A change of heart by an administrative law judge with the US International Trade Commission (ITC) has resulted in a ruling that Microsoft has not violated a patent owned by Google's Motorola Mobility when it created the Xbox 360 video gaming console. The ruling by Judge David Shaw is a reversal of his own previous decision
in April 2012, where he declared that Microsoft had infringed four patents and did not infringe a fifth. The ruling follows the unusual return of the matter by the ITC to the judge in June of 2012.
Between the original case being heard and its re-hearing, four of the five patents were withdrawn from the case. The sole remaining patent between the two at the ITC is a Wi-Fi related issue. The ruling today isn't binding, as the judge's recommendation has yet to be heard by the full ITC board of judges, but the full board is unlikely to hear the recommendation until the summer.
Google dropped a pair of standards-essential patents from the complaint in October
. To prevent censure by the FTC, Google agreed in January
to not request sales bans based on the infringement of standards-essential patents, but rather pursue licenses from users based on fair, reasonable, and nondiscriminatory (FRAND) terms.
"We are pleased with the administrative law judge's finding that Microsoft did not violate Motorola's patent and are confident that this determination will be affirmed by the commission," said corporate vice president and deputy general counsel for Microsoft, David Howard. Google had an alternate view of the proceedings, with spokesman Matt Kallman saying "we are disappointed with today's determination and look forward to the full commission's review."
The dispute now revolves around the H.264 video codec, used by Microsoft in Windows 7, Internet Explorer 9 and the Xbox 360. Microsoft already pays a capped $6.5 million annually to the MPEG LA
pool, which it says covers the patent. Microsoft would be liable for $60 million annually if the license were not capped. The royalty rate set by Motorola of 2.25 percent of the device was deemed unacceptable by Microsoft, as it applied not only to the software but also to any products covered by it. Motorola was expecting 2.25 percent of the total cost of a new computer, which would cost Microsoft $4 billion annually for 50 patents it uses.
In a previous filing, Judge Shaw slammed Motorola's behavior regarding FRAND licensing and wrote that there was "no evidence that any company would agree to the offer that Motorola sent to Microsoft." One comment mentioned that the statements made to standards-setting organizations by Motorola were misleading, shown by statements and conduct towards Microsoft and a redacted listing, most likely Apple. Motorola's response to the terms was that it was a starting point in negotiations which the judge believed would last months or years, yet based on the records provided it wasn't a likely scenario, showing Motorola "was not interested in good faith negotiations and in extending a [F]RAND license."