Thursday, August 1, 2013

Mitsubishi, Philips, Thomson sue Google's Motorola Mobility over MPEG-2 codec patents

Google's Motorola Mobility is no stranger to video codec patent lawsuits. It's been asserting some allegedly H.264-essential patents against Microsoft for a couple of years, though a federal judge has found that those patents are of extremely low value (in general and to Microsoft's products in particular). What goes around, comes around. The Google subsidiary is now on the receiving end of a lawsuit brought yesterday in the Southern District of Florida by MPEG-2 patent holders Mitsubishi, Philips and Thomson (this post continues below the document):

13-07-31 Mitsubishi Philips Thomson Complaint Against Motorola Mobility

Unlike the wholly-owned Google subsidiary, this Japanese-Dutch-French trio is not seeking an injunction or ITC import ban over FRAND-pledged standard-essential patents. The complaint reiterates, in its paragraph 26, each of the plaintiff's commitment "to individually license its own MPEG-2 patents on fair, reasonable and nondiscriminatory {FRAND] terms to anyone who requests such a license", in addition to Motorola Mobility having the choice to take a "one-stop shop" license from MPEG LA, also on FRAND terms.

The complaint says that Motorola Mobility, which was "one of the founding members of MPEG LA", from 1997 through 2010 "either directly or through one of its subsidiaries, received royalties from the MPEG-2 pool license and/or profits from the overall licensing activities of MPEG LA, including administration of the MPEG-2 pool license". The filing goes on to say that "Motorola to this day receives profits from the business of MPEG LA". But Motorola and its subsidiaries refused to renew their license when it expired on December 31, 2010. Interestingly, that was the end of the calendar quarter in which Motorola's dispute with Microsoft began. On October 1, 2010, Microsoft sued Motorola for Android's alleged infringement of various non-standard-essential patents. Later that month, Motorola sent Microsoft certain demand letters, one of which related to the H.264 video codec standard and stated a royalty demand amounting to roughly four billion dollars a year. In a few weeks the question of whether these demand letters constituted a breach of Motorola's FRAND contract will be put before a jury in the Western District of Washington. Microsoft brought that contract lawsuit in November 2010.

In October 2010 Motorola sued Apple, another dispute that is unresolved as of today. Yesterday's lawsuit has, by the way, been assigned to Judge Robert N. Scola, who also presides over the two-way Motorola Mobility v. Apple litigation scheduled to go to trial in Miami in a little over a year.

It could be (but probably isn't) purely coincidental that Motorola terminated a fruitful 13-year working relationship with the MPEG LA patent pool firm when it started to aggressively assert its declared-essential patents against Apple and Microsoft. Even though the MPEG-2 patent pool is not identical to the AVC/H.264 pool, it's possible that Motorola wanted to distance itself from reasonably-priced video codec patent license offers.

This new Mitsubishi et al. v. Motorola Mobility litigation creates a couple of strategic conflicts for the Google subsidiary. In order to counter whatever damages claims the three patent holders will present in the course of this litigation, Google might want to leverage Judge Robart's FRAND rate determination in some ways. Google could argue at a high level of abstraction that video codec patents in general aren't as expensive as Mitsubishi, Philips and Thomson may claim, and point to Judge Robart's decision. But that rate-setting opinion very specifically discusses the reasons for which Motorola Mobility's H.264 declared-essential patents are of limited value. What will, however, almost certainly happen is that the plaintiffs in this new Miami litigation will draw the court's and the future jury's attention to Motorola Mobility's own out-of-this-world royalty demands over video codec patents, and the positions it took on FRAND. That could become really costly for Google if things go wrong.

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