Motorola and Microsoft Try to Resolve Royalty Payment Dispute

Microsoft and Motorola have been in court for quite some time now. If you are unfamiliar with the case, Microsoft is using some of Motorola’s patents in its products. While that much has been clarified, the bone of contention is the amount of royalties to be paid by Microsoft to the Google owned entity per year. According to the recent statements made by the two companies, Microsoft is seeking to pay Motorola a flat $1.2 million per year. On the other hand, Motorola wants more than $100 million.

Closing Arguments $100 Million Apart

The lawyers representing both companies made their final statements this past week and offered the two amounts. Both companies are looking to resolve the dispute sooner rather than later but there is a huge $100 million gulf between the amounts they are agreeing to. Microsoft maintains its stance that Motorola is asking far too much for the use of its patents. Motorola meanwhile has projected Microsoft would earn close to $100 billion over the next five years through the devices which uses its patents.

A Steep Drop from $4 Billion

The $100 million quote put forth by Motorola seems to be excessive on the surface. There must be a reason why Microsoft has only offered to pay $1.2 million. After all, $100 million is not a big amount for a huge corporation like Microsoft. Yet, they are adamant that Motorola is trying to cash in on their success and the quality of their products. Among the products Motorola’s patented technology or components are used in include the Xbox and Windows.

In context of the case, $100 million is not an extravagant demand by any stretch of the imagination. The initial demand by Motorola was for $4 billion a year, which is excessive regardless of whether the company in question is Microsoft or not. They had asked for a 2.25% share of the sales revenue generated through Windows and Xbox. They are among the highest selling products in Microsoft’s catalog and would have earned Motorola $4 billion according to Microsoft.

Final Decision Left to the Judge

With the parties failing to agree on a certain amount, it is up to the federal judge presiding over the case to decide the fair amount of royalties to be paid by Microsoft to Motorola. This would be a historic judgment as never before has a federal judge been tasked with the responsibility of settling this kind of dispute. Legal experts believe the Motorola vs. Microsoft patent trial would be a precedent which could have long-lasting ramifications for the tech industry.

With the year of the end approaching, there is no doubt that a final decision would only be made in 2013. How long it takes for US District Court Judge James Robart to pass a judgment remains to be seen. As of now, both companies can look forward to the holiday season as a much-needed boost to their sales. They will have to resume their dispute in the not too distant future though.

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