Saturday, March 23, 2013

Google loses another one to Microsoft: ITC judge says Xbox doesn't infringe WiFi-related patent

An Administrative Law Judge (ALJ) at the United States International Trade Commission (USITC, or just ITC) has given notice of a preliminary ruling that Microsoft's Xbox gaming console does not infringe Google's (Motorola's) U.S. Patent No. 6,069,896 on a "capability addressable network and method therefor". This non-standard-essential patent is the only patent-in-suit left in this investigation after Google's withdrawals of four standard-essential patents (SEPs). In October Google dropped its WiFi (WLAN) patents, and after Microsoft notified the ITC of Google's envisioned settlement with the Federal Trade Commission (FTC), Google also withdrew its two H.264 video codec SEPs (which I believe are subject to a reciprocal-licensing obligation anyway).

The first preliminary ruling in this case, prior to a remand of the case to the judge, had actually resulted in four infringement findings (including three SEPs). In June the investigation was remanded to Judge David Shaw, and the remand instructions already suggested that Google was going to lose this case.

Once again the judge's decision can be reviewed by the Commission, the six-member decision-making body at the top of the ITC. Google already told the media that it's "disappointed with today's determination and look[s] forward to the full commission's review".

Judge Shaw's notice just says that no violation was found. There are different possibilities: a finding of no infringemenent, a finding of invalidity, or some other (less common) reason. A detailed version of the ruling will become available. It usually takes several weeks before a redacted version is published.

To put this decision into context: with every Microsoft-Google patent ruling that comes down, the logic behind Google's $12.5 billion purchase of Motorola Mobility becomes more questionable. Microsoft has already won a U.S. import ban over one patent (which it's trying to broaden on appeal) and three German patent injunctions against Motorola (which forced its Android devices out of the German market for months), and is fairly likely to win an even more impactful German injunction against Google Maps based on a preliminary indication given at a trial earlier this month. By contrast, Google's Motorola hasn't won anything apart from a couple of German H.264 patent rulings it never got to enforce. It had to withdraw another German case because there was no infringement, and is going to lose a fourth one. Google is soon going to have to license its SEP portfolio to Microsoft in exchange for what will most likely be a tiny fraction of the $4 billion annual royalty demand it originally made.

I believe Google will soon realize, or may already have realized, that it needs to pay Android patent royalties to Microsoft, and that Motorola's patent portfolio doesn't give it enough leverage for a "freebie" cross-license.

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