Counsel for Microsoft retained Cornerstone Research and Vice President Matthew Lynde to estimate the value and range of royalties that would be consistent with Motorola Mobility’s contractual obligations to license its patented standards on reasonable and nondiscriminatory (RAND) terms.
On July 30, 2015, the Ninth Circuit affirmed the jury decision and bench trial rulings in the landmark intellectual property case, Microsoft Corporation v. Motorola Mobility Inc. et al. Microsoft brought the action as a contract matter, alleging that Motorola had breached its obligation to offer reasonable and nondiscriminatory (RAND) terms for licensing its patents that had been declared essential to two separate standards organizations. The bench trial was the first to set a RAND range for standard essential patents (SEPs), as detailed in a lengthy opinion by Judge James L. Robart.
The resulting range, setting RAND royalties at approximately $1.8 million per year for the patents in suit, was substantially less than Motorola’s initial demand of up to $4 billion per year. In the second phase of the trial, the jury determined that Motorola had breached its contractual obligations to offer RAND rates. Judge Robart’s quantitative finding and modifications to the Georgia-Pacific factors were based to a large extent on the analysis offered in the preceding bench trial by Cornerstone Research Vice President Matthew Lynde, the expert witness for Microsoft. Dr. Lynde, relying in part on comparable patent pool information, had calculated a RAND range going up to approximately $1.2 million per year across the two standards in question, essentially similar to Judge Robart’s determination.
The ruling is now the only such decision that has been tested at the appellate level. The Ninth Circuit found that the court’s RAND rate determination was “consistent with the Federal Circuit’s recent approach to establishing damages in the RAND context” and affirmed the damages award based on the court’s properly admitted factual findings.