Motorola has proposed royalty fees to Microsoft in an attempt to put an end to its long running and global patent disputes, but the Xbox 360 and Windows OS maker has rejected its offer claiming that the royalty payments are too high. Motorola's offer would squeeze a 2.25 percent royalty on every Xbox 360 sold and a 50 cent royalty fee on every copy of Windows sold. The royalty fees relate to patented Motorola technology that both products use.
The International Trade Commission is currently considering an order of exclusion that would effectively ban the sale of both products in the United States. Meanwhile a German court has ruled in favor of Motorola effectively banning the sale of the Microsoft products in that region. Apple, Activision Blizzard, the ESA, and other game industry heavies have petitioned the ITC asking them not to ban the Xbox 360 in the U.S., saying that the impact on U.S. consumers and businesses dependent on the console would be devastating.
At the heart of this fight are licensing fees.
Microsoft alleges that Motorola Mobility (now owned by Google) breached royalty contract with the company by demanding unreasonable licensing fees for use of the patents. Microsoft says that it would have had to spend around $4 billion each year to cover the licensing costs.
We will continue to follow this story as it develops.