Microsoft flees Germany over patent disputes

Microsoft flees Germany over patent disputes

Summary: Microsoft is taking its European software distribution center out of Germany due to patent disputes with Motorola Mobility.

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On Monday, Microsoft said it is in the process of moving its European logistics operation to the Netherlands. The decision has meant severing its distribution deal with Bertelsmann subsidiary Arvato, which is based in the German state of Nordrhein-Westfalen.

"We have a great relationship with Arvato, and we are pleased with the quality of their service. But Motorola's refusal to live up to its patent promises has left us no choice," Microsoft said in a statement. "We would have preferred to keep our European distribution centre with Arvato in Germany as it has been for many years, but unfortunately the risk of disruption from Motorola's patent litigation is simply too high."

Motorola is suing Microsoft in Germany over H.264 video compression technology. It has accused the software maker of using its patents in Windows 7, the Xbox gaming console, Internet Explorer 7 and Windows Media Player without permission, and the Mannheim Regional Court is due to rule on the matter on April 17.

If the court finds in Motorola's favor, it could prohibit the sale of Windows 7 and the other products in Germany — a decision that would also affect any distribution happening from that country. FRAND terms

The suit is central to a complaint Microsoft made to the European Commission's antitrust division in February. Microsoft says the patents in question are essential to the H.264 standard and should therefore be licensed out on fair, reasonable and non-discriminatory (FRAND) terms.

Apple has also complained to the Commission over Motorola's allegedly abusive patent licensing tactics. In December, Motorola succeeded in having some iPad and iPhone models banned from German shelves over 3G-related patents that Apple said should have been licensed on FRAND terms.

In its suit, Motorola is looking for $4bn (£2.5bn) in annual royalties for Microsoft's use of 50 patents in Windows. This figure is equivalent to 2.25 percent of the Windows retail sales price, and is the same proportion that Motorola has demanded from Apple over the cellular patents.

Apple and Microsoft say that percentage is far too high for standard-essential patent royalties, but Motorola — and its soon-to-be owner Google — maintain that it is appropriate.

Samsung is being investigated by the Commission over similar FRAND issues, although its attempts to have German courts grant injunctions against Apple over cellular patents have been less successful than Motorola's.

According to German patent expert Florian Mueller, courts in that country are increasingly willing to grant injunctions to companies that use standard-essential patents aggressively, and Microsoft's decision shows that this trend may damage the German economy.

"A country in which such patents can be easily abused to win injunctions is not an advisable place for a European distribution operation," Mueller wrote in a blog post on Monday. "It's also an irresponsibly risky location for hosting websites that implement industry standards such as H.264."

Topics: Legal, Microsoft, Mobility

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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12 comments
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  • M$ is evading legal responsibility

    by dodging the justice in Germany. The EC should ban this kind of fleeing from justice and avoiding paying the legal consequences for stealing innovators IP.
    The Linux Geek
    • Motorola is abusing their RAND responsibility.

      Please what was stolen? To steal something means the other party no longer has it in their possession. From all my reading Motorola is being a hog; pigs get fed hogs get slaughtered.

      In my mind that which MS is doing is not any different than you being raked over the coals at one store thus you move your business to another store.

      YMMV
      BubbaJones_
      • FRAND applies only to

        FOSS and companies that agree not to sue using baseless claims.
        Hence, apple and M$ lost that privilege and now have to pay the piper!
        The Linux Geek
      • Basically you agree with FOSS

        That using FAT for example in Linux would not be stealing. Thank you for being against MS!
        kirovs@...
  • In America, a person or company is innocent until proven guilty

    How can they be fleeing from justice if the court hasn't ruled yet, or is European justice that different?

    Also, how could you stop them for closing up shop? If you had a Europe-wide system of stopping them from moving in the EU, would you be able to stop them from moving out of it? Then it might be bad for the economy of the EU.

    But, ultimately, if Germany feels that strongly about it, aren't they happier with the scoff-law leaving? Then they only have pure companies left.
    Hameiri
    • the writing is on the wall

      M$ is going down the tubes at the rightful hand of German justice!
      They are grasping at straws trying to delay the inexorable end by fleeing days before the verdict! Ballmer and M$ top brass should better find a country that has no extradition treaty with Germany!
      The Linux Geek
    • Because with past legal proceedings in Germany, it's clear that the courts

      aren't all that fair or unbiased?
      William Farrel
    • Not Guilty Yet...

      "How can they be fleeing from justice if the court hasn't ruled yet"

      Microsoft is not made up of a bunch of dummies. They see the writing on the wall and are cutting their losses and running.
      benched42
  • Righhhhht Linux Boy

    "dodging justice"? First of all nothing's been decided, secondly Linux would be hounded by these same suits if anyone thought there was money to be had.
    stano360
  • HAHAHAHAHA, ROFL

    I love Florian's squeals!
    "A country in which such patents can be easily abused to win injunctions..."
    Is he talking about Germany, US or one of the Texas districts?
    kirovs@...
  • Apple is daring...

    ...to accues someone of predatory usae of patents?

    Hahahahahaaaaa
    fairportfan
  • Microsoft flees Germany over patent disputes

    It won't be long before the German government realizes what is happening, forces Motorola to withdraw and begs Microsoft to stay.
    Loverock Davidson-