Google Confirms Motorola Licensees Pay 2.25% Per-Unit Royalties

If all goes according to plan, the same company which last year asserted that patents were essentially legal weapons in an unfair war against the Android operating system, will find itself the owner of one of the largest technology portfolios anywhere in the world. Today, Google took steps to assure many of Motorola Mobility’s (MMI) existing licensees that it would adhere to that company’s existing reasonable and non-discriminatory (RAND) licensing practices for mobile technologies.

This after Apple sent a letter to a European Telecommunications Standards Institute last November 11 – as first reported by Dow Jones this morning – complaining that Google had not been forthcoming about what constitutes “reasonable” with respect to royalties.

Google shared a copy of one such letter of reassurance, sent this morning to IEEE President Gordon Day. In it, Google Deputy General Counsel Allen Lo promises to keep the maximum per-unit royalty it would charge its licensees to “2.25% of the net selling price for the relevant end product on a go-forward basis,” minus possible offsets for cross-licensing. Lo acknowledges that “the relevant end product” constitutes the retail sale price of a mobile device, minus subsidies paid by carriers.

Lo also writes that Google is aware of MMI’s existing policy of negotiating good faith terms with individual parties, so long as those parties pledge not to seek injunctions or litigation against Google during the negotiation period. Google would pledge not to “apply for injunctive relief against a willing licensee” for MMI’s patents so long as that licensee makes a reciprocal pledge not to take Google to court about the same patents.

“Transparency and consistency in licensing practices are important with respect to standard essential patents, and the IEEE and its rules play a critical role in promoting those goals,” Lo states in his closing. “I am confident that Google’s acquisition of MMI will not disturb those goals or otherwise adversely affect the IEEE, its members, or the implementers or consumers of its standards.”

The per-unit royalty rate that a device manufacturer pays to a patent holder is rarely publicly disclosed, though it is often deduced by analysts. On Monday, Dow Jones reported that Apple was able to ferret that amount out of the public domain, by way of a successful request for a document in a California court dispute against MMI. Citing that document, Apple reportedly told ETSI that if Google were to have applied that “reasonable” rate for the sale of each iPhone last year, it would have owed as much as $1 billion. Google estimates the valuation of the entire proposed MMI acquisition at $12.5 billion.

One of the companies that will not be playing by Google’s rules is Immersion, the developer of haptic feedback systems. This morning, that company announced it had filed with the U.S. International Trade Commission for an injunction against MMI, alleging that its Android-based smartphones utilize methodologies that violate six of Immersion’s patents for haptic feedback. In its statement this morning, Immersion said MMI could not reach an agreement on reasonable terms. CEO Victor Viegas said, “Our primary interest is not to disrupt the availability of any product but to obtain compensation for the unauthorized use of our patents.”

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