Motorola rejects $300M Microsoft bond to keep Windows 7 in Germany

Windows 7 and the Xbox 360 could be banned in Germany due to patent litigation

Motorola refused Microsoft's offer of a $300 million bond to postpone enforcement of potential German injunctions against Microsoft products that use the H.264 video codec, which if granted could exclude Microsoft from the German market, according to court documents filed on Wednesday.

Microsoft could lose its rights to distribute in Germany products that use the H.264 video standard and the 802.11 WiFi standard, pending a court ruling on April 17. According to Motorola, those products infringe on its patents.

If the court rules that Microsoft indeed infringes on Motorola's intellectual property in its use of these standardized technologies, this could exclude Microsoft from the German market and cause irreparable harm to Microsoft and the public, Microsoft claimed in court documents filed with the U.S. District Court for the Western District of Washington on Wednesday. The software company asked the U.S. court for a temporary restraining order and a preliminary injunction preventing Motorola from enforcing any legal victory in its case being heard in Mannheim, Germany, until a U.S. lawsuit between both companies is decided.

Microsoft said it had to resort to filing for a preliminary injunction in the U.S. because Motorola was not willing to accept an offer of a $300 million in bond to postpone any enforcement of the possible German verdict until the U.S. case was settled. The millions are meant to protect Motorola against any losses suffered by not being able to enforce a possible German injunction.

Both court cases are being fought over standard essential patents that have to be licensed under so-called fair, reasonable, and non-discriminatory (FRAND) terms.

According to the court document, Motorola approached Microsoft in 2010 in order to license its WiFi and H.264 technologies for 2.25% of the price of end-user products, amounting to more than $4 billion per year. That is more than the total amount received by Motorola from all licensees of its patents, according to Microsoft. Furthermore, Motorola demanded a royalty-free license to all of Microsoft's relevant standard-essential patents. The company called Motorola's demands "the antithesis of reasonable," and brought the case to court in the U.S.

Microsoft said that Motorola is seeking to gain improper leverage over Microsoft by suing it in Germany, using the legal action in Europe to force Microsoft to accept a license that is definitely not fair, reasonable and non-discriminatory. If Motorola's tactics are allowed, Microsoft will be denied a meaningful remedy, the company stated in the preliminary injunction request.

Microsoft's lawyer in the German case, Peter Chocziel, also filed a declaration on Wednesday with the U.S. court, stating that Microsoft intends to appeal a possible German injunction. "In Germany, the majority of prevailing patentees do not enforce an injunction while a matter is on appeal. Prior behavior by Motorola in another case involving a standard-essential patent, however, suggest that it will immediately attempt to enforce any order mentioned by the Mannheim Court," Chocziel wrote to the court.

At the same time he emphasized that Microsoft could not challenge the validity of the patent claims made by Motorola in Germany. That possibility was suspended after Microsoft offered an undisclosed royalty payment to Motorola.

Motorola did not respond to a request for comment.

Loek covers all things tech for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to loek_essers@idg.com

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