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Wednesday, November 14, 2012 - Page updated at 08:30 p.m.

Microsoft, Motorola patent trial starts

By Janet I. Tu
Seattle Times technology reporter

For an event at which “RAND royalty,” “H.264 standard,” “802.11” and other such terms were frequently uttered, the patent trial between Microsoft and Motorola drew quite an audience on its first day Tuesday.

In fact, U.S. District Judge James Robart noted the standing room-only crowd, saying: “I don’t believe this courtroom has been this full since the strip-club ordinance,” referring to when he ruled in 2005 that Seattle’s ban on new strip clubs was unconstitutional.

“I’m hopeful that once you realize how boring this is that you’ll clear out,” he said of Tuesday’s patent trial.

Nonetheless, the Microsoft vs. Motorola Mobility trial in Seattle is being closely watched for several reasons.

The trial is one of several globe-spanning patent battles between the tech titans at which billions of dollars — and the fate of such widely used products as Xbox, Windows and Android smartphones — are at stake.

And it’s expected that this will be the first time a federal judge will rule on what a reasonable royalty is for so-called “standard-essential patents.”

Such patents are for technologies deemed so essential that they have become standard use in the industry, such as the H.264 standard for streaming video or the 802.11 standard for wireless connectivity.

Companies holding such patents may decide to pool them, with each receiving or paying an agreed-upon royalty for use of each other’s patents — on “reasonable and nondiscriminatory,” or RAND — terms.

The trial stems from Microsoft’s contention that Motorola Mobility, now owned by Google, was asking too much for use of some of its industry patents: 2.25 percent of the sale price of each Xbox and Windows. Microsoft said that would mean paying Motorola $4 billion annually.

In pretrial briefs, Microsoft argued it should be paying Motorola about $1.2 million annually based on other patent-pool benchmarks.

Motorola has disputed the $4 billion figure and said the 2.25 percent royalty had been intended as an opening offer for more negotiations.

Tuesday’s trial began with talk of which documents should be redacted or sealed because of trade secrets.

Robart said he was “trying to take as expansive a view as possible” of the public’s right to know and that the public is entitled to know how he arrives at a reasonable royalty.

There was also talk of Microsoft’s recently launched Surface tablets — the company’s first branded computing devices — with questions about how much Surface supports or makes use of the industry-standard technologies in question.

That’s because Motorola, in its pretrial brief, argued that in addition to Xbox, Surface is likely to use wireless technologies that include Motorola’s industry-standard patents.

Jon DeVaan, Microsoft’s corporate vice president for Windows development, was the day’s first witness.

He and Microsoft’s attorneys attempted to establish that Microsoft used the industry-standard technologies simply because it makes it easier for end users who expect their products to work via the most broadly used methods.

Motorola’s attorneys tried to play up the importance of those standard technologies to Microsoft’s products.

With the day’s second witness — Garrett Glanz, Microsoft’s general manager of intellectual-property licensing — the company attempted to show how Motorola had earlier wanted low royalty rates (as opposed to the higher rates it wants now). Motorola, in its cross-examination, tried to show Microsoft wanted a lower rate for its own purposes.

The trial is expected to last through the middle of next week, though Robart isn’t expected to issue his decision until early next year.

Janet I. Tu: 206-464-2272 or On Twitter @janettu.

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