Monday, April 30, 2012

Microsoft and Barnes & Noble settle Android patent litigation -- Motorola increasingly isolated

Patent settlements typically come at times when nobody predicts them rather than as a result of court-ordered mediation.

Today, Microsoft and Nook maker Barnes & Noble announced a strategic partnership relating to e-reading. Microsoft invests $300 million in exchange for an equity position of approximately 17.6% in a Barnes & Noble spin-off. The press release also says this about the Android-related patent litigation that was pending between the parties:

"Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft's patents for its NOOK eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers."

The term "royalty-bearing" is a real blow to Google, which tells Android device makers to refuse to pay but doesn't do what it takes to properly address Android's intellectual property infringement issues.

The fact that Barnes & Noble partners with Microsoft proves, if anyone still needed any proof, that its mostly antitrust-related "patent misuse" allegations against Microsoft, which the ITC threw out even ahead of trial and refused to reconsider, were bogus claims borne out of desperation (for lack of patents that could be used to bring counterclaims). Barnes & Noble may have had very bad advice from certain lawyers who self-servingly raised totally false hopes in Barnes & Noble's management as to what they could achieve by shouting "antitrust! antitrust!" Look at it this way: if you really thought someone was an anticompetitive abuser of patents, would you form a joint venture with him? There you have it.

An important effect of this settlement is that Motorola Mobility is now the only Android device maker to be embroiled in litigation with Microsoft. Just four days ago, Microsoft announced yet another Android- and Chrome-related patent license agreement (with Pegatron, a major Taiwanese company that manufactures devices for others). More than three months ago Microsoft already said that more than 70% of Android devices sold in the U.S. market have a license to Microsoft's patents reading on Android. Those device makers notably include Samsung, HTC and LG -- companies that defend themselves in court against patents all the time if they think there's a point in doing so in a given context.

Motorola's strategy is different. Motorola hopes to gain leverage, not only but primarily from abusive assertions of standard-essential patents, in federal court, at the ITC and in Germany, where a decision is scheduled to come down on Wednesday morning (May 2). That conduct has already triggered two EU antitrust investigations and has led a federal judge in the Western District of Washington to enter a temporary restraining order. But it's quite possible that Motorola, too, would have settled the dispute with Microsoft a while ago if Google had not offered to buy the company -- a transaction that hasn't been closed yet.

At any rate, the good news is that there's one Android-related dispute less as a result of the agreement Microsoft and Barnes & Noble just announced.

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