Microsoft Rejects Motorola Settlement; Xbox Closer to Doom

[Snipeye]

Microsoft Rejects Motorola Settlement; Xbox Closer to Doom
5:20 PM - June 21, 2012 - By Kevin Parrish - Source : CVG

It's the end of the Xbox world as we know it, and PC gamers feel fine.

CVG reports that Microsoft has rejected a settlement offer from Motorola Mobility that would finally end an extraordinarily expensive patent dispute. Motorola Mobility, now owned by Google, asked for a royalty of 2.25-percent on each Xbox 360 Slim sale, and $0.50 per copy of Windows, both of which use its patented ActiveSync technology.

Back in April, Judge David Shaw said that Microsoft should be handed a cease-and-desist order on sales of the Xbox 360 Slim console here in the United States unless the dispute was settled. He also said that the International Trade Commission (ITC) should ban Microsoft from importing the popular console from China. Microsoft should also cough up 7-percent of the value of any unsold Xbox 360 Slim systems still remaining on US-based retail shelves.

The legal drama between Microsoft and Motorola Mobility has spanned across courtrooms located in Germany and the US, and within the ITC panel itself. Microsoft claims that Motorola Mobility has breached the licensing contract by demanding "unreasonable licensing fees" for the use of the patents, requiring the company to spend around $4 billion USD each year to cover the licensing costs. Motorola claims that Microsoft gave up its right to negotiate on the royalty rate as soon as it began lawsuit action.

But now that Microsoft has rejected Motorola's offer, it's up to the ITC to allow the initial Xbox 360 Slim ban determination to stand, if it needs to amend specific terms, or send it back for a rewrite. Surprisingly, Activision and iPhone maker Apple are currently opposing a possible US market ban of the Xbox 360 Slim by the ITC.

Microsoft has already warned the ITC that banning the Xbox 360 Slim console would not serve the "public interest" (aka bad for the economy), as it would leave a gaping hole in the console sector, forcing consumer to choose between Sony's PlayStation 3 and Nintendo's Wii. Judge Shaw disagrees, saying that intellectual property rights takes precedence over consumer need.

Microsoft is also currently facing a Xbox 360 Slim ban in Germany thanks to a ruling made by a German court back in May. This verdict will not come into effect until the US-based lawsuit concludes.

http://www.tomsguide.com/us/ActiveSync-Patent-Xbox-360-ITC-Lawsuit,news-15634.html

 

[pillar]

Just goes to show ya how freakin money hungry Microsoft is. I mean sounds like Motorola was giving Microsoft a legit offer. Thanks for the post man. Im definitely looking forward to seeing how this will go down (no offense to the Xbox 360 fans out there).

 

[Snipeye]

Because of this, I'm debating if I should go buy one now for dirt cheap while I can. Even though I heard the 720 is due out in 2013/2014...

 

[NinjaMittens]

I don't know how I feel about this... Like, at this point the xbox has so much market saturation that frankly it would be ridiculous for further sales of it to be banned. While not strictly a legal matter, this is something that all judges have to take in to account when deciding cases like this. Remember, nobody has been harmed due to this, the engineers who created the technology for Motorola are likely no longer employees any way. The only one making any more money would be the lawyers and CEO's.

Microsoft probably should not have rejected that offer, but 4bn/ year is literally an increase of 15% on their annual operating budget. Their stockholders would have literally ended anyone who approved that kind of deal outright. I suspect that this (like most other steps in this case) is just posturing. They'll settle before anything too drastic can happen.

 

[Aldax]

they rejected that offer because the settlement Motorola made was not in the FRAND terms, Moto wants to charge whatever they want but FRAND it's not about that,
here's a link and an extract of the article...as you can see, BOTH are in a dime, but Moto is closer....

http://arstechnica.com/gadgets/2012/06/motorola-proposes-way-to-end-patent-war-with-microsofts/?comments=1#comments-bar

"The ITC has threatened both companies with import bans if they can't come to licensing agreements and continue to use the others' software. Motorola is in somewhat more dire straights, as an import ban on its phones using ActiveSync is set to go into effect July 17th, barring the intervention of President Obama. An ITC judge also recommended that the Xbox suffer import bans, but several companies and congressmen have rallied to Microsoft's side including Apple, Nokia, and HP, along with representatives from California, Washington, and Texas."

just look at all that backup, I think Moto it's at fault here, but I'll leave it to you to decide

 

[IDigitalDeadI]

I don't think anything will change if Xbox 360 Slims get banned. Everyone who wants an xbox already has one (except a few). Plus its just the Slim model being banned, you can still buy an older model fine.

 

[pillar]

I don't think anything will change if Xbox 360 Slims get banned. Everyone who wants an xbox already has one (except a few). Plus its just the Slim model being banned, you can still buy an older model fine.

If any of them are still around & have survived, then the owners will have to take real good care of them since a good portion of them still have the possibility of getting the RRoD. Those individuals who are seriously interested in an old skool 360 will need to have an entertainment center that is geared towards plenty of air flow.

 

[Muffs]

If any of them are still around & have survived, then the owners will have to take real good care of them since a good portion of them still have the possibility of getting the RRoD. Those individuals who are seriously interested in an old skool 360 will need to have an entertainment center that is geared towards plenty of air flow.

Water cool your 360 @_@

 

[LeviTheDegu]

Soo many people still buy xbox's everyday...

I can understand microsoft's not wanting those rates...Microsoft already looses money for every 360 they sell... NOt to mention large corporations like motorola have patents for pretty much everything.. It'd just be wise for microsoft to change the programming...but that might take longer then the lawsuit itself.

 

[Snipeye]

I can understand microsoft's not wanting those rates...Microsoft already looses money for every 360 they sell... NOt to mention large corporations like motorola have patents for pretty much everything.. It'd just be wise for microsoft to change the programming...but that might take longer then the lawsuit itself.

Do you have backup for what you're saying? This is what I was able to find (2011 information on patents):
http://www.uspto.gov/web/offices/ac/ido/oeip/taf/topo_11.pdf

Microsoft had 2309 patents granted in 2011, 6th most overall (IBM took first place followed by Samsung). Motorola is wayyyy down the list with barely more than 10% of MS' total at 249 patents granted. So yeah; large companies do have patents for a large variety of sectors, even more so when its a technology company. However, MS has a larger portfolio than Motorola, and the two really should have found a way to work it out, especially if there's an important patent owned by Motorola that MS needs for their Xbox. It just happens that both companies are caught in the "Patent Wars" that's been going on between all the major tech companies (Samsung, Apple, MS, Motorola, Google, IBM, Toshiba, HTC, Intel, Sony, etc. etc.)

In regards to losing money on every sale; it's standard practice for consoles to be sold at a loss because the goal is to make the money back (and then some) through software sales. Think of it like this: MS loses $50/xbox sold. However, each Xbox owner will buy 10 Xbox games, which MS gets a royalty of $10/unit. So for 100 owners, MS lost $5000 total on Xbox sales, but earned an additional $10,000 on software sales, for an overall profit of $5,000. In this case, we can't use the same standard applied to Motorola, as they earn their revenue similarly, but still differently, from the methodology used by MS and other companies in the console business.

It's more likely that MS will find a way to avoid an import ban (i.e. buy Congress votes to sway the ITC), and will cut out that portion of coding from their Xbox 720, and let current stocks either remain at current levels, or allow it to be depleted in anticipation of the 720's release. But still, if you got some links to backup your statements, I'd be interested in reading it as I haven't seen any hard set numbers on per unit loss on sales, and if it would be better or not for MS to change its programming. Which may still require MS to pay a fine to Motorola based on unit sales of the 360 Slim (which MS loathes to release; they report total unit sales, but don't break it down by individual console type I believe).