Microsoft Files Antitrust Complaint with EU Against Motorola Over H.264 Video Standard Patent

Microsoft has filed an antitrust complaint with the European Commission against Motorola Mobility and Google over video-patent-licensing terms, so as to prevent the vendor from blocking sales of Windows PCs, Xbox game console and other products."We have taken this step because Motorola is attempting to block sales of Windows PCs, our Xbox game console and […]

Microsoft Sues Motorola and Google over video patent licensingMicrosoft has filed an antitrust complaint with the European Commission against Motorola Mobility and Google over video-patent-licensing terms, so as to prevent the vendor from blocking sales of Windows PCs, Xbox game console and other products.

"We have taken this step because Motorola is attempting to block sales of Windows PCs, our Xbox game console and other products. Their offense? These products enable people to view videos on the Web and to connect wirelessly to the Internet using industry standards," stated Microsoft's vp & deputy general counsel David Heiner in a February 22 blog post.

"You probably take for granted that you can view videos on your smartphone, tablet, PC, or DVD/Blu-ray player and connect to the Internet without being tied to a cable," Heiner notes. Adding, "That works because the industry came together years ago to define common technical standards that every firm can use to build compatible products for video and Wi-Fi," said Heiner.

"Motorola and all the other firms that contributed to these standards also made a promise to one another: that if they had any patents essential to the standards, they would make their patents available on fair and reasonable terms, and would not use them to block competitors from shipping their products."

Motorola has broken its promise. Motorola is on a path to use standard essential patents to kill video on the Web, and Google as its new owner doesn't seem to be willing to change course, he said.

"Watching video on the Web is one of the primary uses of computers these days. And we've all grown accustomed to "anytime, anywhere" access to the Internet, often made possible by the Wi-Fi standard," Dave Heiner continues.

"Imagine what a step back it would be if we could no longer watch videos on our computing devices or connect via Wi-Fi, or if only some products, but not others, had these capabilities. That would defeat the whole purpose of an industry standard."

Heiner said that

"for a $1,000 laptop, Motorola is demanding that Microsoft pay a royalty of $22.50 for its 50 patents on the video standard, called H.264. As it turns out, there are at least 2,300 other patents needed to implement this standard.

That's right. Just 2 cents for use of more than 2,300 patents. (Windows qualifies for a nice volume discount, but no firm has to pay more than 20 cents per unit.) Motorola is demanding that Microsoft pay more than 1,000 times that for use of just 50 patents.

And that is for a mid-level, $1,000 laptop. For a $2,000 laptop, Motorola is demanding double the royalty - $45. Windows is the same on both laptops, and so is the video support in Windows. But the high-end laptop will have a bigger hard drive, more memory, perhaps a titanium case--and Motorola is demanding a hefty royalty on all of this, even though none of these features implements Motorola's video patents."

Motorola is seeking significantly higher royalties for more expensive laptops, he said. He contrasted that with the considerably lower royalties that Microsoft and other companies are charging for their own H.264 patents on FRAND terms.

How does Motorola justify this pricing, for so few patents?

"Google says that it is just trying to protect manufacturers of Android devices against patent actions by Microsoft and others. But there are big differences between Google's approach and Microsoft's. Microsoft is not seeking to block Android manufacturers from shipping products on the basis of standard essential patents. Rather, Microsoft is focused on infringement of patents that it has not contributed to any industry standard. And Microsoft is making its patents--standard essential and otherwise--available to all Android manufacturers on fair and reasonable terms. In fact, more than 70 percent of Android devices are now licensed to use Microsoft's patent portfolio," Heiner said.

Adding, he said, "Google's unwillingness so far to make this commitment is very concerning. That's why you can pretty well count on a chorus from across the industry: "Google: Please don't kill video on the Web.""

A Google spokesperson issued the following statement about Microsoft's legal action today:

"We haven't seen Microsoft's complaint, but it's consistent with the way they use the regulatory process to attack competitors. It's particularly ironic, given their track record in this area and collaboration with patent trolls."