U.S. District Judge James Robart in Seattle said Microsoft owed only a fraction of the royalties Motorola had claimed for use of its technology in Microsoft's Xbox console.
Motorola had sought as much as $4 billion a year for use of its so-called standard, essential wireless and video patents, while Microsoft argued its rival deserved about $1 million a year. Robart decided the appropriate payment was about $1.8 million.
Microsoft welcomed the outcome.
"This decision is good for consumers because it ensures patented technology committed to standards remains affordable for everyone," said David Howard, Microsoft's Deputy General Counsel, in a statement.
A Motorola representative said "Motorola has licensed its substantial patent portfolio on reasonable rates consistent with those set by others in the industry."
The ruling is a blow for Google, which bought Motorola for $12.5 billion, partly for its intellectual property stockpile. Robart's low valuation makes Motorola's patents a weaker bargaining chip for Google to negotiate licensing deals with others.
The second patent trial between the two, set for this summer in Seattle, will decide if Motorola breached its duty to license its standard, essential patents to Microsoft on fair terms.
The Microsoft-Motorola spat is just one strand of a wide-ranging battle over who owns the technology behind smartphones and other new electronic devices.
Apple Inc and Microsoft have been litigating in courts around the world against Google and its partners such as Samsung Electronics Co Ltd, which use the Android operating system on their hardware.
Apple contends that Android is basically a copy of its iOS smartphone software and Microsoft holds patents it contends cover a number of Android features.
The case in U.S. District Court, Western District of Washington is Microsoft Corp. vs. Motorola Inc., 10-cv-1823.
© Thomson Reuters 2013