Motorola Caught in Patent Dispute

U.S. cell phone giant Motorola is violating a patent that belongs to Russian company RussGPS, cheating it out of hundreds of millions of dollars, a RussGPS manager said Monday.

Motorola, however, denied the allegation Monday, and questioned the way RussGPS had handled the dispute.

Pavel Panov, a RussGPS manager, said seven types of Motorola cell phones violated his company's patent for a "mobile communications terminal," registered in Russia in 2003. Motorola owes RussGPS between 5 percent and 10 percent of Motorola's C115, C261, C333, C390, E365, L6 and L7 Russia sales at manufacturer's prices, he said.

That would translate into an average damages payment of $403 million per quarter, said Mobile Research Group's analyst Eldar Murtazin, who expressed skepticism about the claim.

Early this year, RussGPS asked the Interior Ministry to investigate Motorola, saying it had violated the law by using a patented device without purchasing a license, Panov said. "Motorola is fighting 1,000 patent infringements around the world. Why doesn't it respect Russian patent law?" he said.

Motorola said Monday its products did not infringe on RussGPS' patent.

"The claims made by RussGPS are groundless," Motorola vice president Greg Estell said in a statement.

Intellectual property experts said that while tapping law enforcement officials to solve patent disputes was legal, it was highly unusual.

Article 147 of the Criminal Code on infringement of inventors' and patent rights is rarely used in practice, Vladislav Ugryumov, a patent lawyer with Baker & McKenzie's Moscow office said Monday. A criminal case must contain an element of premeditation, he said. Normally, a patent holder files a lawsuit in a civil or arbitration court to enforce it, Ugryumov said. The disputed patent is a "utility model," or so-called patty patent, which is granted by Rospatent without thorough checks of the invention's patentability, he said.

"It's possible to patent anything," Murtazin said. "Let's describe and patent a wheel while we're at it."

The outcome of RussGPS' dispute with Motorola would only affect the Russian market because the patent under dispute is regional, Ugryumov said.

Cell phone market watchers said the RussGPS claim may be part of a campaign to put pressure on Motorola, thousands of whose phones were earmarked for destruction last month because they allegedly posed a health threat.

"We are surprised by the manner in which this is being pursued, " Estell said in his statement. "Patent disputes fall under the jurisdiction of Rospatent and not the Prosecutor General's Office."

The Interior Ministry's news service referred inquiries to the Prosecutor General's Office, but officials there were not immediately available for comment.

Motorola knew that RussGPS' patent, No. 31183, and several others belonged to a Russian company, said Sergei Mosiyenko, general director of Rimco-XXI, which claims to have registered the patent originally.

Mosiyenko said Monday that Rimco-XXI cooperated on research and development with Motorola 2 1/2 years ago. The companies' agreement listed the patent now under dispute and several others that served as the basis for various Motorola products, he said.

Rimco-XXI declined to pay Motorola to sell the device under the Motorola brand, Mosiyenko said. Subsequently, Rimco-XXI sold the patent to RussGPS to avoid prolonged battles in court, he said.