Microsoft Sues Motorola over Patents, Again

Microsoft is suing Motorola for the second time in two months, this time over patents related to technology in Windows Phone 7 and the Xbox 360.

Microsoft fired a lawsuit against Motorola for the second time in two months, claiming the manufacturer has violated agreements to license at "reasonable rates" patents related to H.264 video compression and wireless LAN.

In the lawsuit, Microsoft insists that Motorola made patent-related commitments to both the IEEE-SA (Institute of Electrical and Electronics Engineers Standards Association) and ITU (International Telecommunications Union). Microsoft argues that Motorola's insistence on patent royalties calibrated to the retail price of Microsoft consumer products, as opposed to those products' components, is "exorbitant and discriminatory." The products in question include PCs loaded with Windows 7, Windows Phone 7 smartphones and the Xbox 360 console.

"Microsoft invested substantial resources in developing and marketing products in compliance with these standards," reads the lawsuit, which was filed Nov. 9 with the United States District Court for the Western District of Washington at Seattle, "relying on the assurances of participating patent holders-including Motorola-that any patents asserted to be 'essential' by such patent holders would be available for licensing on such terms, regardless of whether such patents were, in fact, used in any particular implementation."

The lawsuit then recounts a letter purportedly sent from Kirk Dailey, Motorola's corporate vice president of intellectual property, to Microsoft demanding royalties for identified patents adjusted to "the price of the end product ... and not on component software." This move, Microsoft argues, is injurious to its business.

"Motorola broke its promise to IEEE-SA and its members and affiliates by refusing to offer Microsoft a license that is consistent with Clause 6 of IEEE-SA Standards Board Bylaws, instead demanding royalties that are excessive and discriminatory," the lawsuit adds. "Motorola broke its promise to ITU and its members and affiliates by refusing to offer to Microsoft a license that is consistent with the Common Patent Policy of the ITU, instead demanding royalties that are excessive and discriminatory."

In October, Microsoft filed an intellectual-property lawsuit against Motorola, alleging that the manufacturer's line of Google Android smartphones violates nine of its patents.

"The patents at issue relate to a range of functionality embodied in Motorola's Android smartphone devices that are essential to the smartphone user experience," Horacio Gutierrez, Microsoft's corporate vice president and deputy general counsel of intellectual property and licensing, wrote in an Oct. 1 statement on the matter. "Motorola needs to stop its infringement of our patented inventions in its Android smartphones."

Despite that lawsuit, however, Motorola co-CEO Sanjay Jha reportedly seemed determined not to burn bridges with Microsoft. "I am open to finding ways to work with Microsoft," he told The Wall Street Journal Oct. 6. "I would much rather have done without that lawsuit, but it doesn't always work out that way."

But how does he feel about Microsoft now?