Microsoft Corp. v. Motorola, Inc.

Microsoft Corp. v. Motorola, Inc.

Opinion

 [*1026]  ORDER

I. INTRODUCTION

This matter is before the court on Plaintiff Microsoft Corporation's ("Microsoft") motion for summary judgment ("Microsoft's Motion") for breach of contract (Microsoft Mot. (Dkt. # 236)), and Defendants Motorola, Inc., Motorola Mobility, Inc., and General Instrument Corporation's (collectively, "Motorola") motion for summary judgment ("Motorola's Motion") that Microsoft repudiated its rights to the contract (Motorola Mot. (Dkt. # 231)). ¹ The  [*1027]  court heard the oral argument of counsel on May 7, 2012, and has considered all pleadings on file, including: (1) Microsoft's Motion (Microsoft Mot.) and all attachments thereto; (2) Motorola's response to Microsoft's Motion (Motorola Resp. (Dkt. # 274)) and all attachments thereto; (3) Microsoft's reply in support of its motion (Microsoft Reply (Dkt. # 284)) and all attachments thereto; (4) Motorola's Motion (Motorola Mot.) and all attachments thereto; (5) Microsoft's opposition to Motorola's Motion (Microsoft Resp. (Dkt.  [**8] # 269)) and all attachments thereto; and (6) Motorola's reply in support of its motion (Motorola Reply (Dkt. # 290)). Being fully advised, the court DENIES Microsoft's Motion (Dkt. # 236) and DENIES Motorola's Motion (Dkt. # 231).

II. BACKGROUND

A. The IEEE and the ITU as Standard Setting Organizations

Microsoft and Motorola are both members of the Institute of Electrical and Electronics Engineers ("IEEE") and the International Telecommunication Union ("ITU"). The IEEE and the ITU, neither of which are parties to the instant dispute, are international standards setting organizations. Standards setting organizations play a significant role in the technology market by allowing companies to agree on common technological standards so that all compliant products will work together. Standards lower costs by increasing product manufacturing volume, and they increase price competition by eliminating "switching costs" for consumers who desire to switch from products  [**9] manufactured by one firm to those manufactured by another.

One complication with standards is that it may be necessary to use patented technology in order to practice them. If a patent claims technology selected by a standards setting organization, the patent is called an "essential patent." Here, Motorola is the owner of numerous patents "essential" to certain standards established by the IEEE and the ITU. (See 10/21/10 Motorola Offer Ltr. (Dkt. # 79-5); 10/29/10 Motorola Offer Ltr. (Dkt. # 79-6) (see list of attachments).) In order to reduce the likelihood that owners of essential patents will abuse their market power, many standards setting organizations, including the IEEE and the ITU, have adopted rules related to the disclosure and licensing of essential patents. The policies often require or encourage members of the standards setting organization to identify patents that are essential to a proposed standard and to agree to license their essential patents on reasonable and non-discriminatory ("RAND") terms to anyone who requests a license. Such rules help to insure that standards do not allow essential patent owners to extort their competitors or prevent competitors from entering  [**10] the marketplace.

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