What Does the Microsoft-Motorola Mobility Patent Case Mean for BlackBerry?
At issue in the case is Microsoft’s allegation that Google/Motorola Mobility refused to license some of its standards-essential patents on FRAND (fair, reasonable and nondiscriminatory) terms in breach of its obligation to do so. Earlier this year, a federal court in Seattle ruled that Motorola — which had been demanding in excess of $4 billion from Microsoft for its use of a portfolio of patents related to the H.264 video standard and the 802.11 wireless standard — ruled that it was instead entitled to just $1.8 million a year.
Now a jury will determine whether Google and its Motorola Mobility division violated their FRAND obligations by seeking unreasonable royalties from Microsoft and threatening to seek an injunction if they weren’t paid. And if it should find against them, determining that Google and Motorola did indeed breach their contract, it could order them to pay Microsoft damages. Obviously, were that to happen, it would be good news for Microsoft. But it’s also potentially good news for BlackBerry, or any other company that signed an SEP licensing deal with Google/Motorola Mobility under duress and threat of litigation.
In 2008, Motorola sued BlackBerry, then called Research In Motion, alleging that it violated seven of Motorola’s patents. BlackBerry countersued, claiming infringement of nine patents and, crucially, that Motorola was wrongfully demanding excessive royalties for its standards-essential patents.
“[Motorola] has refused to extend FRAND … licensing terms to RIM for any of Motorola’s purportedly essential patents … and has instead demanded of RIM terms that are unfair, unreasonable, and, on information and belief, discriminatory,” BlackBerry said in its complaint.
Motorola disputed that assertion in court, filing a motion to have BlackBerry’s claims that it was abusing its SEPs dismissed. But the presiding judge denied it. “At this stage of the case, the court takes [BlackBerry’s] pleadings as true,” Senior U.S. District Judge A. Joe Fish wrote. [BlackBerry] has adequately pled that Motorola did not honor its promise to license on FRAND terms. Motorola’s contention otherwise is entitled to no weight.”
A small victory for BlackBerry, but one that would ultimately get it nowhere. Motorola subsequently filed a complaint with the U.S. International Trade Commission alleging patent infringement and seeking a ban on imports of BlackBerry phones into the U.S. And a few months later, the two companies settled the case, with BlackBerry agreeing to make a one-time payment to Motorola and pay ongoing royalties for its IP.
So BlackBerry may be watching closely as arguments get under way in Microsoft versus Motorola Mobility. Because if Motorola Mobility is found to be in breach of its FRAND commitments as a result of the trial, BlackBerry might conceivably be able to argue that it suffered similar transgressions. It might even be able to make the case for paying a lower royalty rate going forward — or a rebate on fees already paid.
Taking such a tack wouldn’t be easy, though.
“It would be hard for them to go back on that deal unless they can show that they were coerced by Motorola into signing it,” Jorge L. Contreras, associate professor of law at American University, told AllThingsD. “But they could possibly bring some kind of antitrust claim arguing that Moto should refund some royalties.”
Question is, would going that route be worth it for BlackBerry, which is currently exploring its strategic options following a so-far unsuccessful turnaround attempt? Said Contreras, “Frankly, I think that BlackBerry might very well bring such a suit. All they would have to lose are some legal expenses. But I think they would have a hard time winning such a suit, if it went to trial — though Motorola might consider settling with them at a lower rate.”
BlackBerry declined comment on the case. Google’s Motorola Mobility division did not respond to a request for comment.