Microsoft’s Germany Ban Highlights ‘Risk And Reward’ Dilemma Of The Technology Sector

Expert Gives Views On Implications Of Motorola Injunction


The injunction obtained by Motorola Mobility against Microsoft’s distribution of products, including the Xbox 360 and Windows 7, in Germany demonstrates the need for businesses in the technology sector to recognise the “risk and reward” associated with high profile cutting-edge software and hardware.

Motorola Mobility obtained the injunction after the Mannheim Regional Court ruled that Microsoft had infringed two patents relating to the H.264 video codec, used across the internet to deliver high-quality video.

The decision means Microsoft is theoretically unable to distribute products including the Xbox 360, Windows 7 and Windows Media Player in Germany. The software giant is expected to appeal the German Court’s decision, although such a decision is likely to be made pending the outcome of a case in the US which is due to be heard on 7 May 2012. This is in order to decide whether Motorola has breached the fair, reasonable and non-discriminatory (FRAND) licensing obligations which is associated with certain fundamental technology patents.

In addition, the European Commission is investigating whether Motorola Mobility failed to licence its technology on reasonable grounds.

James Wellburn, a solicitor at Irwin Mitchell’s Birmingham office, specialises in advising on disputes in relation to commercial litigation and intellectual property.

Commenting on this issue, he said: “This kind of scenario outlines the importance of fully assessing the risk and reward when developing hardware and software. If you are developing such products, then you do run the risk of competitors seeking to obtain injunctions and/or substantial damages which can have serious implications for businesses.

“That said, this case also demonstrates the advantages for businesses in remaining flexible, illustrated by Microsoft moving its European distribution centre from Germany to the Netherlands in order to minimise the impact of any ruling by the Mannheim Regional Court.”

He added: “If the US Court decides that Motorola Mobility have not complied with its FRAND obligations, then it is likely that Motorola Mobility will need to consider the terms of any licensing offers to Microsoft so that these become ‘FRAND compliant’.

“Whilst Microsoft has indicated they plan to appeal the ruling of the Mannheim Regional Court, if the US Court rules that Motorola Mobility’s licensing terms are FRAND compliant, then Microsoft will have to decide whether they wish to reach a settlement with Motorola Mobility, which may include entering into a licensing agreement, or appeal the German Court’s decision.”