Business, Sci-Tech

The Patent Wars: Episode 4 – Microsoft extends Android reach, and peace looms

By Sipho Hlongwane 25 October 2011

We rejoin our ongoing drama, The Patent Wars in the consumer electronics space, with doddering giant Microsoft revealing that it is far from being out of top-spot contention. Microsoft signed a patent agreement with Compal, which means that companies accounting for half of all Android devices on the market have entered into patent licence agreements with it. How long before we see a vicious war erupt between Apple and Microsoft? By SIPHO HLONGWANE.

The announcement would have been missed by many, but its impact is potentially far-ranging in the consumer electronics (division: mobile devices) space.

Microsoft executive vice president and general counsel Brad Smith and deputy general counsel Horacio Gutierrez posted a blog post in which they announced that Microsoft had reached a patent licensing deal with Compal, a company that makes third-party smartphones and tablet devices.

“Today Microsoft announced its tenth license agreement providing coverage under our patent portfolio for Android mobile phones and tablets. Today’s agreement is with Compal, one of the world’s largest Original Design Manufacturers, or ODM. Compal is based in Taiwan, where it produces smartphones and tablet computers for third parties and has revenue of roughly $28 billion per year,” the two men wrote. “Today’s announcement marks Microsoft’s ninth Android agreement in the last four months. More important, today’s announcement means that companies accounting for over half of all Android devices have now entered into patent license agreements with Microsoft.”

The deal covers Android and Chrome devices, according to PC World.

Oh, so what, you say?

Well, it doesn’t end there. Compal is a big deal. It handles production for companies that include Acer Inc., Dell, Toshiba, Hewlett Packard, and Fujitsu Siemens Computers. For Microsoft to be able to arrange a deal with this original design manufacturer not only means a huge bottom-line plug, but guarantees the Seattle-based company continued influence in years to come.

Also, the patents for various bits of smartphone business are quickly being snapped up by a few major companies, which then either lease them out to other companies, or more entertainingly, knock six bells out of each other in patent court.

Observe Google’s $12.5 billion purchase of Motorola Mobility, purely to get at its rich cache of patents. Observe too the great battle between Apple and Samsung, that other carrier of the Android OS. There are other battles in this galactic war: Microsoft is suing Motorola Mobility, Barnes & Noble, Foxcon and Inventec for patent infringement. Apple is suing Samsung, Motorola Mobility and HTC. Samsung is suing Apple. And Oracle is suing Google.

However, as Smith and Gutierrez pointed out in their announcement, positive partnerships are becoming more important in this field, even though the war is getting all the press. They wrote: “While lawsuits may dominate many of the headlines, these are being overtaken by the number of license agreements being signed. At this point, the fast pace of licensing is reshaping the legal landscape for smartphone patents.At Microsoft we’re building on our extensive experience with patent licensing. Over the past decade we’ve spent roughly $4.5 billion to license in patents from other companies. These have given us the opportunity to build on the innovations of others in a responsible manner that respects their IP rights.”

Is this a sign of things to come? Are we going to see makers of mobile devices cooperate instead of fighting?

It’s very simple, actually. Once the financial implications of being friends are better than under a situation of enmity, we will see all the lawsuits melt away like morning mist (at which point, competition regulators will suddenly start paying close attention).

For now, it remains a really good time to be a tech patent lawyer. DM

Read more:

  • Microsoft’s new patent agreement with Compal: A new milestone for our Android licensing program, on Microsoft TechNet blog; and
  • Microsoft, Compal sign patent deal covering Android, Chrome, in PC World.

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