On Tuesday (November 20), Judge James L. Robart of the United States District Court for the Western District of Washington entered a minute order according to which the FRAND rate-setting trial between Microsoft and Google's Motorola Mobility has been completed. Yesterday was trial day 6.
Motorola Mobility is a separate legal entity and the lawsuit started even before Motorola Mobility was spun off of Motorola (which is now called Motorola Solutions) when Microsoft brought an action in November 2010 to enforce Motorola's FRAND promise. But Google acquired Motorola Mobility and is in complete control of its patent litigations. For example, Google officially discusses settlement of Motorola's claims with Apple, making and rejecting demands on behalf of its wholly-owned, micromanaged subsidiary.
Google's acquisition of Motorola Mobility may be outcome-determinative with respect to the H.264 video codec standard, one of the two standards at issue in this case (the other is IEEE 802.11, the WiFi, or WLAN, standard). Judge Robart's order says that "[t]he court will accept a 10 page brief regarding the Google license". According to Microsoft, Google has a grant-back obligation under its H.264 patent license agreement with MPEG LA that benefits Microsoft and relates not only to companies that were Google subsidiaries by the time the agreement was signed but also to entities that subsequently became subsidiaries, such as Motorola Mobility, a claim that I believe is correct if Google accepted the standard terms of the MPEG LA H.264 agreement. Microsoft first mentioned the Google-MPEG LA agreement in a filing with Judge Robart's court in June. The contract may also be outcome-determinative in the remainder of the ITC investigation of Motorola's complaint. After Google withdrew its WiFi patents, only H.264 patents are left in the investigation.
The deadline for all post-trial briefs and revised findings of fact is December 14. It was previously expected by observers that a rate-setting order would not come down before late December at the earliest, and more likely next year. The rate-setting order will be an extremely important milestone and will be the last missing piece for Microsoft to receive a license to Motorola Mobility's IEEE 802.11 and H.264 SEPs on court-determined terms. But the case still won't be over (absent a settlement). The next step would be a breach-of-contract trial, with a jury evaluating the question of whether Motorola Mobility's initial 2.25%-of-end-product, $4-billion-per-year demand constituted a breach of its FRAND contract in light of the fact that counsel for Motorola Mobility conceded in court, earlier this year, that a "blatantly unreasonable" demand would be a breach.
I have read all of the information available on the Internet on what was said at the trial. Judge Robart was right that many of the reporters who attended the first couple of days didn't return for the last part. At last there's an informative Reuters report on the final trial day, and it appears that Google (Motorola) once again made its Surface argument. According to the report, one of its experts said that Microsoft would have "a difficult time selling smart phones or tablets" without a license to Motorola's patents, which is yet another example of Google's constant attempts to capture hold-up value instead of basis its demand on the intrinsic, pre-standardization value of its standard-essential patents.
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