Thursday, January 12, 2012

Microsoft-LG agreement shows Android (and Chrome) patent licensing is still en vogue

2012 has had a reasonably busy start on the patent litigation front, but license deals continue to be struck: Microsoft and LG just announced a patent license agreement covering LG's products running Android and Chrome OS.

The terms of the agreement are confidential, but it's safe to assume that this agreement is like the others Microsoft has signed with the industry in regards to royalties, i.e., it will be royalty-bearing.

The announcement indicates that the two companies have "built upon [their] longstanding relationship". Back in 2007, before Android and Chrome OS were relevant, Microsoft and LG already reached a patent license agreement relating to other technologies "including Linux-based embedded devices". Basically, Android is a Linux fork, and Android phones and tablets are, by extension, Linux-based embedded devices, so the new license agreement is in the tradition of the previous one.

Microsoft says more than 70 percent of all Android smartphones sold in the U.S. now have a license to its patent portfolio. Even though litigation is often very spectacular (which is why I blog about it so much), the commercial reality is that patent licensing is still the prevalent way to resolve intellectual property issues. Only a minority of all disputes ever go to court, even though the percentage of cases that require litigation may be, temporarily, a bit higher in the current situation, in which different industries are converging and sorting out who owns what types of innovation.

Prior to LG, Samsung already signed a license deal with Microsoft covering the same Google platforms. Just like LG, Samsung also has a commercial partnership with Microsoft in place. It says something that those two Korean companies prefer to resolve any Android- and Chrome-related IP problems amicably with Microsoft, given that both of them have proven to be great fighters. Samsung is clearly giving Apple a run for the money in ten different countries (see my latest post on that particular dispute, published last night), and less than a year ago, LG achieved the (temporary) seizure of roughly 300,000 PlayStations in the Netherlands over the alleged infringement of Blu-ray-related patents. Both these companies hold large numbers of patents on a worldwide basis. In the Dutch PlayStation complaint, LG claimed to own approximately 90,000 patents, and Samsung owns more than 100,000 (on a worldwide basis in each case, with many inventions being patented in a numnber -- sometimes in dozens -- of jurisdictions). These are companies that definitely understand the patent business and know how to defend themselves in court if they have to or want to -- but with Microsoft, they both reached an agreement at the negotiating table.

Motorola Mobility appears to be the last major Android vendor to refuse to take a license from Microsoft. Others either have a direct license agreement in place or they are licensed because of arrangements between Microsoft and their ODMs (Original Device Manufacturers).

Besides Motorola, Microsoft is also suing Barnes & Noble, but that company isn't quite comparable to the big international players that have taken a license. The first major Android device maker to receive such a license was HTC (almost two years ago).

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