Microsoft refused to pay royalty of 2.25% on final product price for standard essential patents to Motorola

Both Motorola and Microsoft are members of the standard setting organisations Institute of Electrical and Electronics Engineers ("IEEE") and the International Telecommunication Union ("ITU"). Motorola owns numerous patents that are essential to the IEEE 802.11 wireless local area network ("WLAN") Standard ("802.11 Standard") and the ITU H.264 advanced video coding technology standard ("H.264 Standard").On October 21 and 29, 2010 Motorola sent letters to Microsoft offering to license its standards-essential patents (SEP) for the 802.11 Standard and H.264 Standard. The offer asked for a 2.25% royalty rate on the price of all end products Microsoft sold utilizing the technologies protected by these patents. Microsoft regarded these terms as blatantly unreasonable and responded by filing a breach of contract case against Motorola in the Western District Court of Washington, claiming that Motorola had violated its agreement with the IEEE and ITU to provide reasonable and non-discriminatory terms of licensing to all potential licensees on a global scale.

Read the court judgement.