Microsoft Sales to Proceed Over Motorola’s Protest

(CN) - Motorola cannot stop Microsoft from selling Xbox gaming consoles, Windows products and smartphones, a federal judge ruled, just in time for holiday shoppers.

Though Microsoft products rely on wireless technology pioneered by Motorola, the former cellphone kingpin failed to prove it would be irreparably harmed by continued sales, the ruling states.

"Economic damages are not traditionally considered irreparable because the injury can later be remedied by a damage award," U.S. District Judge James Robart wrote. "At this stage in the litigation, and based on this court's prior rulings, the court concludes that Motorola cannot demonstrate irreparable harm."

Motorola and Motorola - which is now owned by Google - sued each other two years ago, with Microsoft claiming that Motorola demanded exorbitant licensing fees for its wireless patents in breach of industry-wide agreements, and Motorola crying patent infringement against Microsoft over the disputed technology.

Agreements with the Institute of Electrical and Electronics Engineers (IEEE) and International Telecommunication Union (ITU) require both companies to license high-demand, essential technology on a reasonable and nondiscriminatory (RAND) basis.

Microsoft argued that Motorola's proposed royalty of $2.25 per unit for use of its patents was unreasonable and amounted to a breach of the RAND agreement.

Robart, who heard arguments on RAND contract dispute in Seattle last month, has chided both sides in the past for being "arrogant" and profit-driven during the 2-year-old dispute.

"The court is well aware that it is being played as a pawn in a global industry-wide business negotiation," Robart said this past spring, as reported by tech blog GeekWire. "The conduct of both Motorola and Microsoft has been driven by an attempt to secure commercial advantage and, to an outsider looking in, it has been arbitrary, it has been arrogant and frankly it appears to be based on hubris."

In the latest ruling, Robart said he intends to rule on the details of the contract dispute soon, having already decided that Microsoft is entitled to a license as a "third-party beneficiary" of Motorola's commitments to the ITU and IEEE.

"Because Microsoft will pay royalties under any license agreement from the time of infringement within the statute of limitations, this license agreement will constitute Motorola's remedy for Microsoft's use of Motorola's H.264 standard essential patent portfolio to include the Motorola Asserted Patents," Robart wrote. "Accordingly, Motorola cannot demonstrate that it has been irreparably harmed."

The ruling also ends Motorola's attempts to keep Microsoft products out of German stores. Earlier this year, a court there found that the software giant illegally used Motorola's video compression software in the Xbox 360 and Windows 7, breaching an agreement between the companies.

The German court ordered Microsoft to remove its products from the market, but Robart granted a temporary restraining order days later that barred Motorola from acting on the European court's order. The 9th Circuit - after hearing arguments from both sides - affirmed in October.

Robart said Friday that his order "logically extends to all of Motorola's H.264 standard essential patents.

"This is so because the RAND litigation in this matter involves not only the Motorola asserted patents, but all of Motorola's H.264 standard essential patents on a worldwide basis," Robart wrote.

"As a result, this court's order not only dismisses injunctive relief for the Motorola asserted patents, but also for Motorola's entire H.264 standard essential patent portfolio including the European patents at issue in the German action," he added.

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