Microsoft Claims Victory Against Motorola Mobility’s German Lawsuit by Using a Preliminary Injunction and Temporary Restraining Order Issued by a U.S. Judge in a Contract Dispute
What was once a nice partnership has definitely soured; Motorola Mobility and Microsoft have gone to the courts. Initially, both companies were working together on the development of Windows Mobile until Motorola left and chose the Android OS because Windows Mobile was “slow to evolve.” Since then, both companies have been wrapped up in litigation, presenting some interesting strategies.
In the rising recent battle between Microsoft and Motorola Mobility, each is throwing mud as fast as it can and getting creative about how they are doing it. Motorola Mobility owns industry standard patents on video compression and WiFi. Microsoft and Motorola entered into an agreement to license industry standard patents at a reasonable royalty rate. What is a reasonable rate for a piece of technology that is an industry required standard? Motorola Mobility feels that a reasonable royalty rate is 2.25% of the retail product’s price, which could total to around $4 billion a year based on existing sales. Microsoft claims that Motorola Mobility failed to license the video compression and WiFi patents on fair terms, and has brought them to court.
The dispute continued to expand when Motorola Mobility sought to block the sales of Xbox and Windows 7, their only option in the German court system. In Germany, there are no proportional monetary damages for patents, only injunctions stopping the sales and importing of products. In return, Microsoft has requested a ban on importation of Motorola phones into the U.S. that run the Android operating system. Currently, Microsoft’s European distribution center is located in Germany, meaning that a ban in the German courts could stop Microsoft from selling across all of Europe. Microsoft is so concerned by the idea of the courts banning sales in Germany that it is moving its entire distribution center to the Netherlands.
In an interesting strategy, Microsoft has requested a temporary restraining order and preliminary injunction in Seattle based on the contract dispute over patent licensing . Microsoft won the preliminary injunction and restraining order which prevents the German court from ruling on the validity of Motorola Mobility’s patents until the dispute is resolved. It remains unclear what the effects will be, but at the least, it has given Microsoft the time to move its distribution center allowing uninterrupted sales to the rest of Europe should Germany ban the sales of Microsoft’s Xbox and Windows 7 in Germany.