Patent licence agreements overtaking lawsuits, Microsoft says

Out-Law News | 26 Oct 2011 | 10:53 am | 2 min. read

Microsoft has defended its use of patents after announcing its latest licensing agreement with a device manufacturer that supports Google's Android operating system.

The software giant said that licensing agreements were "overtaking" lawsuits and said they were benefiting both it and its agreement partners in protecting intellectual property (IP) rights.

"Amidst continuing clamor about uncertainty and litigation relating to smartphone patents, we're putting in place a series of agreements that are reasonable and fair to both sides," Brad Smith, Microsoft's general counsel and Horacio Gutierrez, Microsoft's corporate vice president, said in a company blog.

"Our agreements ensure respect and reasonable compensation for Microsoft's inventions and patent portfolio. Equally important, they enable licensees to make use of our patented innovations on a long-term and stable basis," Smith and Gutierrez said.

"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," they said.

Microsoft said they now hold licence agreements with original device manufacturers accounting for 55% of the market for mobile phones and other devices that support Google's Android operating system. The company said the landmark was achieved when it signed a licensing agreement with Compal, a Taiwanese manufacturer that makes smartphones and tablet devices for other firms.

In August Google shot out at its rivals, including Microsoft, for buying "bogus" patents and driving up the cost of using smartphones that support its Android system.

"A smartphone might involve as many as 250,000 (largely questionable) patent claims, and our competitors want to impose a 'tax' for these dubious patents that makes Android devices more expensive for consumers," David Drummond, Google's senior vice president and chief legal officer said.

"They want to make it harder for manufacturers to sell Android devices. Instead of competing by building new features or devices, they are fighting through litigation. This anti-competitive strategy is also escalating the cost of patents way beyond what they’re really worth," Drummond said.

Last month Google accused Microsoft of "resorting to legal measures to extort profit from others' achievements and hinder the pace of innovation". Google made the comments after Microsoft entered a licensing agreement with Samsung over the use of Microsoft's patents on Android-supported devices that the South Korean manufactures, according to a report by the Seattle Times.

Following the Samsung agreement Microsoft now has licensing arrangements in place with companies owning 53% of the Android-supported smartphone market in the US, the software giant said.

Microsoft said that their licensing agreements showed that it was possible to enter into the smartphone market.

"For those who continue to protest that the smartphone patent thicket is too difficult to navigate, it's past time to wake up," Smith and Gutierrez said.

"As Microsoft has entered new markets from the enterprise to the Xbox, we’ve put together comprehensive licensing programs that address not only our own needs but the needs of our customers and partners as well. As our recent agreements clearly show, Android handset manufacturers are now doing the same thing. Ultimately, that's a good path for everyone," they said.

Microsoft has spent about $4.5 billion in the last decade for the use of patents owned by other firms, and in the same period entered into more than 1,133 agreements that enable firms to make use of its patented software, the pair said.

"Over the past decade we’ve spent roughly $4.5 billion to license in patents from other companies," Smith and Gutierrez said.

"These have given us the opportunity to build on the innovations of others in a responsible manner that respects their IP rights. Equally important, we've stood by our customers and partners with countless agreements that contain the strongest patent indemnification provisions in our industry. These ensure that if our software infringes someone else's patents, we'll address the problem rather than leave it to others. And ... we've now entered into 1,133 agreements over the last decade to license our patents to other companies that share our desire to respect IP rights," they said.