Patent Licensing: Ninth Circuit Affirms District Court RAND Royalty Rate Calculation and Claim for Motorola’s Failure to Abide by Its RAND Commitments

Sullivan & Cromwell LLP - August 3, 2015

In Microsoft Corp. v. Motorola, Inc., the Ninth Circuit affirmed the district court’s determination of an appropriate royalty for certain standard-essential patents (“SEPs”) subject to Motorola’s commitment to standard-setting organizations to license under reasonable and non-discriminatory (“RAND”) terms.  The court also affirmed the judgment issued after a jury verdict concluding that Motorola’s initial offer to Microsoft to license these SEPs and Motorola’s subsequent actions seeking injunctive relief for infringement of its SEPs breached the duty of good faith and fair dealing implied in Motorola’s RAND contractual commitments.  The decision is the first by a U.S. appellate court approving a methodology for determining a RAND royalty.