News

Microsoft Signs Android Royalty Deal with Pegatron

• By Kurt Mackie
• April 25, 2012

Microsoft on Wednesday inked an intellectual property licensing deal with Pegatron Corp. over the Taiwan-based company's use of Android and Chrome software technologies in its products.

Pegatron will pay Microsoft royalties under the agreement, which covers "eReaders, smartphones and tablets running the Android or Chrome platforms." By "Chrome platforms," Microsoft in the past meant Google's cloud-based Chrome operating system, rather than Google's Chrome Web browser. However, the announcement from Microsoft did not provide clarification on the matter.

Pegatron describes itself as a design and manufacturing service that was founded in January 2008. It makes computer equipment, set-top boxes, TVs, wireless systems and game consoles.

Mobile Patent Wars
With the Pegatron deal in process, Microsoft claims to have rolled up agreements with nearly all of the Taiwan-based original design manufacturers (ODMs) with regard to software patent infringement claims.

"With this agreement, Microsoft has now licensed four of the top five Taiwanese ODMs," said Horacio Gutierrez, corporate vice president and deputy general counsel of the Intellectual Property Group at Microsoft, in a released statement.

Last year, Gutierrez claimed that Microsoft had signed intellectual property licensing agreements with "more than half of the world's ODM industry for Android and Chrome devices." This year, Microsoft claimed that it had inked intellectual property deals with manufacturers covering 70 percent of all Android devices that are sold in the United States.

Microsoft's attorneys have generally claimed that use of Linux operating systems in products violates 235 of Microsoft's patents, without specifying what those patents are. One by one over the years, Microsoft has sought intellectual property licensing deals with hardware device makers using Linux. Many equipment makers have signed the agreements and didn't go to court to dispute Microsoft's claims. Exceptions include Barnes & Noble, which is defending intellectual property claims against its Nook e-reader devices and Motorola.

Microsoft isn't the only litigant in these patent wars centering on mobile device software technologies. Apple too is an active litigant suing companies using Linux operating systems. Those legal actions have put a crimp on Google's plans of leveraging mobile devices for its search advertising business. Google fostered the Linux-based Android mobile OS that is used in various hardware devices by manufacturers, which don't pay royalties to Google to use it.

Xbox In the Sights
Google is in the process of acquiring Motorola Mobility to bulk up its patents portfolio for legal defensive reasons. Even though Google's proposed purchase hasn't yet cleared regulatory approvals, the acquisition bid appears to be raising alarms with Microsoft and Apple, particularly over Motorola's interpretation of standards-essential patents use rights. Supposedly, these sorts of patents are to be made available on "fair, reasonable and nondiscriminatory" (FRAND) terms so that all organizations using standards-based technologies can operate, but it's apparently somewhat of a gray area as to what that exactly means.

Motorola currently wants 2.25 percent of Microsoft Xbox gaming console net sales as royalties for its patents, which are associated with wireless LAN and H.264 video codec standards-based technologies. Microsoft and Apple have separately complained to the European Commission, claiming Motorola (and potentially Google) is abusing FRAND principles by its demands.

Microsoft recently got a reprieve against a potential injunction against Xbox sales in Germany, where the litigation is continuing. Meanwhile, a U.S. International Trade Commission court found this week that Microsoft is violating four of five Motorola Mobility patents with Xbox. That finding could lead to a U.S. ban on the importation of Xbox devices unless Microsoft pays royalties to Motorola, according to a Bloomberg story.