Microsoft Marshals Dealmakers, Lawyers to Take On Android

As it gets ready to unveil its own operating system next, Microsoft is taking careful aim at its closest competitor: Android.

Through patent licensing deals and lawsuits, the Redmond-based computer giant is trying to cover all its bases, aiming for a situation where it wins whether a customer chooses a Windows phone or an Android one.

But it’s too soon to tell whether the strategy will pay off.

On Monday, Microsoft CEO Steve Ballmer said he looks forward to collecting revenue from Android handset makers, including HTC, which has a licensing agreement with Microsoft.

For handset makers that don’t show HTC’s willingness to do it the easy way, Microsoft can do it the hard way, too: Microsoft sued Motorola this week, alleging patent infringement around Motorola’s Android-based smartphones. The suit charges Motorola with allegedly violating patents related to synchronizing email, calendars, contacts, scheduling meetings and notifying applications of changes in signal strength and battery power.

“One reason that Microsoft is going after Motorola is that if patent infringement is found it is easier to establish damages against a company that is selling a product than Google, which is giving the OS away for free,” says Robert Sloss, intellectual property partner at Farella Braun + Martel.

In April, Microsoft announced that it has inked a patent licensing deal with HTC that would allow HTC to continue using the Google-designed Android operating system in its phones while mitigating its risk should Microsoft aim any patent lawsuits at the OS.

Microsoft and HTC did not disclose specific details of the agreement, though the two companies have said HTC will pay Microsoft an undisclosed sum for the patent rights.

Patent battles among technology companies are routine. Oracle has filed a lawsuit against Google over the use of Java in Android, a claim that Google has vigorously disputed. Last year, Nokia sued Apple alleging patent infringement by Apple in connection with the iPhone. Meanwhile, Apple initiated a lawsuit against HTC over alleged infringement on iPhone related patents. In other words, its business as usual.

With the smartphone business becoming extremely competitive, the stakes are higher than ever.

In just two years, the Google-designed Android OS has become a major force in the mobile world. Android, which made its debut in 2008 on a HTC manufactured phone, has now been adopted by almost every device maker including Motorola, Samsung and LG. Android is now the most popular operating system among people who bought a smartphone in the past six months, according to August data from The Nielsen Company. BlackBerry and Apple iOS are in a statistical dead heat for the second place.

With the upcoming Windows Phone 7 OS, Microsoft hopes to attract consumers. But until then, it is trying another strategy.

“The Microsoft innovations at issue in this case help make smartphones ’smart,’ Horacio Gutierrez, deputy general counsel at Microsoft, wrote on the company blog.

Microsoft’s patents relate to features such as the ability to send and receive email, manage calendars and contacts. Microsoft claims it has also patented technologies that manage signal strength, battery power and memory in the device.

“The crux of the argument is that Microsoft is saying Android OS uses technology that has already been part of Microsoft software,” says Sloss.

Although the lawsuit has been filed, it is difficult to know right away how valid Microsoft’s claims are, says Sloss. Both Microsoft and Motorola are likely to go through an extensive process of discovery, which involves presenting documents to support their claims and they are likely to keep it under wraps.

“A lot of it probably won’t be public,” says Sloss. “It is standard to enter into protective order because the core of the patents and the products will be highly confidential.”

There is always the possibility that the two companies settle out of court, with Motorola going down the same road as HTC. In that case, Microsoft could gain “hundreds of millions of dollars” in royalties and further strengthen its patent claims.

“Damages calculations are very complex,” says Sloss. “There’s nothing in Microsoft’s complaint that says exactly how much it is looking for.

But if Microsoft and Motorola choose to settle, it is likely that Motorola may wind up paying a license fee for each Android handset it sells, similar to what HTC is doing.

For Microsoft that may not translate into rich profits but it will certainly add up to sweet revenge.

Source.

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