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Yet another Android vendor pays Microsoft patent royalties

By | June 29, 2011, 7:10am PDT

Summary: Just days after announcing that General Dynamics was paying Microsoft undisclosed patent royalties to cover Android-based devices, Microsoft announced a similar deal with custom-PC vendor Velocity Micro Inc.

Microsoft announced its second Android patent-protection deal this week on June 29.

Just days after announcing that General Dynamics was paying Microsoft undisclosed patent royalties to cover Android-based ruggedized devices it was selling, Microsoft announced a similar deal with Velocity Micro Inc.

Microsoft and Velocity “have signed a patent agreement that provides broad coverage under Microsoft’s patent portfolio for Velocity Micro Inc. Android-based devices, including Velocity Micro, Inc.’s Cruz Tablet,” according to Microsoft’s press release. As in the case with General Dynamics, terms are not being made public, other than the fact that Microsoft will received some undisclosed royalties.

Velocity Micro, based in Richmond, Virg., is an OEM that provides companies with custom-designed and -built gaming system, PCs, notebooks, workstations, servers and small-business systems. While its Cruz tablet runs Android, its notebooks run Windows 7.

Microsoft has been targeting vendors running Google’s Linux-based Android operating system and is working to convince them to pay royalties to Microsoft to cover alleged patent-infringement issues involving Android. HTC signed a patent-protection deal with Microsoft for an undisclosed amount last year that focused on Android.

Not all Android vendors are signing on the IP (intellectual property) dotted line, however. Barnes & Noble is in a legal fight with Microsoft over Microsoft’s claim from earlier this year that the Android-based Nook e-reader violates Microsoft patents.

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Microsoft Corp., Microsoft Windows 7, Notebooks, Operating Systems, Microsoft Windows, Software, Hardware, Notebooks & Tablets, Mary Jo Foley

Mary Jo has covered the tech industry for more than 25 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Disclosure

Mary-Jo Foley

Freelance journalist/blogger Mary Jo Foley has nothing to disclose. WYSIWYG (what you see is what you get). I do not own Microsoft stock or stock in any of its partners or competitors. I have no business ventures that are sponsored by/funded by Microsoft or any of its partners or competitors.

Biography

Mary-Jo Foley

Mary Jo Foley has covered the tech industry for 25 years for a variety of publications, including ZDNet, eWeek and Baseline. She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years. In the late 1990s, she penned the award-winning "At The Evil Empire" column for ZDNet, and more recently the Microsoft Watch blog for Ziff Davis.

Got a tip? Send her an email with your rants, rumors, tips and tattles. Confidentiality guaranteed.

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RE: Yet another Android vendor pays Microsoft patent royalties
dsfwrryd74-24353636458548791193357148816734 10th Nov
weushs,good post!
View in thread
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RE: Yet another Android vendor pays Microsoft patent royalties
Return_of_the_jedi Updated - 29th Jun
An just how are these vendors expect to make a profit?

Microsoft is in search of a new monopoly.
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RE: Yet another Android vendor pays Microsoft patent royalties
jk_10 29th Jun
@Return_of_the_jedi If you have to make a profit with a free OS, the business modle is wrong. If you have make profit based on an OS that voliate others IP, then you shouldn't start.
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RE: Yet another Android vendor pays Microsoft patent royalties
bradyroy 26th Sep
@jk_10 Thanks to the great idea and i really fell good to found you blog. Belford High School | Belford University
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RE: Yet another Android vendor pays Microsoft patent royalties
bradyroy 26th Sep
@jk_10 I also said that you have a great explanation in your all comment. Lorenz High School | Lorenz University
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The same way everyone else does
WilErz 29th Jun
@ Return_of_the_jedi

They have to add value to their inputs. Adding value owned by someone else doesn't count.
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RE: Yet another Android vendor pays Microsoft patent royalties
linasmith 23rd Aug
@WilErz Your are totally right i am appreciate you to giving a good idea. Assignments | Dissertation Writing
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RE: Yet another Android vendor pays Microsoft patent royalties
bradyroy 26th Sep
@WilErz yes you right that Adding value owned by someone else doesn't count. Must High School
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RE: Yet another Android vendor pays Microsoft patent royalties
BubbaJones_ Updated - 29th Jun
@Return_of_the_jedi
First it is business 101; These businesses do not pay the MS royalties, same as businesses do not pay government (city, county, state, federal) taxes. Raising taxes on businesses will cause them to raise prices to us consumers to cover their tax increase; again, think MS royalties or tax. Folks think business pays tax, in this case the MS tax, however smart folks understand it is always the consumer that pays. Folks that yell "businesses should pay higher taxes" are stupid or ignorant. They do not understand that they themselves are that pay.

So, as for the royalties to MS, oh-well, it is us the consumer that will pay more for those products. Taxes and royalties are a cost of doing business that are transferred to us consumers.

To make a profit to stay in business, businesses charge their business expenses everything to the consumer. So, having to pay MS royalties is not from their pocket, it is not a hardship on them. They will raise the cost of their product to cover that which they must to pay. Their profit, if any, remains the same. It is we the consumer, the bottom of the food chain, that take the financial hit not businesses.

Do not feel sorry for these business, feel sorry for your own pocket as that is were the money will come from to pay that MS tax.
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Or the other "taxes"
A Gray 29th Jun
@RicD_ To you think HTC does this for free? Or do you consider the profits HTC banks as "taxes?" HTC builds something, you get it, you pay. Microsoft builds something, you have it in Android, you pay. There is no difference.

HTC and other companies are free to take out the patent-infringing code and put in their own, but its probably too costly to do that.

The real question is how could Google have done this in the first place and passed off the OS as "free?"
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RE: Yet another Android vendor pays Microsoft patent royalties
yoshipod 29th Jun
@RicD_

You may want to review economics 101.

Who "pays" the taxes depends on the elasticity of a given product. Sometimes that is the consumer, sometimes that is the producer. Most of the time it is shared by both.

Remember that a tax increases the price of a good and when the price of a good increases, the demand decreases. So a business can't just pass along the entire expense to consumers without reducing their sales, which reduces their profits.
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Right, and wrong!
adornoe@... 30th Jun
You are 100% correct when it comes to taxes paid by a corporation being passed on to the consumer as higher prices to the consumer on products/services.

However, you're wrong on the IP part of your post.

A corporation is not in business to allow its properties to be used for "free". IP is the property of the company that created the idea or innovation, and thus, as the law allows, they should continue to profit from those ideas or innovations, which took a lot of work and time and money to create. If company feels the need to use some IP to create another product which partly uses the IP from another company, then they should recognize the fact that, perhaps the IP holder needs to be compensated in some form.

What incentive would there be for any company or individual to be creative and innovate, if his/her invention could be used freely by anybody else or any company, to enrich themselves without proper compensation to the originator of the idea or innovation? It wouldn't be fair, and it would actually be counter-productive.
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yoshipod: You may want to revisit Economics 101
adornoe@... Updated - 30th Jun
Remember that a tax increases the price of a good and when the price of a good increases, the demand decreases.

Partly true. But, the demand does not decrease. What decreases is affordability. But, a consumer may still want or need the product or service in question. It's mostly a matter of affordability if the consumer doesn't have the dough at the moment.

So a business can't just pass along the entire expense to consumers without reducing their sales, which reduces their profits.

A company's profits will decrease with less sales, but the profits can also decrease with lower prices. It's mostly a matter of demand, and the demand can be influenced by affordable prices, but, affordable prices can have a deleterious effect on the bottom line of a company and the product might have to be terminated if the company can't afford to sell it at low prices.

However, the fact remains that, corporations do "pay taxes", but, it's mostly for the appearance of "fairness" and not in real terms. In real terms, no matter what the price of a product, taxes are one of the costs of doing business, and as such, it's always passed on to the consumer in higher prices for those products. The idea is to make it as unnoticeable as possible or as "unhurtful" as possible. Not everybody will be able to afford all products, and no company ever tries to please all consumers all the time, but those that can afford a product will be paying the taxes for a corporation, no matter what the price of a product. Some people won't ever be able to afford a Mercedes, but, they probably can afford Huyndai. It's a matter of who the market is and what the market will bear.
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RE: Yet another Android vendor pays Microsoft patent royalties
bradyroy 26th Sep
@RicD_ Great writing your break it down very nicely. Lorenz High School | Lorenz University
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RE: Yet another Android vendor pays Microsoft patent royalties
Sultansulan 29th Jun
@Return_of_the_jedi

Microsoft are losers, sue Google. And i hope they lose.
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RE: Yet another Android vendor pays Microsoft patent royalties
linasmith 23rd Aug
@Return_of_the_jedi They have to add their valve input. essays | term papers | research papers
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RE: Yet another Android vendor pays Microsoft patent royalties
bradyroy 26th Sep
@Return_of_the_jedi I agree with you and also i said that a great explanation. Lorenz High School | Lorenz University
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the racketeering must stop
Linux Geek 29th Jun
and the DOJ should prosecute M$ under the RICO statute.
The M$ crooks are stifling innovation by acting like parasites on the growing FOSS industry.
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RE: Yet another Android vendor pays Microsoft patent royalties
1773 29th Jun
@Linux Geek Why not ask Google to indemnify all its OEM partners who use Android ? Is Google scared of something ? They shouldn't be scared if they haven't stole any IP !!!
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RE: Yet another Android vendor pays Microsoft patent royalties
Linux Geek 29th Jun
@1773
FOSS does not need indemnification.
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RE: Yet another Android vendor pays Microsoft patent royalties
Return_of_the_jedi Updated - 29th Jun
@1773

"Why don't ask" M$ to sue Google and be done with it.

Sort of like locking up the drug user and not the dealer, eh?
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RE: Yet another Android vendor pays Microsoft patent royalties
1773 Updated - 29th Jun
@Return_of_the_jedi As far as I know, only those who make monetary profit out of the stolen IP can be sued in the court of law. Since Google doesn't make a dime on Android (it makes money on the extra services and advertising) Google cannot be sued. OEMs make profit on their hardware which use Android so they can be sued. Microsoft indemnifies all its OEM vendors and partners from any IP related lawsuit. I am no expert but this is what I have read. If you have any more information I would be delighted to know.

EDIT: And maybe Microsoft cannot sue Google because Google may have licensed the required IP from Microsoft for its own use and not licensed it to be used by all the OEMs who use Android.
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RE: Yet another Android vendor pays Microsoft patent royalties
Return_of_the_jedi Updated - 29th Jun
@1773
M$ said Redhat infringe on it's IP .
RedHat is making a profit. What's the difference in the two cases? Both RHT and Google aren't small fries to be mucked with.

Hence M$ nature is to go after the weak.

Edit: If M$ had a case, Moto and B&N would have signed.
The B&N case is going to prove big. The others may/can come back at M$ for damages.

PS. M$ has chosen to sue the mobile space and move on from the Enterprise. Those guys have the OIN to defend them.
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RE: Yet another Android vendor pays Microsoft patent royalties
1773 29th Jun
@Return_of_the_jedi Maybe because they are working on signing a licensing agreement ? Lawsuits are costly for both parties.
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Message has been deleted.
Will Pharaoh Updated - 30th Jun
  • Flagged
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that's simple
Linux Geek 29th Jun
@Return_of_the_jedi
because rackets are cowards and go only after the weak.
  • Flagged
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Machiavellian
WilErz 30th Jun
@ 1773

If you're right (I'm not familiar enough with the relevant law to know), then what Google are allegedly doing is gaming the legal system. Assuming the allegations are true, they're trying to weaken their competitors by stealing their IP and then giving it away to their competitors' customers. If penalties for theft of IP are based on profit from the use of that IP, then they've found a loophole and are exploiting it ruthlessly (but that could change dramatically if Oracle win their lawsuit).

The 'beauty' of the scheme Google have allegedly adopted is that the only way for the owner of the stolen IP to get compensation is to sue their own customers who've adopted the free alternatives based on the stolen IP. Even if the victims of the IP theft succeed (through settlement or litigation), this will almost certainly damage their relationships with their customers.

If Google have adopted the above strategy, it would explain why they aren't willing to indemnify their customers against IP infringement lawsuits, which is something most reputable firms do. It's a very Machiavellian strategy, and repugnant to anyone with morals, but just the sort of thing clever but amoral management might come up with. It's also possible, of course, that Google aren't actually using stolen IP, or (less plausibly) that Google's management are inept, and didn't realise they were giving away stolen IP.
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RE: Yet another Android vendor pays Microsoft patent royalties
WilErz 30th Jun
@ Return_of_the_jedi

You haven't got a clue what you're talking about. Compared with General Dynamics or Amazon, both of whom have agreed to pay royalties to Microsoft, Red Hat are a tiny firm of no consequence. GD's revenue is over 30 times as high as RHT's and their profit is over 20 times as high.
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RE: Yet another Android vendor pays Microsoft patent royalties
FlatbushE21 29th Jun
@Linux Geek
How exactly are they stopping innovation, No one is stopping Velocity from using android. stop being a douche bag.
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RE: Yet another Android vendor pays Microsoft patent royalties
Linux Geek 29th Jun
@FlatbushE21
M$ tax is making the product too expensive and less attractive douche bag.
  • Flagged
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RE: Yet another Android vendor pays Microsoft patent royalties
FlatbushE21 Updated - 29th Jun
@Linux Geek
But they signed it anyway, they could have just stopped using it but the choose to sign it. Stop acting like you know better than the people who are running these companies. You are just like me spending time here reading and commenting. you do it a lot more. you know what that says about both of us. we are not running ****. If you are then u need to be fired.
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RE: Yet another Android vendor pays Microsoft patent royalties
Jayton 29th Jun
@Linux Geek No, it's not Microsoft acting like parasites. It's the idiots who came up with the idea of software patents are the ones that caused the problem in the first place, Bill Gates & Microsoft were opposed to these iirc. If Microsoft didn't protect their 'investments' they'd have a whole world of trouble, thanks to the American legal system. Thanks for stopping by and giving absolutely no valuable feed back though, Douch? bag.
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Idiots?
WilErz 30th Jun
@ Jayton

It isn't clear that the people who decided to allow patent protection to cover software were idiots. The US dominates the global software industry and has the strongest patent regime protecting software (although causality may run from the former to the latter). Moreover, firms like IBM have threatened to move EU-based software research to the US because of the weaker protection of software IP in the EU.
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its good to live for free
A Gray 29th Jun
@Linux Geek You must live in your parent's basement and eat your parent's food, because you obviously don't believe people or companies should be payed for their efforts. If Google didn't make revenue off ads, they wouldn't build Android. Google isn't your friend, they are a profit center. There are only so many ad dollars out there. At a certain point someone needs to get paid for a product or you starve.
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RE: Yet another Android vendor pays Microsoft patent royalties
browser. 29th Jun
No one knows these vendors. So are MS paying these companies to become Android vendors and then pay them so that they can make some news! Even if not, these companies are too small to fight the monster
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HTC
DeekoVB5 29th Jun
@browser. They have a similar deal with HTC, they're a pretty big vendor.
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RE: Yet another Android vendor pays Microsoft patent royalties
Return_of_the_jedi Updated - 29th Jun
@DeekoVB5

And they don't have a deal with B&N. Why not?

PS. It's some truth to 'a sucker is born ever minute'.
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RE: Yet another Android vendor pays Microsoft patent royalties
FlatbushE21 29th Jun
@Return_of_the_jedi
Yes like B&N is the first company to not sign something like that even when they are wrong. They will sign trust me or they will be forced to sign.
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RE: Yet another Android vendor pays Microsoft patent royalties
kirovs@... Updated - 30th Jun
@FlatbushE21
You are not to say B&N are wrong or not. This is done in a court by a judge/jury. B&N is not the first one. Redhat and Motorolla were way before B&N.
Given the *disclosed* patents in question it is unlikely a court will grant Microsoft anything.
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Microsoft just needs to man up
Michael Alan Goff 29th Jun
and sue Google, if they think they have a case.
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RE: Yet another Android vendor pays Microsoft patent royalties
Linux Geek 29th Jun
@goff256
will never happen!
M$ does not have a legal case, just empty threats.
Even Oracle case against google is crumbling.
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RE: Yet another Android vendor pays Microsoft patent royalties
FlatbushE21 29th Jun
@Linux Geek
How is it crumbling
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RE: Yet another Android vendor pays Microsoft patent royalties
Linux Geek 29th Jun
@Linux Geek
check groklaw!
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Groklaw is a highly biased site of low trust.
Bruizer 1st Jul
@Linux Geek

So how is it crumbling?
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Why there needs to be some Litigation
itguy10 29th Jun
Hopefully B&N will take this through the courts so there is some resolution. And hopefully MS will be told to go pound sand.
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Message has been deleted.
Will Pharaoh Updated - 30th Jun
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Jeez, man
blind obedience 29th Jun
@Will Pharaoh are you always this big an a$$hole?
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RE: Yet another Android vendor pays Microsoft patent royalties
kirovs@... 30th Jun
@blind obedience
Just ignore him and perhaps the troll will go away
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RE: Yet another Android vendor pays Microsoft patent royalties
jk_10 29th Jun
In the real world if you are caught steal a can of tuna, you are in deep trouble. In business world they steal your IP, no big deal, they just pay you, then they are still a proud business. If you tell the cop, hey, it is just a can of tuna, I will put it back, would that be OK?
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RE: Yet another Android vendor pays Microsoft patent royalties
Return_of_the_jedi Updated - 29th Jun
@jk_10
You should still have your day in court, eh?
PS. All things aren't what they appear to be some times. Hence day in court.
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There are damages etc.
WilErz 30th Jun
@ jk_10

The shop owner could agree not to report the crime if you agree to pay for the tuna (and maybe pay extra), and I see nothing wrong with that.

With IP theft, a convicted firm would have to pay royalties (or stop using the IP), plus damages, legal costs, etc., which can be quite high. That's one reasons firms tend to settle if they think the weight of the evidence is against them. The victims are typically more interested in getting royalties than in punishing the offenders, so tend to agree to settle.
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RE: Yet another Android vendor pays Microsoft patent royalties
dsfwrryd74-24353636458548791193357148816734 10th Nov
weushs,good post!

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