Judge Sides With Microsoft In Motorola’s $4 Billion Patent Demand

The technology patent war just took a rather interesting turn earlier today when a judge gave the verdict that Motorola’s patents are not worth the $4 billion per year it mandates Microsoft to pay.

In fact, the ruling declares that Motorola’s patents are worth far less — think $3.82 billion less.

This is a massive, massive drop in value of Motorola’s patent portfolio with the court stating that the new royalty rate is to be in the tune of $1,797,554 per year, a momentous dip from the multi-billion dollar price Motorola had put up.

Finally we have a patent issue settled with logic.

You can find all the details over at AllThingsD, but long story short both Microsoft and Motorola were tied up in a legal battle where Microsoft was said to be using several patents that are part of the 802.11 Wi-Fi and H.264 video standards.

These patents are deemed as standards-essentials patents, meaning patent holders are obliged to license them to others at what the industry calls a reasonable and non-discriminatory (RAND) rate.

Microsoft claimed that Motorola violated the RAND accord by asking too much for the use of the patents. For the record, this translated to a massive (and cruel) 2.25 percent the price Microsoft’s products (the ones that used the patents) sold at — including all Windows 7 computers and Xbox 360.

Told you it was brutal.

This new ruling now implements the RAND rate for Motorola’s H.264 patents at 0.555 cents per product, stretching up to 16.839 cents per product in certain cases. The 802.11 Wi-Fi patents get priced at 3.471 cents per unit for Xbox units and 0.8 cents per unit for all other products.

And this, friends and foes, is how it all came down from $4 billion to barely $1.8 million a year.

One company that will be ticked off with this verdict is Google — the search engine giant acquired Motorola for $12.5 billion last year, largely for the patents portfolio that the telecommunication giant possessed. This new ruling will have a long-lasting impact on all parties involved, this much is sure.

But like I said, finally we have a patent issue settled with logic.