John Paczkowski

Recent Posts by John Paczkowski

Motorola Mobility to Microsoft: We Demand a Royalty Recount

Here’s a big surprise: Google and Microsoft beg to differ.

For months now, the software giant has been saying that Google’s Motorola Mobility unit has refused to license standards-essential patents on fair, reasonable and non-discriminatory terms.

Microsoft’s beef: That the cellular telecom company was demanding a 2.25 percent royalty rate on Windows for use of its portfolio of patents related to the H.264 video standard.

“Motorola has refused to make its patents available at anything remotely close to a reasonable price,” Microsoft Deputy General Counsel Dave Heiner claimed in a February 2012 blog post. “For a $1,000 laptop, Motorola is demanding that Microsoft pay a royalty of $22.50 for its 50 patents on the video standard, called H.264.”

All told, that adds up to $4 billion.

That’s a hefty figure, of course — and one that got Microsoft a lot of mileage in the media.

But in an interview with AllThingsD on Wednesday, a Motorola exec said the company hasn’t been seeking royalties at that level for some time and that it has only been demanding 50 cents in royalties for each copy of Windows for a year now.

“Microsoft says we demanded $4 billion a year from them, and that’s simply not true,” said Kirk Dailey, VP of intellectual property for Motorola Mobility. “We never asked for anything like that.”

Dailey also alleged that Microsoft was aware of that lower offer when it said that Motorola was demanding far larger royalties.

Dailey noted that a 50-cent royalty on 300 million copies of Windows would net Motorola just $150 million.

Not surprisingly, a spokesperson for Microsoft disputed Motorola’s account, telling AllThingsD that it didn’t see the 50-cent proposal until just two days ago.

But it is even more of a hairball than that, when the roles are reversed.

Dailey said that Motorola has offered to pay Microsoft a 33-cent fee for every Android phone that uses its ActiveSync software, to avoid a U.S. International Trade Commission ruling scheduled to go into effect July 17.

“We are willing to take an ActiveSync license at that price, and we believe they are obligated to consider and accept that,” Dailey said.

But, in a statement given to AllThingsD, Horacio Gutierrez, Microsoft’s corporate vice president and deputy general counsel, slagged both Motorola and the search giant for what he suggests are untoward tactics.

“While we welcome any good faith settlement effort, it’s hard to apply that label to a demand that Microsoft pay royalties to Google far in excess of market rates, that refuses to license all the Microsoft patents infringed by Motorola, and that is promptly leaked to the press,” said Gutierrez. “At a time when the FTC, prominent members of Congress and leading companies from across the industry are expressing concern about Google’s refusal to honor its obligations to standards bodies, this appears to be little more than an effort to change the subject.”

In other words, just another typical day between Microsoft and Google.

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