Microsoft's Android patents will face challenges

Microsoft's Android patents will face challenges

Summary: Now that the Chinese government has revealed the patents within Microsoft's Android patent portfolio, Microsoft may soon be facing challenges from vendors over its Android patent licensing agreements.

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With over 20 patent licensing deals with Android mobile device makers, Microsoft's most profitable mobile operating system is Android. That revenue stream may soon be shrinking.

Now that the Chinese government has revealed the patents within Microsoft's Android patent portfolio, Microsoft may soon be facing challenges from vendors over its Android patent licensing agreements.

microsoft-android

The Android patents alone may bring as much as $2 billion a year to Microsoft's coffers. 

As John Ferrell, co-founder of the Silicon Valley law firm Carr & Ferrell, said in an e-mail interview: "It’s not unexpected that a company like Microsoft, that invests so heavily in building and acquiring patents, wouldn’t also aggressively find a way to monetize its huge investment."

Microsoft has certainly done that. 

Microsoft's licensing fees vary from company to company. While no one has gone on record, the range seems to be from $5 to $16 per Android device. So, for example, Microsoft signed Samsung to an Android patent deal in 2011. Thus, with Samsung's Galaxy S5, which is available at a carrier-subsidized price of $200, Microsoft may be making from $10 to $32 per device sold.

Android smartphone and tablets manufacturers aren't happy about this. I've been speaking to half-a-dozen Android related businesses and these companies are considering a variety of options now that Microsoft's Android patent arsenal [.docx file] has been publicly revealed. As these companies are still weighing what, if any, actions they make take, I am unable to identify them or what specific actions they are currently considering.

Here, however, are the possibilities that are under consideration.

Of the major Android smartphone vendors, only Motorola Mobility, which previously belonged to Google, and is being bought out by Lenovo, has fought Microsoft in court over its demands for Android patent licensing. The other firms, considering the high-cost of patent litigation, have been elected to pay Microsoft off. The average cost of a patent lawsuit in 2008 had already reached $17.8-million per case.

For most companies the smart move has been to swallow their pride, pay the licensing fees, and move on. 

Motorola Mobility, however, has shown that Microsoft patent portfolio was weaker than many expected. Of the 17 patents to appear so far before the International Trade Commission, the US District Court of Western Washington, and the German Federal Patent Court, 16 of the decisions have gone Motorola's way.

The only Microsoft-owned Android patent to be upheld to date has been US Patent No. 6,370,566 for ActiveSync.

As a result of Motorola Mobility's relative success, and the Chinese patent revelations, some firms are re-considering their Microsoft patent licenses. One in-house counsel for a major Asian firm said that, after checking the full list and taking out duplicates, they found multiple invalid and expired patents, and standard essential patents covered by fair, reasonable, and non-discriminatory terms (FRAND). Once those were taken out, by this firm's count, Microsoft only had 80 relevant patents. The company also believes that many of these — if someone were to file for a reexamination of them — might be invalidated.

Another firm is considering suing Microsoft over the current terms of its patent license. Still, another corporate attorney suggested that the mere threats of either litigation or seeking to have the patents invalidated might be enough to get Microsoft to reduce the costs of its patent licenses. While it's unlikely that a company would seek to have any of Microsoft's patents invalidated at the US Patent and Trademark Office (PTO), pro-open source and anti-patent groups may seek to do exactly that. 

For companies however, when all is said and done, patents are all about money.

Rather than spend millions in litigation (which as the Apple vs. Samsung saga has shown has no real-world market effect) if the Android companies can use the Microsoft Android patent revelations to strike a more profitable deal for themselves, they'll be happy to do so. 

Related stories:

Topics: Mobility, Android, Legal, Microsoft, Open Source, Patents, Smartphones, Tablets

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  • Microsoft's Android patents will face challenges

    I'm expecting Microsoft's patents to be upheld with very little challenge. Microsoft has a number of signed agreements which will give these patents a lot more credit. On top of that the patents have already been issued. The android companies are just going to have to suck it up and pay up.
    Loverock.Davidson
    • Surely you're kidding

      The agreements say nothing at all about whether the patents are valid. That determination, if it is made at all, will be made by the courts.
      John L. Ries
      • Motorola won over MS

        And showed that only one patent of MS held water.

        Most likely case, they will be FRAND or dismissed.

        MS will lose money.
        Uralbas
        • 1 of 18

          They only challenged 18 patents, not all 300 odd, otherwise your comment is fair enough.
          wright_is
          • Microsoft = corrupted, abusive company

            anyway, this Microsoft and Apple patent blackmailing through ridiculous patents MUST BE STOPPED!!
            Jiří Pavelec
          • Then Google must be stopped, is what you're saying

            if they are using patented code without permission (hence why these companies are signing the agreements) then it only makes sense that someone as "fair and balanced" as you would also have to agree that Google must be stopped, too.
            William.Farrel
          • Google isn't blackmailing anyone...

            So that doesn't even come into it.
            jessepollard
          • But jesse, neither MS nor Apple is blackmailing anyone

            What you don't understand it seems, is that standing up to those using your IP without your permissions isn't blackmailing.

            So neither of you are close to understanding the issue here.
            William.Farrel
          • If you want to enforce your "IP"...

            You do it in a forthright manner, letting people know exactly how you think your franchises are being infringed and giving people the opportunity to decide whether they want to eliminate or replace the infringing code; or license it. And you also give people the opportunity to challenge your claims in court (if they're legitimate, they'll likely withstand the test). Keeping the claims a closely guarded secret so you can turn them into a cash cow is what racketeers do, not honest businesspeople.
            John L. Ries
          • @John L. Ries FAIL.

            "letting people know exactly how you think your franchises are being infringed and giving people the opportunity to decide whether they want to eliminate or replace the infringing code; or license it"

            Done and done. They made their choice. Licence.

            You just tried to make something out of nothing and you failed.

            Nobody prevented ANYONE ANYONE AT ALL from meeting the challenge in court. What a lame ridiculous statement, so much so its hard to believe you don't get the whole situation so significantly as you seem to.

            Since when did MS ever say, "WE AS THE ALMIGHTY PREVENT YOU FROM GOING TO COURT AGAINST US!!"

            You know, or at least you should know (otherwise you should shut your trap on the issue), that if any of these companies thought for one minute it would be better for them to go to court they would. Over and out on that one.

            We just read all about Motorola. Or didn't you read that? Microsoft not only can be challenged, but was challenged. And the FINAL say on how all that went for Motorola can only be known when we hear how much they still pay Microsoft compared to what they would have had to pay them.

            Pollard, your one of the worst offenders for coming on here and just flapping your jaws without putting a scintilla of any thought into your claims.
            Cayble
          • @Cayble - What the &%££ are you talking aout?

            This is standard Microsoft practice, and a classic legal racketeering - just like the copyright scams run by copyright scam companies where they figure out how much they can shake out of you to settle a bogus lawsuit before you will actually take you to court, and set the settlement offer at that value. You are required to sign an NDA before discussing in detail the claims made against you, and not talking to anybody else about what Microsoft is claiming money from you about, which conveniently makes it impossible for others who produce software which Microsoft claims infringement to remove the alleged infringement or to challenge and invalidate it in the courts, which prevents removal of infringement if any and allows perpetuation of the scam on others. This "Al Capone school of business" type of practice should be illegal, but it seems to be allowed to take place in the US. The use of NDA agreements should not be allowed to be a cover for illegal or anti-competitive practices and they should not be allowed to prevent the NDA signatories from talking to the anti-trust authorities, nor from software suppliers who believe their software is being maligned as infringing from receiving full details of the alleged infringement, otherwise this is a tort of interference with business issue.

            This is exactly what happened to Barnes and Noble with the Nook tablet. Barnes and Noble is a small player and Microsoft thought that they could extract punitive fees from them that would force them to exit the Android tablet market. However Barnes and Noble were smart enough to refuse to sign an NDA, and when they were sued by Microsoft, they made a big noise about Microsoft's anti-anticompetitive scam. This forced Microsoft to pay off Barnes and Noble very handsomely to drop the lawsuit, although this would no doubt have resulted in Barnes and Noble signing an NDA not to talk further on the settlement in return for pursue an anti-trust case against Microsoft. Microsoft would no doubt have been willing to pay a lot of money to keep the details of the scam from the anti-trust authorities, and also avoid the scam being undermined by others realising what claims were bogus, bogus patent claims being invalidated by patent challenges, and removal of valid patents from what is being shipped.
            Mah
          • Unix based code was well before S/W patents were allowed.

            @Cayble you need to go back and read the article! What it costs to fight a patent dispute in court. Microsoft, with its deep packets can fight indefinitely (loose usage of indefinite). These smaller companies cannot. They win one, then Microsoft sues them on another, ad nauseum. Also, upon investigation, a lot of those patents are for technology that was public domain before S/W patents were allowed. That is one reason why they have been declared void when contested. Take any Unix implementation used by Android/Linux that Microsoft claims to have a patent andthat claim is garbage. Unix was implemented in very early 70s. Patents for S/W were allowed until mid-80s.
            bobc4012@...
          • Ok,

            I don't understand. What IP is Google using that isn't theirs? Android is open source. You can download it freely from http://source.android.com/source/downloading.html

            Yes, the Google apps are theirs and are not open source. How is that different than Microsoft's apps or Apple's apps?

            And the patents in question have always been among a monstrous list of ALL patents held by MS that could be viewed. However, the SPECIFIC list of patents MS claims are used by Android have not been publicly listed before. Only 18 have been published before and 17 have been nullified in courts. If that ratio holds true for the rest, we can guess that about 16 or 17 of the 300 or so patents MS claims are used by Android will be upheld.
            benched42
          • active sync

            This one patent is for exchange server. It allows an android to connect to it via ms protocol. What's ironic is the android implementation doesn't even work properly. Motorola wrote their own version which works better and uses it on their phones.

            Google developed it's own protocol for synching gmail calendar and whatnot.
            LarsDennert
          • Microsoft vs. MikeRoweSoft.com comes to mind here

            The aggressive demands Microsoft made of the High School student who had a web site business revealed much about how Microsoft is quick to bully and make infringement claims.

            Microsoft got a big black eye (public out-lash) over the way they demanded his domain name be turned over to them and they were wrong to assert any claim at all.
            BoxOfParts
          • Understand?

            What you don't understand is patents are not meant to protect companies, patents are supposed to encourage innovation and progress and the CONSUMER is supposed to benefit. How is a tax on a bunch of garbage patents benefiting the CONSUMER? When they have to pay more because of the garbage tax.

            Real patents are NON-OBVIOUS as one of their main criteria, but NON-OBVIOUS to who? To a bunch of nerds at the patent office, or someone familiar with the industry?
            bigpicture
          • I would that the USPTO had more nerds

            If software patents are to be allowed at all, the examiners reviewing them should be real computer scientists.
            John L. Ries
          • Then you do not understand extortion.

            MS threatens lawsuits, even starts some.

            Google hasn't.

            So you are not even near the comprehension level needed to understand the issue.
            jessepollard
          • In a way MS was

            They were refusing to say what patents android allegedly violated, and told companies if they didn't sign an expensive licensing agreement they might be sued.
            colinnwn
          • It is blackmailing when the victem can't afford to resist.

            That is a mafia action.

            Same as extortion.

            "Nice company you have there... pity if something happened to it... take our 'patent fee' and we won't sue."

            "And if I refuse?"

            "It will cost you around 15 million per patent to find out..."

            That is blackmailing.
            jessepollard