Google's Motorola drops key patent claims against Microsoft

Google unit Motorola Mobility has asked a trade panel to drop two key patents from an infringement complaint that it filed against Microsoft, according to a filing at the International Trade Commission.
The ITC has been considering accusations by Motorola Mobility, which has since been purchased by Google, that Microsoft infringed on its patented technology to make its popular Xbox.
Google filed a motion with the ITC on Tuesday, asking that two patents be withdrawn from the case. One patent remains, according to the filing.
The withdrawal was required under an agreement that Google made with the Federal Trade Commission last week settling a pair of long-running antitrust investigations.
The FTC, U.S Department of Justice and U.S. Patent and Trademark Office assert that companies should not request sales bans when filing patent infringement lawsuits based on patents that are essential to a standard in most cases. Standard essential patents ensure that devices are interoperable.
Microsoft identified the two patents withdrawn from the ITC case as standard essential patents.
"We're pleased that Google has finally withdrawn these claims for exclusion orders (sales bans) against Microsoft, and hope that it will now withdraw similar claims pending in other jurisdictions," David Howard, Microsoft's deputy general counsel, said in an emailed statement.
Google did not immediately respond to requests for a comment.
Microsoft said that standard essential patents had been asserted in cases in Wisconsin and Washington district courts, both of which have been stayed. Sales bans, or injunctions, were requested in both cases, Microsoft said.
The ITC is a popular venue for patent lawsuits because it can bar the importation of infringing products and because it issues decisions relatively quickly.
The International Trade Commission case is No. 337-752.
© Thomson Reuters 2012

Google to sell Motorola's TV set-top business for $2.35 billion

Google is selling Motorola Mobility's TV set-top business for $2.35 billion, lightening the load that the Internet search leader took on earlier this year when it completed the biggest acquisition in its history.
The cash-and-stock deal announced late Wednesday will turn over Motorola's set-top division to Arris Group Inc., a relatively small provider of high-speed Internet equipment that is looking to become a bigger player in the delivery of video. Investors applauded the move, driving up Arris' stock by nearly 17 percent.
Google's decision to jettison the set-top boxes comes seven months after the Mountain View, Calif., company took control of Motorola Mobility Holdings in a $12.4 billion purchase.
The set-top boxes were never a big allure for Google, although the company is interested in finding ways to pipe its service on to TVs so it can sell more advertising.
Google prized Motorola for its portfolio of more than 17,000 mobile patents. Those form an arsenal that it can use in a fierce battle that has broken out over intellectual property as smartphones and tablet computers have emerged as hot commodities in recent years.
Motorola also makes smartphones and tablets, a manufacturing business that Google will retain, despite lingering concerns on Wall Street about the hardware shrinking Google's profit margins and possibly alienating other device makers that use the company's Android software.
Besides not being a natural fit for Google, Motorola's set-top box also has become a potentially expensive liability. Digital video recorder pioneer TiVo Inc. is seeking billions of dollars in damages in a lawsuit alleging that Motorola's boxes infringed on its patents. Those claims are scheduled to go to trial next year in federal court in Texas.
Although they declined to provide specifics, Arris Group executives told analysts in a Wednesday conference call that Google still must cover most of the bill for any damages or settlement that TiVo might win.
TiVo already has negotiated about $1 billion in combined settlements in other patent-infringement cases it has brought against other companies, including Dish Network Corp., AT&T Inc. and Verizon Communications.
The proposed sale of Motorola's set-top division calls for Google to receive $2.05 billion in cash and $300 million worth of Arris stock. If the deal wins regulatory approval, Arris Group expects to take over the division before the end of June.
Google will also pare its expenses, something likely to please investors concerned about Motorola being a drag on the company's earnings. Arris said about 7,000 people work in Motorola's set-top division. Google ended September with about 53,500 employees, including 17,400 who worked on the Motorola side of its operations. More than 20,000 people worked at Motorola Mobility when Google became the owner in late May, but the payroll was slashed as part of an effort to pare the losses that have been piling up within Motorola as its once popular cellphones lost market share to Apple Inc. and Samsung Electronics.
But Motorola's set-top business had been making money, according to Google, though the company didn't say how much.
In the past year ending in September, Motorola's set-top operations generated $3.4 billion in revenue. That makes it twice as big as Arris Group, whose revenue totaled $1.3 billion during the same period. Arris Group, which is based Suwanee, Ga., had earned $39 million through the nine months of last year after suffering a loss of nearly $13 million for all of 2011.
"This represents a great leap forward for Arris," CEO Bob Stanzione said during Wednesday's conference call.
Arris' stock surged $2.46 to $17 in extended trading Wednesday while Google's stock dipped $2.61 to $717.50.
The other half of the old Motorola Inc., Motorola Solutions Inc., remains an independent company. Based in Schaumburg, Ill., it sells communications equipment to government and corporate customers.

Motorola News :: Britain's Pace approaches Google over Motorola Home

British TV decoder maker Pace Plc said on Monday that it had made an early-stage proposal to Internet group Google Inc to acquire its set-top TV box maker Motorola Home.
"Discussions with Google are currently at a preliminary stage and there is no certainty as to whether any agreement regarding any transaction will be reached," Pace said in a statement.

The offer is one of several bids for the unit, including from private equity firms, that Google received on Friday, according to a person familiar with the situation.

Google acquired the set-top box maker as part of its $12.5 billion acquisition in May of Motorola Mobility, which was largely motivated by a desire to snap up its large portfolio of communications patents.

Since acquiring Motorola, Google has moved to revamp the company's loss-making mobile phone business, while appearing less interested in the set-top business.

"It's a fine business, it's just not core to Google," said Pivotal Research Group analyst Brian Wieser.

Motorola and Cisco Systems Inc's Scientific Atlanta dominate the U.S. market for cable television set-top boxes and for the back-end infrastructure that manages the transmission of video signals to the boxes, said Wieser.

He estimated that the Motorola's home business could fetch "in the billions" of dollars, depending on how the deal is structured, such as whether patents are included.

Arris Group, a cable equipment maker, also made a bid for the business, according to a report by Bloomberg. Arris Group and Google declined to comment.

Google, the world's No.1 Web search engine, has increasingly expanded into the hardware business as consumers turn from their personal computers to smartphones and other gadgets to access the Internet.

Google worked closely with companies such as Asus and LG Electronics to develop Nexus-branded smartphones and tablets that Google sells directly on its website. And Google has said it is shifting the emphasis at Motorola Mobility's phone unit from low-end phones to more innovative smartphones.

Some analysts had speculated that Google might use the Motorola set-top box business to help it gain a foothold in the living room, where its nearly three-year-old Google TV efforts have so far failed to make a huge splash with consumers.

"It seems like it would make sense to be able to integrate that into a set top box," said Needham & Co. analyst Kerry Rice, referring to Google TV.

But he said Motorola Home's customers cable providers and telecommunications companies were different than the advertising agencies and consumers that Google is accustomed to working with.

The Motorola Home business generated $797 million in revenue in the third quarter, according to Google's financial results, with $25 million in operating income.

Pace said its shares had been suspended from trading in London as the potential acquisition would be classified as a "reverse takeover" deal given the size of the acquisition relative to Pace.

A deal could help Pace recover from the three profit warnings it issued in 2011 due to natural disasters such as flooding in Thailand and the earthquake and tsunami in Japan that damaged the group's supply chain.

"Pace already has a somewhat stretched balance sheet, they have done a good job over the past 12 months to try to pay down that debt but how they would finance such a large acquisition is a question, but not an insurmountable one," said Numis Securities analyst Nick James.

Shares of Google were just a shade higher in Monday afternoon trading, up 80 cents, or 0.1 percent, to $685.01

© Thomson Reuters 2012