Google's Motorola purchase comes under pressure on the patent front

Google's (NASDAQ:GOOG) $12.4 billion purchase of Motorola Mobility was premised, in part, on giving Android licensees protection from patent litigation via the shield of Motorola's more than 17,000 patents--but so far that has not worked out that well for Google or its licensees.

For example, just last week U.S. Judge James Robart in Seattle ruled that Microsoft (NASDAQ:MSFT) only has to pay Motorola $1.8 million a year for access to Motorola's patents for Microsoft's Xbox. Motorola had been asking for as much as $4 billion a year.

The decision is the latest in a string that have put both Google and its Android licensees under pressure on the patent front. Last week Microsoft got Chinese vendor ZTE to agree to license Microsoft's worldwide patent portfolio for ZTE phones, tablets, computers and other devices running Google's Android and Chrome OS platforms. ZTE is the world's No. 4 handset and smartphone vendor, according to IDC. The announcement came days after Microsoft got Hon Hai, parent of electronics manufacturing giant Foxconn, to agree to a similar license. More than 20 companies have signed such agreements with Microsoft.

Microsoft said last week that "80 percent of Android smartphones sold in the U.S. and a majority of those sold worldwide are covered under agreements with Microsoft," according to a blog post from Horacio Gutierrez, Microsoft's deputy general counsel. Motorola has not signed such a licensing agreement.

"We have worked for multiple years to reach an amicable solution with the few global companies who have yet to take a license, but so far they have been unwilling to address these issues in a fair manner," Gutierrez wrote. "We'd prefer to consider these companies licensing partners and remain hopeful they can join the rest of the industry in the near future.

Google last year said it valued at $5.5 billion Motorola's "patents and developed technology," according to a regulatory filing with the Securities and Exchange Commission. "It wasn't an irrational decision at the time but they've gotten nothing but heartbreak for that money," Rodney Sweetland, a patent lawyer with Duane Morris, told Bloomberg. "Should they have bought? Not at that price."

"We acquired Motorola to level the playing field in patent attacks against Android and draw on Motorola's long history of innovation," Google spokesman Matt Kallman told Bloomberg. "In just under a year they've accomplished a lot, with impressive velocity and execution. We're excited about Motorola's future."

Google executives have lately talked about Motorola less in the context of patents than in the innovative new mobile products it is working on. Earlier this month Google CEO Larry Page again hinted at the company's upcoming Motorola phone products, noting the gadgets likely will feature improved battery life and tougher screens. Page's comments were an expansion of previous statements he and other Google executives have made in recent months.

For more:
- see this Bloomberg article
- see this Reuters article
- see this AllThingsD article

Related Articles:
Google promises Motorola phone advancements, trumpets Google Glass
Google's Schmidt calls Motorola's upcoming products 'phones +'
Microsoft gets Foxconn parent Hon Hai to license its patents for Android
Android dominance targeted in Microsoft, Nokia antitrust complaint
Google: Motorola's patents worth $5.5B

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