Motorola targets Microsoft in patent war
It stands to earn hundreds of millions of dollars from licensing agreements if it wins its latest round of lawsuits.
Motorola has already tried to block the sales of the iPhone in Europe, but its lawsuit was rejected by a German Court last week. However, it may get lucky with its patent lawsuit against Microsoft. It is targeting Microsoft's top moneymakers – Windows 7 and Xbox 360 – and some other products with patent infringement lawsuits. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
Motorola is alleging that some Microsoft products -- Windows 7, Xbox 360, Internet Explorer 9 and Windows Media Player -- infringe on two FRAND patents related to the H.264 video codec it owns. It is demanding a royalty of 2.25% on the sales of each of the aforementioned products.
Windows 7 and Xbox are two of Microsoft's most profitable products and generate a major portion of its total revenue. Motorola could stand to earn hundreds of millions of dollars from licensing agreements with Microsoft should it win the lawsuits. The licensing burden would also depress Microsoft's operating margins in its most valuable businesses.
Microsoft currently earns billions of dollars in patent licensing revenue from the sale of Android devices, thanks to its licensing agreements with almost every major Android device maker. Looks like Google will finally get some payback.
Windows and Xbox account for nearly 40% of Microsoft's $32 Trefis price estimate, which stands at around 5% above its market price.
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The company is planning a 10-for-1 split, which will cut its share price dramatically.
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