Microsoft announced this morning that it's filed a formal competition complaint against Motorola and Google with the European Commission, arguing that Motorola is abusing its patents committed to Wi-Fi and H.264 video by demanding excessive royalties and trying to block sales of products that include the standards. The move follows a similar complaint filed by Apple with the EU last week and an official investigation into Samsung's patent licensing practices, and serves to highlight growing international concern over the use of patents on industry-standard technologies in high-stakes smartphone litigation. Microsoft's also taking its plea to the web at large with a blog post titled "Google: Please don't kill video on the web," arguing that Google should do more to reign in Motorola's behavior after it acquires the company later this year.
At the core of the issue is whether Motorola's breaking a promise to license patents on industry-standard technologies in a fair, reasonable, and non-discriminatory way: as part of its smartphone litigation against Microsoft, Motorola is currently demanding Microsoft pay a 2.25 percent royalty against the final price of any product that includes H.264 video, or $22.50 for a $1,000 laptop. That compares to the maximum rate of 20 cents per product to license the other 2,300 patents in the H.264 standard and the 2 cents per copy of Windows paid by Microsoft under a volume discount plan. Microsoft further notes that Motorola's proposed royalty doubles to $45 for a $2,000 laptop, even though the increase in the final price has to do with better components, not H.264.
Of course, Motorola's demand in the courtroom is likely very different than what the company is willing to settle for in good-faith negotiations, but those are the numbers as they've been made public thus far. For its part, Google has pledged to license Motorola's patents in a fair way after it completes its now-approved acquisition, but it says the 2.25 percent maximum royalty will stay. We'll see how this plays out; it appears the smartphone patent battles are going to get even messier in the months ahead.