Microsoft Batters Google with This Ruling

Microsoft (NASDAQ:MSFT) has emerged the clear winner in the first of two heavyweight court fights with Google (NASDAQ:GOOG). A Seattle District Court judge ruled that Microsoft won’t have to pay Google anything close to the $4 billion it was seeking, setting the tone for future fights over patents and appropriate royalties.

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The court battle stems from a dispute over wireless and video technology patents held by Motorola when Google acquired the company. Because Microsoft’s XBox systems use this technology, Google was looking for a healthy cut of the company’s take, yet only ended up with $1.8 million a year in royalties. The bid for a settlement in the billions was flatly rejected by the Seattle court.

While this date in court revolved around Microsoft’s debt to Google, the next battle will decide whether or not Motorola played fair in its licensing deals with Microsoft. Under the terms that govern standards of wireless technology industry-wide, certain patents must be licensed to companies at a fair rate of compensation. If Microsoft wins in that department, it would be another major blow to Google  as it assesses its investment in Motorola.

Google’s $13 billion investment in Motorola seemed to give the company a leg up on its rivals by securing essential patents and offering the tech giant a way to advance in the hardware business. Yet Google has put most of its energy behind Motorola’s stock of patents. That direction is not earning the company a great deal of money, following the decision announced Wednesday. If the next ruling goes in Microsoft’s favor, the score will become even more lopsided.

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So far, the $13 billion Google paid for Motorola has been a defensive play. The company has been able to stand its ground in the patent game and earn a small amount of money in licensing fees from its tech rivals. Meanwhile, Microsoft has been fighting off the competition from all sides as its legal team continues to win in court. VirnetX (AMEX:VHC) announced this week it would be challenging Microsoft for violation of patent agreements the two companies made with respect to Skype.

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