News

Microsoft: Most Hardware Design Partners Inking Android IP Deals

• By Kurt Mackie
• 10/25/2011

Microsoft this week continued its streak of announcing intellectual property (IP) deals with equipment makers over the use of Google's Android and Chrome platforms.

Compal Electronics Inc. agreed to pay undisclosed royalties to Microsoft for the use of patented technologies associated with the open source Android mobile operating system, as well as the Google Chrome Internet-based OS, according to an announcement issued on Sunday by Microsoft. The patent coverage is associated with "Compal's tablets, mobile phones, e-readers and other consumer devices," Microsoft indicated.

With this deal in place, Microsoft is now claiming that the majority of the original design manufacturing (ODM) industry has struck IP deals with Microsoft over the use of various technologies in Google's products.

"Together with the license agreements signed in the past few months with Wistron and Quanta Computer, today's agreement with Compal means more than half of the world's ODM industry for Android and Chrome devices is now under license to Microsoft's patent portfolio," stated Horacio Gutierrez, Microsoft's corporate vice president and deputy general counsel of the Intellectual Property Group. "We are proud of the continued success of our licensing program in resolving IP issues surrounding Android and Chrome."

Microsoft has sued many of its equipment manufacturing partners over IP allegedly used in Android, which Google developed and released into open source. Those partners include HTC, which settled with Microsoft, as well as Motorola, which is fighting Microsoft in the courts. Barnes & Noble also is engaged in a legal scuffle with Microsoft over Android IP claims. Manufacturers can use Android royalty free, but Google apparently offers little or no indemnity against patent lawsuits.

Google's pending purchase of Motorola Mobility is thought to be a strategic move to fend off litigation directed against Google itself. For instance, Google is being sued directly by Oracle over alleged Java patent infringements. Companies typically amass patent portfolios as defensive measures to counter-sue or strike cross-licensing agreements when faced with IP litigation.

In September, Microsoft began mentioning the inclusion of the Google Chrome platform in its IP settlement deals. For instance, Google Chrome was part of a patent licensing agreement with ViewSonic Corp., along with Android. By "Chrome platform," Microsoft means "Google Chrome OS," rather than Google's browser technology. That point was clarified by Microsoft after it struck an IP deal with Wistron.

Also in September, Microsoft struck a cross-licensing IP deal with Samsung Electronics Co. Microsoft was expected to get royalties as part of the agreement, while Samsung "agreed to cooperate in the development and marketing of Windows Phone," according to Microsoft's announcement. Samsung is planning to launch smartphones running Windows Phone 7.5 "Mango" this fall.

In mid-October, Microsoft signed an IP agreement with Quanta Computer Inc., based on Quanta's use of Android and Chrome platform technologies on tablets and smartphones. Microsoft stated at the time that it expected to collect royalties from the deal.

It's thought that Microsoft makes more money from its IP alleged to be associated with Android than it does from its own Windows Phone mobile OS, which was launched about a year ago. Goldman Sachs has estimated that Microsoft will pull in $444 million just from the royalties Microsoft claims are due from Android use, and that may be a low estimate, according to a Computerworld article.

A number of companies supporting Linux variants have rallied at the Open Innovation Network (OIN), a group aimed at "refining the intellectual property model so that important patents are openly shared in a collaborative environment," according to the group's description. Members of the OIN include IBM, NEC, Novell, Philips, Red Hat and Sony. However, Google is currently missing from the published roster.

Keith Bergelt, OIN's CEO, suggests that cash-flush Microsoft and Apple are simply using their reserves to stall Android in the market, according to an interview by the Business Insider's Matt Rosoff. Bergelt further claims that the equipment makers striking deals with Microsoft over Android IP are just settling rather than exposing their companies to expensive court litigation. Those settlements aren't actually testing Microsoft's patent claims in court.

"[The patents have] never been identified publicly by Microsoft as to what they are or what they read on or what their relevance is," Bergelt stated in the Business Insider's interview.

Microsoft claimed in 2007 that Linux infringes on 235 of its patents, but it didn't publish the details. Gutierrez has contended in public statements that Microsoft is litigating in the mobile space as computer technology has shifted onto smartphones, whereas earlier litigation had tended to focus more on radio patents.

Currently, Windows Phone use trails badly behind Android, which holds a 43.4 percent use rate in the smartphone market. Next in line is Nokia's legacy Symbian mobile OS at 22.1 percent and Apple's iOS at 18.2 percent. Windows Phone brought up the rear at 1.6 percent, according to second-quarter stats from Gartner. However, Gartner has also forecast that the Windows Phone OS will be second to Android by 2015.