Microsoft 2015 Annual Report Download - page 73

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• In the Motorola action originally filed in California, Motorola asserts Microsoft violated antitrust laws in
connection with Microsoft’s assertion of patents against Motorola that Microsoft agreed to license to
certain qualifying entities on RAND terms and conditions.
• In counterclaims, Microsoft asserts 14 patents are infringed by Motorola Android devices and certain
Motorola digital video recorders.
Germany
In 2011, Motorola filed patent infringement actions in Germany against Microsoft and several Microsoft subsidiaries.
• Motorola asserts two patents (both now expired) are essential to implementation of the H.264 video
standard, and Motorola alleges that H.264 capable products including Xbox 360, Windows 7, Media
Player, and Internet Explorer infringe those patents. In 2012, the court issued an injunction relating to all
H.264 capable Microsoft products in Germany, which Microsoft appealed. Orders in the litigation pending
in Seattle, Washington described above enjoin Motorola from enforcing the German injunction.
• Motorola asserts that one patent covers certain syncing functionality in the ActiveSync protocol employed
by Windows Phone 7, Outlook Mobile, Hotmail Mobile, Exchange Online, Exchange Server, and Hotmail
Server. In 2013, the court stayed the case pending the outcome of parallel proceedings in which Microsoft
is seeking to invalidate the patent. In 2013, the Federal Patent Court invalidated the originally issued
patent claims, but ruled that certain new amended claims were patentable. Both Motorola and Microsoft
appealed. In June 2014, the court reopened infringement proceedings, which are currently stayed.
• Microsoft may be able to mitigate the adverse impact of any injunction by altering its products to avoid
Motorola’s infringement claims.
• Any damages would be determined in separate proceedings.
In lawsuits Microsoft filed in Germany in 2011 and 2012, Microsoft asserts that Motorola Android devices infringe
Microsoft patents and is seeking damages and injunctions. In 2012, regional courts in Germany issued injunctions on
three of the Microsoft patents, which Motorola appealed. One judgment has been affirmed on appeal (and Motorola
has further appealed), and the other two appeals are pending (in one of these two cases the asserted patent has
expired). An additional infringement proceeding is still pending in the court of first instance. In actions filed separately
by Motorola to invalidate these patents, the Federal Patent Court in 2013 and 2014 held the Microsoft patents invalid,
and Microsoft appealed. For the cases in which Microsoft obtained injunctions, if Motorola were to prevail following all
appeals, Motorola could have a claim against Microsoft for damages caused by an erroneously granted injunction.
IPCom patent litigation
IPCom GmbH & Co. (“IPCom”) is a German company that holds a large portfolio of mobile technology-related
patents spanning about 170 patent families and addressing a broad range of cellular technologies. IPCom has
asserted 19 of these patents in litigation against Nokia and many of the leading cell phone companies and operators.
In November 2014, Microsoft and IPCom entered into a standstill agreement staying all of the pending litigation
against Microsoft to permit the parties to pursue settlement discussions.
InterDigital patent litigation
InterDigital Technology Corporation and InterDigital Communications Corporation (collectively, “IDT”) filed four patent
infringement cases against Nokia in the ITC and in U.S. District Court for the District of Delaware between 2007 and
2013. We have been added to these cases as a defendant. IDT has cases pending against other defendants based
on the same patents because most of the patents at issue allegedly relate to 3G and 4G wireless communications
standards essential functionality. The cases involving us include three ITC investigations where IDT is seeking an
order excluding importation of 3G and 4G phones into the U.S. and one active case in U.S. District Court in Delaware
seeking an injunction and damages. The ITC issued a finding of no violation relating to two of the investigations,
which IDT appealed. In February 2015, the U.S. Court of Appeals for the Federal Circuit affirmed one of the ITC’s
findings; the other has been stayed. In the third ITC action the administrative law judge (“ALJ”) issued a
determination finding: (1) infringement; (2) evidence of “reverse hold-up;” and (3) the public interest does not
preclude issuance of an exclusion order. The ITC is reviewing the ALJ’s initial determination. The trial in the
Delaware case is scheduled for November 2015.