Court Case Might Tilt Toward Tech Manufacturers Vs. Patent Holders

A U.S. appeals court heard arguments Wednesday in a smartphone patent case that could offer leverage to manufacturers in negotiations with holders patents on technology required to achieve industry wide standards.

Google Inc (NASDAQ: GOOGL) is seeking to overturn a 2013 court decision that Motorola sought too much money for licenses to Microsoft Corporation (NASDAQ: MSFT) of so-called standard-essential patents.

Royalties on such patents are generally granted under reasonable and non-discriminatory terms, or RAND, as laid out by industry standards-setting organizations.

Google acquired Motorola in 2011 and later sold the company to Lenovo Group Ltd. (OTC: LNVGY), but retained its patent portfolio.

Microsoft sued Motorola in 2010 after the handset maker asked for 2.25 percent of the final product price for use of several standards-essential patents related to WiFi and video compression technology, according to the Financial Times.

Motorola's demand would have cost Microsoft $4 billion annually, but a federal court in Seattle calculated Motorola royalties of less than $2 million a year.

Making strange bedfellows in the case, Microsoft unit Nokia filed an amicus brief in support of Motorola's current appeal.

A long list of technology companies filed briefs supporting Microsoft in the case, including Apple Inc. (NASDAQ: AAPL), Intel Corporation (NASDAQ: INTC), Dell Inc.(NASDAQ: DELL) and Hewlett-Packard Company (NYSE: HPQ).

The case is part of a larger and ongoing patent war among smartphone manufacturers that have included well over 100 significant court actions since 2009.