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DEFENDANTS’ RESPONSE TO MICROSOFT’S MOTION FOR SUMMARY JUDGMENT OF BREACH OF CONTRACT CASE NO. C10-1823-JLR

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The Honorable James L. Robart UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE MICROSOFT CORPORATION, a Washington corporation, Plaintiff, v. MOTOROLA, INC., MOTOROLA MOBILITY, INC., and GENERAL INSTRUMENT CORPORATION, Defendants. CASE NO. C10-1823-JLR DEFENDANTS’ RESPONSE TO MICROSOFT’S MOTION FOR SUMMARY JUDGMENT OF BREACH OF CONTRACT

NOTED ON MOTION CALENDAR: Friday, April 20, 2012 HEARING: May 7, 2012 ORAL ARGUMENT REQUESTED REDACTED

Case 2:10-cv-01823-JLR Document 272 Filed 04/13/12 Page 1 of 30

DEFENDANTS’ RESPONSE TO MICROSOFT’S MOTION FOR SUMMARY JUDGMENT OF BREACH OF CONTRACT - i CASE NO. C10-1823-JLR

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98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001

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TABLE OF CONTENTS

Page(s) I.

INTRODUCTION .............................................................................................................. 1

II.

BACKGROUND ................................................................................................................ 5

A.

Motorola’s Longstanding Essential Patent Licensing Program .............................. 5

B.

Microsoft’s Understanding Of RAND Is The Same As Motorola’s ....................... 6

C.

Motorola’s Relationship With Microsoft ................................................................ 8

III.

ARGUMENT .................................................................................................................... 10

A.

Legal Standard ...................................................................................................... 10

B.

Motorola’s RAND Assurances Did Not Require It To Make Unsolicited RAND Offers To Microsoft .................................................................................. 11

C.

The October 2010 Letters Offered Reasonable Terms ......................................... 13

1.

Motorola’s Offers Were Reasonable and Ripe for Negotiation ................ 14

2.

Microsoft’s Focus on the Unnegotiated “Total Cash Payment” Is Inappropriate — The Proper Focus Is On The Royalty Rate and Base ........................................................................................................... 17

3.

Basing A Royalty On The Price Of The End Product Is Not Unusual and, Thus, Not Unreasonable As a Matter of Law ..................... 19

4.

Microsoft’s Arguments That Motorola’s Other Licenses Are Irrelevant Is Without Merit ....................................................................... 21

5.

Motorola Did Not Ignore Crucial Information In Making Its Offers ....... 23

IV.

CONCLUSION ................................................................................................................. 24


DEFENDANTS’ RESPONSE TO MICROSOFT’S MOTION FOR SUMMARY JUDGMENT OF BREACH OF CONTRACT - ii CASE NO. C10-1823-JLR

S

UMMIT

L

AW

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ROUP PLLC

315

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IFTH

A

VENUE

S

OUTH

,

S

UITE

1000 S

EATTLE

,

W

ASHINGTON

98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001

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TABLE OF AUTHORITIES

Page(s) C

ASES

Aetna Health Inc. v. Fox

, No. 09-5647, 2011 WL 2413267 (W.D. Wash. June 13, 2011) ..............................................10

Berg v. Hudesman

, 115 Wash. 2d 657 (1990) .........................................................................................................11

Global Horizons, Inc. v. Dept. of Labor & Indus.

, 157 Wash. App. 1066, 2010 WL 3639917 (Ct. App. (Div. 2) Sept. 21, 2010) .......................11

Lucent Techs., Inc. v. Gateway, Inc.

, 580 F.3d 1301 (Fed. Cir. 2009)................................................................................................21

Paradise Orchards Gen. P’ship v. Fearing

, 94 P.3d 372 (Ct. App. Wash. 2004) .........................................................................................10

Quanta Computer, Inc. v. LG Elecs., Inc.

, 553 U.S. 617 (2008) .................................................................................................................23
