Jury Finds Google Guilty of Standards-Essential Patents Abuse Against MS 278
recoiledsnake writes "A federal jury in Seattle ordered Google to pay Microsoft $14.5 million in damages for breach of contract for failing to license at reasonable terms standard essential patents covering wireless and video technology used in the Xbox game console. Motorola had demanded Microsoft pay annual royalties of up to $4 billion for use of patents that are part of the H.264 video and 802.11 wireless standards, which are baked into Windows and the Xbox video game console. Microsoft said it was willing to pay royalties but not at the 2.25 percent of the product price that Motorola sought. We previously covered Motorola's exorbitant demands."
where is groklaw when we need it... (Score:4, Insightful)
with some real reporting
pot, kettle (Score:5, Insightful)
in the mean time microsoft has no issue charging a similar percentage to android manufacturers
http://bgr.com/2013/05/01/microsofts-android-licensing-agreements-earnings/ [bgr.com]
Misleading or false. (Score:4, Insightful)
Motorola requested royalties up to $4 billion, sure.
But "demanded" does not reflect that this was their initial offer.
Standard practice for licensing is
1-owner offers to license for $x
2-potential licensee offers to pay $y
3-owner lowers price
4-potential licensee raises offer
5-haggle over what is covered and what it's worth
The impression given is that this was after step 5.
It actually was after step 1; Microsoft sued before they made a counter-offer.
Re:Nice summary (Score:5, Insightful)
Can I ask about the FAT patents that are part of a standard (SD Card)? Why Microsoft is able to force OEMs into big cross licensing agreements for dumb patents like that?
Missing Groklaw (Score:5, Insightful)
Re:Yawn (Score:5, Insightful)
And we all lose.
Microsoft makes money off Android, for what I suspect is patents they've never disclosed. Google was trying to make money from Microsoft.
In the end, we all pay more, and the market is locked up by large incumbents who won't let anybody else play in the sandbox.
If the intent of the patent system was to 'foster innovation', we're not seeing that actually happen.
Re:Nice summary (Score:5, Insightful)
Ummm, ya (Score:5, Insightful)
2% of the console's price is pretty exorbitant for open standards patents. The whole deal with (F)RAND stuff is "Reasonable and Nondiscriminatory". Now you don't have to license your stuff under that model, but that's how open standards like MPEG-4 and 802.11 are done. Companies pool their patents and set up a standard, and the licenses are fixed. The idea is that anyone can license it for the same amount, and that amount is fair and reasonable.
The reason companies do that is to get their patents used and licensed. I mean if I develop some cool new video compression, but I won't set licensing terms, everyone has to come to me and I decide if you get a license, and if so what it costs, well that will hamper adoption. Many companies will give that a miss since they don't know why it'll cost them. However if it is all out in the open, then it is much more likely to get used and licensed.
Also a lot of standards agencies require it. If you want your IP to be part of whatever standard they make, you have to disclose it, and license it under RAND terms. You don't want to, then it is excluded from the standard.
Well, if you decide to do that, you can't then go and decide to try and stick it to a company you don't like. You can't say "Yes, all our stuff is available under this fair license for all to use, oh except for you, we don't like you so you pay more." Sorry, you gave up that ability when you decided to do the open standards thing and RAND licensing.
Hence, the court decision. Google wanted to play hardball with MS, but they were doing it with patents they'd said they wouldn't do that with. So they got slapped down.
So ya, exorbitant demands. Particularly in context of what we are talking about. Remember Google doesn't own H.264 or 802.11. They only have a small number of the patents on it. So if their share was like 2%, then total cost could easily be 10-20%. If that was the kind of money demanded for those standards, they'd not be used. Google just wanted to screw MS.
Re:Nice summary (Score:3, Insightful)
If it's a patent then it is a given monopoly to the owner of that patent to do what they want to. They can sit on it, not use it and prevent others from using it. How should there be such a thing as a Standards Essential Patent? That's just another example of how the patent system is broken in many ways.
I have precisely the opposite reaction to yours. First, yes, nothing good can come from agreed vital standards with a barrier to use due to patents. All that emphasizes to me is that ALL PATENTS are EVIL, COUNTER PRODUCTIVE, and ANTI PROGRESS. They are an idea conceived to prevent moneybags from usurping all the profits from new ideas, that has ended up perpetuating exactly the problem it was intended to ameliorate. The patent idea is only broken in one single way: that it is implemented in law at all.
The only worthwhile patent is NO PATENT.
Re:Nice summary (Score:4, Insightful)
Because they have not committed to a FRAND agreement obviously.
Re:Who cares (Score:5, Insightful)
This has nothing to do with the USPO.
Motorola filed the patents which is perfectly in their rights, however what they choose to do was try to extort a lot of unreasonable royalties and licensing fees out of Microsoft which thankfully the courts have found in favour of Microsoft. Yes Microsoft ain't no saints, but thankfully the courts are waking up and stopping this kind of anti-competitive bullshit.
The USPO is not involved in setting the conditions of licensing, royalties, or any other arrangement or agreement for two parties to share or exchange patent IP. A patent filed does not come with a set of conditions on how it should be used, shared, or what fee schedule is applied for royalties or licensing. I am tired of people ignorant of the patent process just throwing out stupid diatribes about the patent office and patents in general. Sure if the USPO grants a patent in the first place that is trivial in nature or duplicates existing work, then by all means slam the USPO. This case is not the time for that.
There is nothing wrong with a patent. Someone that "invents" something has full right to protect their IP. They have a right to be compensated for the effort, time and money that went into creating the idea. I don't care if its a trivial bit of nonsense, or some elaborate mechanical wonder, everyone has a right to invent and turn that into a money making enterprise. The alternative is communism where all your ideas belong to the state and you just get some stale bread for all your effort. Do you want to live in that communist state? Keep slamming patents and decrying for their absolution and everything to do with capitalism and democracy in general.
However what has happened to the humble patent today is they are now are used in a cold war of stockpiling of ideas in a direct effort to prevent competition. The company that succeeds today will have the largest patent portfolio and hopes that the only way for their competition to survive is to have to pay them obscene royalties, or go out of business. Companies like Apple rarely even share their patents, they just make so much obscene profit that they patent every little stupid idea that comes into their heads and hope that each one cuts a tiny slice out of the ability for their competition to create a successful product.
The patent has been weaponized.
There is nothing about the patent that needs to be changed, but the laws surrounding how patents are shared, exchanged, that is the business surrounding the patent, needs to change and its up to courts to start setting precedent that extorting ANY company using and anti-competitive pricing structures or withholding a patent that is necessary to support the standardization of products and services should no longer be tolerated.
Re:Microsoft is one to talk! (Score:1, Insightful)
If you're going to copy and paste a wikipedia article, you're supposed acknowledge this with a link, chucklefuck! http://en.wikipedia.org/wiki/Microsoft_litigation [wikipedia.org]
Re:Nice summary (Score:3, Insightful)
The point is Microsoft did not submit the patent to a standards organization for inclusion in an established industry standard with an agreement to offer the patent under FRAND terms.
Morotola did.
Just because everyone uses a patent does not make it a standards essential patent. Standards essential is an actual term - it means that an entire industry has agreed that "this" is going to be the industry standard and to have your patents be a part of "this" you must agree to license them under FRAND terms. If you don't agree to that, your patent won't be a part of "this" - the industry standards board will find a different solution to the problem that your patent solves and will include that technology in "this."
FAT is not a standards essential patent because Microsoft did not submit it to an industry standards board and did not agree to license it under FRAND terms.
Motorola, in the case of these patents, did submit their patent for inclusion in an industry standard and did agree to license them at FRAND terms. And then broke that promise by attempting to demand non-FRAND patent royalty rates.
Re:Who cares (Score:5, Insightful)
Someone that "invents" something has full right to protect their IP.
No they don't. In neither law nor philosophy does anyone have a "right" to the exclusive use of an idea. Patents are justified because they are believed to be a net benefit to the public. The US Constitution states this explicitly.
The alternative is communism where all your ideas belong to the state and you just get some stale bread for all your effort. Do you want to live in that communist state?
This is a ridiculous argument. Capitalism has existed without patents in the past, and totalitarian communism is not the only alternative to our current IP laws.
Re:Who cares (Score:2, Insightful)
Anti-competitive behavior is only bad insofar as it retards advancement. You have forgotten this and treat it as a bad value all by itself, which it is not.
Patents stop "competition" from people who did not think up the great idea from stealing it, without paying for any of the work that it took to develop that idea. It is akin to government protecting a farmer's field from raiding, so he can be secure in growing a crop and selling it.
In this, it enhances advancement, which is the real goal, and a good value.
Re:Nice summary (Score:4, Insightful)
He wasn't commenting on FRAND or anything else you mentioned. His statement was that patents are in practice the opposite of what they are in theory (and as originally prescribed). Therefore they no longer serve the purpose intended and should simply go away.