’s patents.
The dispute came to court in Europe after Motorola demanded licence fees on terms that Microsoft said were unfair and would cost at least $4bn annually. Because H.264 is a standard technology, patents relating to it are covered by Frand rules, which compel the owners of patents to licence them to competitors on a “fair and reasonable” basis.
According to Florian Mueller, a leading commentator on technology patent litigation, Motorola expected Microsoft to reject its licensing offer.
“Microsoft obviously didn't accept those terms, and Motorola didn't even genuinely expect it to,” he said on his blog.
“From the beginning it just wanted to win injunctions in order to force Microsoft into a broad cross-license agreement,” he added, referring to patent infringement claims by Microsoft pending against Motorola over its range of Android smartphones.
Microsoft has persuaded other Android makers, including HTC and Samsung, to pay licence fees for its patents, and as result currently makes more money from Google’s mobile phone operating system than its own, Windows Phone 7. Google's ongoing $12.5bn acquisition of Motorola, motivated by the thousands of smartphone patents held by the latter, has meanwhile raised the stakes in the battle, which began in 2010.
Mr Mueller said that because Motorola’s video compression patents were essential to the standard and covered by Frand rules, the injunction granted by the German court was unlikely to stand in the face of appeals and related litigation in the United States. Microsoft nevertheless recently said it would move its European distribution headquarters from Germany to the Netherlands as a precaution against disruption by injunctions.
A spokesman for the software giant business would continue as usual and it would “appeal this decision and pursue the fundamental issue of Motorola’s broken promise”.
“This is one step in a long process, and we are confident that Motorola will eventually be held to its promise to make its standard essential patents available on fair and reasonable terms for the benefit of consumers who enjoy video on the web,” he said, pointing out that a restraining order granted in the United States prevents Motorola enforcing the German injunction until American courts have ruled.
The European Commission has already mounted a formal investigation of Motorola over claims it is abusing its Frand patents by demanding exorbitant licence fees to put pressure on rivals. It has also sued Apple, alleging the iPhone also infringes its intellectual property.