Microsoft’s Android-Related Patent Moves Have a Familiar Ring
Getting a sense of déjà vu watching Microsoft’s legal strategy with regard to Android? You have good reason to feel like you’re watching history repeat itself.
Microsoft’s playbook is nearly identical to the one the company used several years back in trying to convince those making Linux-related products to license Microsoft-owned patents. Redmond claimed that Linux was filled with technologies that infringed on Microsoft’s intellectual property
The Linux battle really heated up around 2006, when the company made a landmark deal with Novell in 2006. That was followed by veiled threats of legal action and a slew of licensing deals struck with companies ranging from software makers Turbolinux and Xandros to hardware makers Kyocera Mita and Fuji Xerox.
With Android, Microsoft announced a deal last April whereby HTC would pay Microsoft for every Android device it sells. Microsoft top lawyer Brad Smith said the HTC deal was designed to send a message to the industry that the company is serious about its Android claims.
“By entering into an agreement with HTC, we effectively signaled we are open for business when it comes to licensing,” Smith said at a dinner with reporters last year.
This past week, Microsoft announced four deals with smaller Android device makers Onkyo, Wistron, Velocity Micro and General Dynamics Itronix.
There are some differences between the current approach with Android and the one Microsoft took vis-à-vis Linux. With Linux, Microsoft generally avoided going the litigation route. It wasn’t until years after it started licensing Linux that it filed its first suit involving Linux-related claims — a suit against GPS maker TomTom that was quickly settled.
In the current situation, Microsoft has gone to court early. Not long after it reached the settlement with HTC, Microsoft announced a suit against Motorola. More recently, the company has sued Barnes & Noble, alleging the bookseller’s Android-based Nook products infringe on Microsoft’s intellectual property.
Also, with Linux, Microsoft was largely alone in seeking patent dollars, save for the SCO Group and its effort to take on IBM. On the mobile side, the patent game is much less clear, with Nokia and Apple also looking to enforce their patent rights on various players — including one another. Apple and Nokia settled their patent spat earlier this year, while Apple has its ongoing suit against HTC and Nokia has also said it sees an opportunity to boost its licensing revenue. Meanwhile, Oracle has sued Google directly over Android.
In a clear sign of how high the stakes are, Microsoft, along with a consortium of other companies including Apple, Research In Motion and Sony, agreed to pay $4.5 billion to buy 6,000 patents from bankrupt Nortel Networks, thereby keeping them out of the hands of rivals, including Google.
The upside this time around could be even bigger for Microsoft. On the desktop, the company clearly makes far more from selling Windows than it does when a Linux device is shipped by someone who has taken a license to Microsoft’s patents.
Depending on how Microsoft does on the legal front, and if it is able to get Windows Phone to take off, Microsoft could end up making more from licensing than from selling its own software, not that it wouldn’t rather have customers than licensees.
One analyst suggests that Microsoft is getting around $5 per Android device from HTC, and Redmond is said to be seeking double-digit royalties from other Android makers. Recent reports in Korea, for example, suggest Microsoft wants $15 per device from Samsung, though the same reports suggest the company might take less per Android device if Samsung is willing to commit to a solid Windows Phone road map.
Microsoft declined to comment on the terms of its deal with HTC or on the royalty amounts it is seeking from others. However, if you are making an Android product, my guess is you have already heard from their lawyers.