Bad Microsoft Android patents may lie behind Samsung lawsuit

Bad Microsoft Android patents may lie behind Samsung lawsuit

Summary: Microsoft's wrestling match with Samsung may just be a contract fight, or it could be the beginning of a war over the validity of Microsoft's Android patents.

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At this point, it's hard to say exactly what's going on in Microsoft's patent contract dispute with Samsung. The two companies may just be fighting out their contract terms or it could be the first shot at Microsoft's Android patent portfolio.

AndroidPatentTrolls
The roots to the contract dispute between Microsoft and Samsung may lie in Microsoft's Android patent claims.

Microsoft's heavily redacted lawsuit was filed on August 1st in the US District Court in the Southern District of New York. In a blog posting by David Howard, Microsoft's Corporate Vice President and Deputy General Counsel, claimed that the two companies have "a fundamental disagreement as to the meaning of our contract."

Specifically, Microsoft claims that since Samsung's Android business has exploded from 82 million Android smartphones in 2011 to 314 million Android smartphones, "Samsung decided late last year to stop complying with its agreement with Microsoft."

This agreement had been the biggest of Microsoft's Android patent wins. These deals may make Microsoft as much as two billion dollars a year, more than five times what Windows Phone brings in.

Howard asserted that Samsung was trying to weasel out of the deal because Microsoft was acquiring the Nokia Devices and Services business. Microsoft also licensed the Nokia patents for 10 years in the same deal.  Nokia also granted Microsoft an option to extend its  patent agreement in perpetuity. 

Samsung also had a patent deal with Nokia. Ironically, that November 2013 deal was heralded as a first-rate example of patent peacemaking.  

Samsung's only public response to date on Microsoft's lawsuit has been a terse comment that the company will "review the complaint in detail and determine appropriate measures in response."

So, what's really going on?

Andrew "Andy" Updegrove, a founding partner of Gesmer Updegrove, a top intellectual property (IP) technology law firm, said that "Since it's a contract dispute rather than an external dispute, it's really not possible to comment without knowing the specifics."

But, Updegrove continued, "One possibility is that it's something of a 'rock/paper/scissors' situation where there's a disagreement over which terms apply now that Microsoft owns both patent portfolios. Under a cross license, you balance the value of the two portfolios and then come up with a net difference in value that results in a payment that flows from the holder of the lesser value portfolio to the greater. So if Nokia struck a better deal for Samsung's patents than Microsoft did, Microsoft would say that they are now gaining access to the patents in question under Nokia's agreement with Samsung rather than their own."

Updegrove believes it possible that "The agreements between Samsung and Nokia, and between Samsung and Microsoft, would have covered Microsoft patents in addition to Nokia patents, and maybe not all of the same Samsung patents. Samsung might be saying it's an apple to an orange, and you can't select which patents you want to handle under one agreement and which under the other."

He predicts that, "At the end of the day, it sounds like a judge or a jury will end up deciding. That's not a job I would envy, given the weeks of highly technical testimony that this would entail if the parties don't settle before going to trial."

There may be another, far more important issue behind the battle between the two companies.

M-Cam, a global financial institution that advises corporations and investors on corporate finance and asset allocation by underwriting IP and intangible assets (IA), thinks that "Microsoft's acquisition of Nokia's patent portfolio may be more redundant than additive to its own."

M-Cam's analysts found that "Nearly 20 percent of Microsoft’s patent portfolio either coincides with or is subsequent to Nokia’s patents on similar technologies." Indeed, M-Com speculated that Microsoft may have reverse-engineered that 20 percent of Nokia's patents in its own patents.

This, in turn, calls into question the validity of the patents within both patent portfolios.

M-Cam's earlier analysis of Microsoft's recently revealed Android patent portfolio, showed that only "one fifth of [Microsoft's "Android" patent] portfolio was commercially relevant, casting doubt on the overall viability of the Microsoft licensing packages." Samsung may be gearing up to challenge Microsoft's Android patent portfolio directly.

Pamela Jones, paralegal and founder of Groklaw, the well-known IP legal news site, said in an e-mail interview that, "We may be beginning to see what M-Cam's recent analysis suggested, a backlash against Microsoft for claiming Android supposedly infringes Microsoft patents. The curtain has been pulled aside, and now signers-up for licenses may be feeling a measure of anger, after the Chinese revealed the questionable merit of Microsoft's claims. I mean, did you see any patents in that collection that are Android-specific?"

Jones concluded, "So it could be Samsung wants out and their lawyers may view the contract as giving them a way that is easier to pursue and prevail with than any other strategy. But that's just my guess from the limited information currently available. We'll learn more if the case continues into the discovery phase."

Related Stories:

Topics: Mobility, Legal, Microsoft, Patents, Samsung, Smartphones, Tablets

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71 comments
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  • The beginning of a war over the validity of Microsoft's Android patents

    I can see this starting to unravel for Microsoft to the tune of about $2 billion a year.
    BoxOfParts
    • Really? First you all claim they only make millions

      now it's billions because you're talking from "what they will lose".

      Hey, whatever keeps you happy...
      William.Farrel
      • Quote the source please

        Where did I ever say millions?
        BoxOfParts
        • For some

          Those that do not agree with their opinions are like some kind of collective intelligence working together.
          :-)
          AleMartin
          • A 2 billion loss for MS?

            That seems about right
            Uralbas
    • Microsoft = the biggest patent systems' abuser

      yes, we need to get rid of this the biggest patent troll ever besides Apple
      Microsoft ears billions on general, simple, ridiculous, software patents
      Microsoft should be punished for that with 10 billion fine a year
      Jiří Pavelec
      • Why stop at $10 billion? How about $100 billion?

        Heck, why not take all of MS's assets, and destroy them, once and for all?

        That should make you happy....
        adornoe@...
        • Thats what is supposed to happen to criminals ill gotten gains.

          :)
          jessepollard
          • You mean like Android...

            Which is based on other people's patented technologies...
            omdguy
          • Apparently not so much

            "You mean like Android...

            Which is based on other people's patented technologies.."
            BoxOfParts
          • BoxOf Parts

            So If you invented something you would let everybody use and make money out of it.
            Psst I own the Statue of Liberty. Wanna buy it???
            Blogsworth
          • Microsoft didn't invent anything in Android.....

            ....it is presumably a patent extortion racket with Microsoft stealing other people's work, Android and Chromebook in this case, and claiming it is their own. All classic Microsoft, straight out of the Al Capone school of business.

            This is pretty well what Microsoft tried to do to Barnes and Noble regarding , who promptly refused to sign the NDA, spilled the beans and countersued Microsoft. This forced Microsoft to settle out of court with Barnes and Noble, reportedly with a very nice financial settlement for Barnes and Noble and a face saving publicity release for Microsoft.

            I suspect that this lawsuit is more to do with the Chinese government recently revealing the bogus claims publically as an scam, allowing the bogus patent claims to be challenged in court, and possibly Microsoft being sued by the true owners of the intellectual property that Microsoft has claimed it owned.
            Mah
          • Using your standard, there would be no businesses operating in the U.S.

            or elsewhere, since, anybody can define and redefine what constitutes crooked or criminal behavior.

            Like others have said, Android would have been stopped before it came on the market.
            adornoe@...
          • That would be individual judgement

            If you can't stomach the way XYZCorp does business, then don't do patronize it and feel free to say why; others then get to determine whether or not they agree with you (this too is part of the operation of the free market). Likewise, if XYZCorp's stockholders think management's behavior is unconscionable, then they know what to do about it (throw the bums out), even if it is technically legal, and even if it is deemed to be lucrative.

            Written law is a minimum standard of behavior, not the sole standard of ethics.
            John L. Ries
          • Noting...

            ...that illegality and criminality should be the same, but aren't necessarily (for starters, there is no universally accepted definition of crime).
            John L. Ries
          • There is a precise legal definition of crime in every country......

            .....it is called the criminal law. However this does vary slightly from country to country, and prosecution for crimes is usually (with very few exceptions) carried out by the state. However the state does not bother to prosecute many, and probably most crimes that take place.
            Mah
          • Crime!=lawbreaking

            Murder would be considered a crime, even if it were legal; likewise with theft; likewise with assault. A crime is a severe breach of the moral code, legal or not. Traffic laws are necessary and violations are and should be punished, but the prohibited acts are wrong solely because they are illegal and potentially dangerous; not because they are immoral per se. The same goes for failure to pay taxes and any number of other things.

            Laws reflect the moral standards of the societies they purport to govern; they do not dictate it.
            John L. Ries
    • Box od Parts

      You are just an idiot. A bit like Stevie Boy.
      Blogsworth
  • Yet they do comment

    "Since it's a contract dispute rather than an external dispute, it's really not possible to comment without knowing the specifics."

    Yet they do anyway
    thekman58
    • People can speculate

      Unless the litigants settle, we'll have a better idea of what's going on in due course.
      John L. Ries