A new judicial test has likely
established a new commercial standard for determining RAND royalty
rates. The Court of Appeals for the 9th Circuit has
upheld a $14.5M damage award against Motorola for breaching its
obligation to license standard-essential patents on reasonable and
non-discriminatory (RAND terms).
Motorola is the owner of patents
that are essential to the implementation of two common industry
standards1 and had entered agreements with the standard
setting organizations to license these standards essential patents
(SEPs) to all other parties on RAND terms.
Not satisfied with the royalty
rates demanded for the use of the SEPs, Microsoft initiated
litigation alleging that Motorola had breached its RAND obligations
and sought, amongst other issues, damages for over-payment of
patent licensing royalties. In April 2013, Judge James
Robart2 issued a 207 page opinion setting out the
first-ever judicial determination of a RAND royalty rate for SEPs,
and
