Microsoft handsets face sales ban in InterDigital's 3G patent suit

Microsoft could be forced to stop selling certain Lumia handsets which were found to infringe two patents in the US.

More bad news for Microsoft's Windows Phone division: the US International Trade Commission (ITC) has ruled in favour of InterDigital in a patent dispute with the company.

ITC judge Theodore Essex on Monday issued an initial determination that certain Microsoft devices infringed two wireless patents owned by licensing company InterDigital - 3G handsets and any LTE models that fall back to 3G. The commission added that public interest would not prevent it from ordering a ban on the import of the infringing devices.

The suit centers on two US patents held by InterDigital concerning 3G standards. The two patents were part of the case that InterDigital brought to the ITC against Huawei, Nokia, and ZTE in 2013.

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Essex noted there was no evidence of "patent hold-up" in discussions between Microsoft and InterDigital but that there was evidence of "reverse patent hold-up". Patent hold-up refers to when a licensor uses the threat of an injunction to extract better terms when negotiating a license, whereas reverse patent hold-up can mean a company is unwilling to pay for a license on fair, reasonable and non-discriminatory (FRAND) terms.

The ITC's finding is potentially a bad result for Microsoft: Huawei and Nokia in 2013 accused InterDigital of using patent hold-up in the dispute over standard essential patents.

This week's ruling still needs to be approved in a final determination by the ITC, which is expected on 28 August 2015.

"We hope it will form the basis for the final determination by the ITC. We also look forward to continued discussion with Nokia and Microsoft Mobile to achieve a license on fair and reasonable terms," Lawrence Shay, InterDigital's executive vice president of intellectual property and chief intellectual property counsel, said.

The company added that the Monday ruling stemmed from a claim it filed with the ITC in 2007.

The ruling follows news that Microsoft is considering a writedown related to its Nokia acquisition. Announcing its most recent set of financial results, Microsoft CEO Satya Nadella highlighted that the company is planning more cost cuts in its phone making operations, despite improving Lumia sales. Nadella didn't detail what form the cost cuts would take.

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