News

Court Lets Microsoft Use 'Hard Bargaining' Tactics Against Android

• By Kurt Mackie
• February 16, 2012

The initial determination issued by a U.S. International Trade Commission court earlier this month that concluded Microsoft did not engage in "patent misuse" in its legal dispute against Barnes & Noble has been made partially available to the public.

Microsoft's suit against the bookseller stems from its allegation that use of the Android mobile operating system in Barnes & Noble's Nook e-reader devices violates its patents.

The document, which described a judge's reasoning in finding that Microsoft did not misuse its intellectual property when it sued Barnes & Noble, can now be read in a redacted form. The still-censored document was unearthed and reported by Todd Bishop in an article published Wednesday at GeekWire.

Administrative Law Judge Theodore R. Essex essentially argued that the U.S. patent system allows the holder to charge whatever the market can bear. He added that court precedents allow Microsoft as a patent holder to engage in "hard bargaining," and that isn't considered by the courts to be patent abuse.

"Microsoft's tactics are certainly hard bargaining, but they do not rise to patent misuse because there is absolutely nothing about such tactics that expand the scope of any patent," Judged Essex wrote (p. 11).

The expand-the-scope part of the argument is tough to follow, but the judge essentially is saying that just because Microsoft may have it out for Android, and just because it is using its patents to increase the costs for any company, like Barnes & Noble, that uses Android, that doesn't mean Microsoft is abusing its monopoly granted by a particular patent according to the legal doctrine of patent misuse.

"Even assuming that these transactions and the related evidence establishes that Microsoft is bent on eliminating Android as a competitor, the mere fact that Microsoft is targeting Android for destruction is insufficient to establish an antitrust violation let alone patent misuse," Judge Essex wrote (p. 10).

The judge does cite various legal precedents for his initial determination, but the reasoning only leaves open the question as to whether it is possible for patent abuse to actually exist in the U.S. legal system. The judge cited the precedents for patent abuse as having a "narrow scope," saying it was limited to instances where "the patentee seemed to be trying to extend his patent grant beyond its statutory limits."

Microsoft has narrowed its dispute with Barnes & Noble to just three patents and the hearings are continuing. An ITC staff attorney, acting on behalf of the public interest, recommended that Barnes & Noble not be found liable for violating Microsoft's patents, but his advice and even the advice of the administrative law judge in this case could be ignored by the ITC's commissioners, who will eventual render a decision in the case.

A download (PDF) of the partially blacked-out "initial determination" document can be found at the GeekWire post. It's initial, and not final, so the determination can change.

See Also:

• Court Favors Microsoft in Barnes & Noble 'Patent Misuse' Claim
• Microsoft Cuts One Patent from Barnes & Noble Lawsuit
• Barnes & Noble Did Not Infringe Microsoft Patents, ITC Attorney Says