Microsoft has won an appeals court ruling in the U.S. that may lower the rates many electronics makers pay to license technology considered standard in smartphones and computers.
An appeals court in San Francisco Thursday upheld a $14.5 million jury verdict against Google as punishment for unfairly demanding what Microsoft said amounted to billions of dollars for use of patents covering Wi-Fi and video downloads.
The appeal  was being closely watch by companies like Apple, Intel and Hewlett-Packard which have waged a worldwide campaign to lower the amount of money they pay for essential technologies that let mobile phones download video, access Wi-Fi or accept calls no matter the manufacturer.
The technology industry, which is split over patent policies, has been watching this case closely for guidance on how to value standardized technology. Regulators and courts on three continents have been wrangling with the issue of whether there are different rules for such patents compared with those related to inventions that are unique to a specific product.
“This ruling is a win for consumers, competition, and innovation,” said Charles Duan, a lawyer with consumer group Public Knowledge, which backed Microsoft.
“It keeps prices reasonable for old products and allows new products to come to the marketplaces.”
The court upheld a jury decision that Google’s Motorola breached its obligation to license the patents on fair and reasonable terms. The obligation came because they are part of industry standards that Motorola helped develop.
The developers of fundamental technology in the wireless industry, including Qualcomm, Ericsson and Noki, have argued they need compensation for the billions they poured into research that consumers now take for granted.
Companies often team up to develop standardized technology so products can work together. Since they have the advantage of ensuring their inventions become part of the standard, they agree to license any relevant patents on fair reasonable and non-discriminatory terms, known as FRAND.
Google got the case as part of its 2012 purchase of Motorola Mobility. It’s since sold the handset business but retained most of the patents.
The jury, using Robart’s valuation, found that Motorola had breached its contractual obligations to license its patents on reasonable and non-discriminatory terms.
After Robart’s ruling, other judges in the U.S. began copying his analysis for their own cases.
The appeals court on Thursday upheld Robart’s analysis of how to calculate the correct royalty rate, and the jury’s use of that information. It also said Microsoft was entitled to compensation for having to move its German facility to the Netherlands and the legal costs to ensure it didn’t have to stop selling any of its products.
“The jury’s verdict was supported by substantial evidence, and its damages award was proper,” the three-judge appeals court panel ruled.
Caroline Matthews, a spokeswoman for Google, said the company had no comment on the court decision.
Bloomberg
