Microsoft, Motorola ruling: Google patents not worth billions

Microsoft, Motorola ruling: Google patents not worth billions

Summary: A judge found in favor of Microsoft in a patent spat with Motorola, indicating that Google grossly overpaid for the smartphone maker, despite the patent protection it was given.

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(Image via CNET)

A U.S. judge fell in favor of Microsoft in the first round of an ongoing spat against Motorola over how much the software giant should pay the Google division for patent use.

But the case was more than twofold: the ultimate cost that Microsoft must pay for the patents would lead to an estimate valuation of Motorola's patent cache, which could have drastic effects on how the company makes deals with rivals and competitors in the future.

The case centers around how much Microsoft should pay the search giant's mobile division for licensing its H.264 video and networking "essential" patents, aptly named because they are necessary to the functioning of its Xbox console and Windows software.

In the ruling, U.S. District Judge James Robart in Seattle said Microsoft owed about $1.8 million, a slightly higher figure than Microsoft's offering price of $1 million a year.

Google-owned Motorola, on the other hand, argued that it should be paid a massive $4 billion a year for use of these devices, as a result of the revenue and profit generated by both Xbox and Windows. 

While Motorola believed that it licensed its patents on a reasonable basis "consistent with those set by others in the industry," reports AllThingsD, Microsoft welcomed the decision saying it was "good for consumers," as it allowed patents essential to innovation remain affordable.

The string of judgements falling against Motorola seems to suggest Google grossly overpaid for the company, despite the patent protection it was given.

The valuation of Motorola's patents remains undefined, but significantly lower than Google expected. 

For the search turned mobile giant, it's a huge blow. It puts the company that Google bought for $12.5 billion — which has since increased to about $13 billion with restructuring costs and suchlike — worth a lot less than what it shelled out for back in 2011. 

Google's Eric Schmidt said Motorola was "not all about the patents," but it bolstered Google's position in the wake of competition, notably from Apple, which had brought a slew of patent-related cases against its manufacturing partners. All the patent fights were ultimately aimed at knocking Android down a peg or two.

But it almost was all about the patents. In total, Google acquired 17,000 patents in total, worth roughly $12.5 billion — not including staff, acquisition costs and other things. Call it $12 billion or even $11 billion, the difference between Motorola's asking price of $4 billion down to the court's $1.8 million determination values Motorola far less than Google expected.

Topics: Patents, Cloud, Google, Microsoft

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89 comments
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  • Still making cash

    I'm wondering what the latest statistics are for Microsoft? Do they really make more money on every Android phone sold or do they make more money on their own phone sold?
    BruinB88
    • I think they made more money off royalty fees than Windows Phone

      But that was about 2 years ago so I don't know about now.
      Jabe124
      • If you think Mario`s story is nice,

        If you think Mario`s story is nice, , 1 week ago my mum's best friend basically also earnt $5998 sitting there a ninteen hour week in their apartment and their buddy's step-aunt`s neighbour has been doing this for six months and got a cheque for more than $5998 parttime from there labtop. use the guidelines from this address,, >> http://qr.net/kiS8
        bhaitoqeer
        • Patent trolling underlines that our generation...

          ...is full of cowardice and submission in front of corporate fascism.
          MacBroderick
        • Your mum is a patent troll.

          I bet she gets her $5998 because she thinks she owns the patent for "Method and Apparatus for Soft Keyboard Keys containing Vowels" and she's collecting royalties from both Motorola and Google, all whilst sitting on the loo.
          AccountUnwanted
    • Windows Phone 8 was the only

      OS that had a good growth this quarter if I remember well. And they sold a lot worldwide, but poorly in the US. This is why some people like you can say that no one has one, because in the US it's all about Samsung and Apple.
      Throw All The Things
  • I would imagine Microsofts goal with the licensing fee for Android

    isn't to make money off Android phones, but rather to make the cost of using Android comparable to the cost of using windows for a phone.

    That is just speculation though.
    Emacho
  • In Microsoft patent spat, ruling hints that Google grossly overpaid for Mot

    We've been saying Google over paid since they made the deal. Google didn't know what to do with the company and Motorola phones weren't that great.
    Loverock-Davidson
    • Awww...

      Schmidt et al basically panicked and bought a $12B+ sockful of soapsuds. Well, that, plus a money-losing phone manufacturer that would be p*ssing off its Android partners if it wasn't so obviously circling the drain.

      I wonder when the $10B goodwill writedown will come. That's gotta hurt.
      pdq
  • BS

    Just like most of these rulings. People steal a moto patent, then get a court to give it away.

    What was the point of moto spending all the money to develop these things, if the courts just give them away.

    IF M$ paid them fees comparable to those they charged the Android manu's...

    Oh, and Love_ock is nothing more than a M$ sound bite.
    timspublic1@...
    • Cell phones

      When Motorola sold its first mobile phone it had invested $100,000,000 over fifteen years. Cost per unit in 1983: $3995.00. (source: Retrobrick) Same could be said for computers. That's the way of technology. I'm sure Motorola made up its patent costs through sales.
      Gray Hawk
    • Motrola made a voluntary FRAND promise

      When Motorola made the FRAND promise it was clear that the value of the releted patents would be limited from that moment.
      Motorola voluntarily gave that promise and thus they found it still worth the development investment at that time (before 2003). Only after going into negatiations with google about the takeover of Motorola they changed their mind on their FRAND promise and tried to get a ridiculous amount of money.

      Now they are losing courtcase after courtcase and have two formal investigations by the EU which might cost them hundreds of millions in fines.
      IE9
    • And are you an anti-MS soundbite, timspublic1@...?

      I like how you glossed over absolutely everything so you could jump to Motorola's defense.

      This is similar to you leasing a building, then having the company raise that rate to 1000% because they made a bad choice someplace else, and is trying to milk you to cover their loses on some other failed purcahse.
      William Farrel
    • ??

      how is a $4bn annual fee fair for FRAND patets??
      bluemooberry
  • This is not about a large patent portfolio

    You do realize this is about the inclusion of standard video codecs, and that motorola only holds some of these patents, do you?

    So they tried to charge 4 billion a year for partial rights to use a standardized video format.
    Sacr
  • I'm quite sure Motorola is going to appeal.

    The Motorola initial offer was just that "INITIAL".

    Negotiation was expected.

    I suppose the next time someone wants a MS patent they should also go to court immediately after the initial "offer" and get them dropped to pennies as well.
    jessepollard
    • Motorola lost already 4 times agianst MS patents

      Going to court against MS has not a very good descision for Motorola.
      They have has several sales bans in Germany for patent infringements
      IE9
    • Those are not frand patents

      Negotitation or extortion. It went from 4 billion to 180 million, that's 3820 million dollar less !

      It was utterly crazy to expect Motorola even having the slightest chance of pulling this off.
      sjaak327
      • pesky decimal points

        It went from $4B to $1.8M (not $180M) those pesky decimal points are always getting out of line.
        dawgstyler
        • Oops

          Only 1.8 million ? that's even worse. That makes the difference 3998.2 million.
          sjaak327