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Texas readers may recall that Google purchased Motorola, along with all of its patents. Shortly thereafter, Google filed a patent infringement suit against Microsoft. The suit backfired on Google, which was ordered to pay Microsoft over $14 million. The company was hoping that it would have the ruling reversed on appeal, but patent law was not on its side, and the U.S. 9th Circuit Court of Appeals upheld the lower court's ruling.

When Google purchased Motorola, it also obtained certain patents for video encoding and local area networking that fall under the umbrella of standards-essential patents that the company is supposed to allow other companies to use for a reduced fee. Microsoft uses the patented technologies in its Xbox video consoles and Windows software under the assumption that it would pay approximately $.0371 per unit sold to Google. However, Google believed it could demand 2.25 percent of the price of each Windows computer and Xbox that was sold by Microsoft.

Microsoft failed to meet this demand, so Google filed its patent infringement suit against Microsoft. In addition to monetary damages, Google sought an injunction for the sale of the items here in the United States and in Germany. However, at the trial court level, the jury ruled that Google breached industry standards and ordered the award in favor of Microsoft. That is when Google appealed alleging that the court did not have the right to rule as it did. The appeals court disagreed.

When it comes to patent law, companies need to take care that they are not somehow violating industry standards. A Texas company may be entitled to royalties for the use of its patents, but there may be a limit to what it can collect. Before entering into any licensing agreement, it would be beneficial to have a full understanding of a company's rights and responsibilities before allowing anyone else to use its patents.

Source: Fortune, "Google lost a patent appeal over Motorola patents, found in "bad faith"", Jeff John Roberts, July 31, 2015

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