Motorola Is Seeking 2.25% Royalty Of Apple’s Sales Over Wireless Patents

Posted Feb 4, 2012

In August 2011, Pulse2 intern Riley Kennysmith wrote about how Google acquired Motorola Mobility as part of a strategic move in their patent war. Google added about 17,000 patents to their war-chest as part of the acquisition. It appears that Google is now putting their new patent portfolio to good use as they are now demanding 2.25% of Apple’s sales for licensing the use of a specific wireless-related patent. Since an agreement was not made yet, Motorola was able to successfully block the sales of the iPhone 4 and the 3G-enabled iPad in Germany through an injunction.

The 2.25% royalty demand figure was recently uncovered from Motorola’s legal court documents against Apple. Apple requested Qualcomm’s patent license agreement with Motorola according to the FOSS Patents blog.

Apple argued that their devices could be covered by extension under their own license for baseband chips from Qualcomm. Apple’s lawyers are currently trying to prove that Motorola’s request for 2.25% of royalties is unfair. Motorola’s patent was commited by Motorola to be subject to the Fair Reasonable and Non-Discriminatory licensing, which means that the company must offer a licensing agreement to competitors asking for it.

Motorola had opposed Apple’s motion, but a judge dismissed Motorola’s claims at the end of January. Apple filed motions requesting access to information regarding Motorola’s agreements with HTC, Nokia, LG, and Ericsson in order to determine the specifics of their respective agreements to decide how much they should have to pay in royalties.

The letter that listed Motorola’s demands did not state the the proposed 2.25% royalty covers all of their standards-related patents. However this number still seems excessive since the number of companies that hold patents for standards would result in a ridiculous aggregate royalty rate if all of them requested similar percentages.

Interestingly Motorola may have an antitrust investigation if the courts rule that the company abusively wielded their FRAND patents from European agencies like what is happening to Samsung right now.