News

Microsoft Signs Android IP Deals with Two German Companies

• By Kurt Mackie
• December 11, 2012

Microsoft this week inked intellectual property (IP) licensing deals with two equipment makers based in Germany related to the use of the Android operating system.

The companies have agreed to pay royalties to Microsoft in association with their use of the open source, Linux-based Android mobile OS in their hardware products. One of the companies is EINS SE, which makes a series of consumer Linux tablet devices that are marketed under the "Cat" brand in Germany.

"We are thrilled to be able to bring high-quality Android products to our customers as a result of this agreement with Microsoft," stated Christian Pladwig, CEO of EINS, in a prepared statement. "We now have a strong IP foundation that allows us to improve on our product line across Europe."

From Microsoft's perspective, the deal with EINS would appear to be just one of many to come in the European market.

"In the past year, Microsoft has been able to demonstrate the strength of our German patent portfolio and its relevance to Android devices," stated Horacio Gutierrez, corporate vice president and deputy general counsel of the Intellectual Property Group at Microsoft, in a prepared comment. "We're hopeful this license with EINS leads to additional licenses with European companies."

The second IP deal was struck with Hoeft & Wessel AG, a maker of handheld devices and terminals for transportation and retail industries in Europe. The company, with €80 million ($104 million) in sales revenues, has offices in Hannover, Germany as well as in Swindon, UK.

The two deals represent Microsoft's "first Android" IP licensing agreements in Germany, according to a Twitter post by the Microsoft Intellectual Property Group. Overall, Microsoft claims to have established more than 1,100 IP licensing deals since 2003.

Motorola Mobility, owned by Google, is one of the few equipment makers using Linux to hold out against Microsoft's IP claims, which tend to be about the usability aspects of software on mobile devices. Courts in Germany have become a perpetual battleground between Motorola and Microsoft over various patent claims, with each side drawing blood.

Recently, a U.S. District Court stepped into a dispute between Motorola and Microsoft over a fair, reasonable and nondiscriminatory (FRAND) patent claim made by Motorola in Germany. The U.S. court may determine what would be reasonable for Microsoft to pay to Motorola under the FRAND licensing concept, which apparently is somewhat new legal ground.

The European Commission is also examining complaints by Apple and Microsoft that Motorola is asking too much for royalties associated with FRAND patents. Intellectual property covered under the FRAND concept is deemed to be "essential" for an industry. Consequently, FRAND patents are supposed to be broadly licensed, but the royalty rates represent unsettled legal territory.

Motorola's FRAND disputes come in the context of attacks on Android by both Microsoft and Apple, with both companies claiming non-FRAND IP violations by hardware makers using Android. Google, Motorola's parent company, fostered the development of the Android OS and distributes it royalty free to manufacturers, but it competes with mobile OS products from Apple and Microsoft in a general mobile platform war.

The stakes of these legal battles are high. A report by investment banking company Goldman Sachs recently estimated that Microsoft's computer OS market share has shrunk from 97 percent to 20 percent when factoring in tablets and smartphones as computers, according to a report.