Print 29 comment(s) - last by ShieTar.. on May 19 at 4:19 PM

  (Source: DeviantArt/Tenesbrosa)
The ban-happy EU giant is making no friends in the electronics industry

The patent war has claimed another victim -- Microsoft Corp. (MSFT).  As bad as things are in the U.S. with respect to abusive, vague patents, and punitive litigation, Germany is much worse.

I. Microsoft vs. Motorola: The Pot and the Kettle

The nation has been a focal point in the three-way fracas between Microsoft, the Android alliance led by Google, Inc. (GOOG), and Apple, Inc. (AAPL).  The players in the battle have targeted Germany with an abundance of lawsuits as the top European Union market has a policy of banning first and asking questions later.

Microsoft vs. Motorola Mobility, Inc. (MMI) (and by proxy its soon-to-be-owner Google) has been a war with plenty of dirt flung by both sides.  Microsoft is accused of threatening Android manufacturers with an undisclosed large portfolio of operating system patents.

Just how good or bad those patents are was illustrated by a recent Barnes & Nobles, Inc. (BKS) case.  Microsoft approached Barnes & Nobles, an Android tablet maker, with licensing demands.  It agreed.  Once it had caved, Microsoft shared information about the patents with it.  Barnes & Noble was shocked to discover that the patents were mostly trivial or seemingly invalid.  In other words, Microsoft's Android extortion was all bluff and no bite.

Barnes & Noble responded by breaking the embargo on Microsoft's secret portfolio and terminating the licensing arrangement.  In hopes of gaining an upper hand in the inevitable legal abuse to follow, the company wrote a letter to the U.S. Department of Justice (DOJ) and U.S. International Trade Commission (ITC) highlighting its complaints about Microsoft's Mafioso-esque tribute scheme.

Motorola h.264
Motorola and Microsoft are fighting over 100 patents, but the German case focused on only two, involving the h.264 codec. [Image Source: Joker Blog]

Motorola faced similar licensing demands from Microsoft, and refused to back down.  It's currently being sued in the U.S. and Germany by the operating system giant, which hopes to terminate EU and U.S. sales of the third-place Android phonemaker.

Motorola has hardly been angelic in its response to Microsoft's demands, though.  It has seemingly violated legally enforceable "fair, reasonable, and non-discriminatory" rules by refusing to license its standards patents to Microsoft, including those pertaining to the h.264 video codec, at a reasonable rate.

Microsoft complains that Motorola has sought a preposterous sum for the h.264 patent -- over $20 -- compared to the typical licensing rate of a couple of pennies per device.

II. Germany is Condoning Destructive International Patent War

In the U.S. the companies' mutual belligerence and patent mongering has been met largely with indifference from the courts, which have refused to implement sweeping preliminary injunctions (product bans) in either direction.

In Germany, though the court has been perfectly happy to go on a banning spree.  The latest casualty is Microsoft's Xbox 360 and Windows 7.

Both products may soon be banned in Germany, after a Mannheim Regional Court judge ruled them to be in violation of Motorola's h.264 patents -- EP0538667, a patent on an "adaptive motion compensation using a plurality of motion compensators" (filed in 1992), and EP0615384 a patent on an "adaptive compression of digital video data" (filed in 1994).

No Soup for You
Germany says "No Windows for you!" [Image Source:Columbia Pictures]

Microsoft still has some hope of avoiding the ban.  It is appealing the ruling to Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court).  That court can suspend the ban if it thinks Microsoft will win an appeal on the infringement claims (e.g. if it thinks Motorola's FRAND abuse is overly egregious).  Likewise the EU could step in, given that Motorola is under antitrust investigation by EU inquisitors regarding FRAND abuse.

Of course it's also entirely possible that the ban may be allowed to stick, as with Motorola's recent successful bid to ban the iCloud.

While a ban on Windows and Xbox sounds bizarre by American standards, it's an example of just how different German intellectual property laws are versus American laws.  In Germany, infringement and validity proceedings are carried out on separate tracks, so it's easy to ban products using patents that are later ruled invalid.  As companies increasingly look to abuse this overly trusting architecture, one must wonder how far things must go before Germans demand their government make drastic changes.

Xbox 360
Appeal is one of Microsoft's last routes available to avoid a costly ban.
[Image Source: Justin Sullivan/Getty Images News]

Motorola also has to deal with a thorny ruling by a Washington state federal judge, who warned Motorola that it could face stiff fines in the U.S. if it tried to enforce a ban on Windows sales in Germany.

In the U.S. Motorola is facing the prospect of a complete ban on its smartphones after Apple won a key ruling, which indicated that Motorola -- and virtually any other Android device for that matter -- infringed on one of Apple's mobile patents.  The decision will likely be appealed meaning that it is unknown when or if a ban might actually materialize in the U.S.

Source: FOSS Patents

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Nearly 6 years after it launch?
By 1ceTr0n on 5/2/2012 3:46:12 PM , Rating: 2
Honestly, whats the point?

RE: Nearly 6 years after it launch?
By 1ceTr0n on 5/2/2012 3:48:26 PM , Rating: 5
And WTF Is up with these constant law suits? How does this benefit anyone, especially the customer by spending time/money/resources on stupid *I created this first* bullshit?

Yeah, im talking to you Apple especially

RE: Nearly 6 years after it launch?
By kattanna on 5/2/2012 4:40:41 PM , Rating: 5
And WTF Is up with these constant law suits? How does this benefit anyone, especially the customer

there is only 1 group of people who ever benefit from lawsuits..and thats the lawyers

By ClownPuncher on 5/2/2012 5:22:25 PM , Rating: 3
Everyone else ends up with a handful of shit.

RE: Nearly 6 years after it launch?
By Natch on 5/3/2012 9:12:57 AM , Rating: 2
And 1 group that is always hurt by it, the consumer.

Those costs will be passed on, somehow, to the buyer. We pay higher prices, while the lawyers laugh, all the way to the bank.

RE: Nearly 6 years after it launch?
By MozeeToby on 5/2/2012 4:01:01 PM , Rating: 4
Microsoft fired the first shot, Motorola fired back with this in counter suit. It was probably one they felt they had a chance of winning, basically telling Microsoft exactly what most people in the comments below are saying: "knock this stuff off or we're all screwed!"

By mcnabney on 5/3/2012 9:16:29 AM , Rating: 2
I also wouldn't be too startled over the $20 demand by Motorola to Microsoft for licensing. Remember, Motorola is already paying Microsoft $10 for every Android device is sells because THAT is what MS demanded for whatever vague OS patents it claims to have.

Smartphones are replaced far more rapidly than desktops/laptops, so if the $10 Motorola had to pay was fair, the $20 falls right in line.

world war 3
By prabal34 on 5/2/2012 6:25:47 PM , Rating: 4
And these lawsuits will be the catalyst for World War 3. Once again with Germany in the middle of all of it. /sigh

RE: world war 3
By BZDTemp on 5/2/2012 6:41:09 PM , Rating: 2
That takes the prize for the most stupid remark in a long time on this forum (and that says a lot).

RE: world war 3
By TSS on 5/2/2012 9:51:34 PM , Rating: 5
Doesn't have to be. Big wars are often preceded by big trade wars, and with governments today being or coming under the palm of corperate entities, this patent war might just be a precursor.

And germany would be in the middle again since they basically are the euro at this point, so they represent a big power block. The US and China would be the other power blocks.

Just cause germany's involved doesn't mean they start it or they're "the bad guys". Hell to be honest, if they wheren't involved in some way it wouldn't really feel like a world war now would it :p

RE: world war 3
By Silent-Ninja on 5/2/2012 10:44:52 PM , Rating: 1
Microsoft blamed China for hacking a memory leak. The FCC was to investigate the accusations, because China declined the remark and wanted to see the evidence.

China then makes a massive firewall, blocking a lot of outside traffic. China has only done that to protect their people and their government system, from any other accusing.
Now Germany is attacking Microsoft and again USA is defending them.

Why should the USA defend a corporation that is obviously doing things the company should not?

Who cares it's Germany
By vision33r on 5/2/12, Rating: 0
RE: Who cares it's Germany
By StevoLincolnite on 5/2/2012 11:48:32 PM , Rating: 2
Believe it or not, Germany has one of the largest economies in Europe.

Companies like Microsoft exist to sell products to consumers in return for money, that is the basis of all profit-making companies.

To pull out of Germany would be a fairly hefty financial hit, the shareholders would hate it.

RE: Who cares it's Germany
By FITCamaro on 5/3/12, Rating: -1
RE: Who cares it's Germany
By Ramtech on 5/3/2012 3:26:09 PM , Rating: 5
Germany has fourth largest economy by GDP in the world

RE: Who cares it's Germany
By ShieTar on 5/19/2012 4:19:37 PM , Rating: 2
On the other hand most people in germany love to follow a "never change a running system" approach, and got stuck on Windows XP anyways. Still, given that most complete PCs and Laptops that are sold will come with a Windows 7 OEM version, we are probably a market of about 4 million private licenses per year, and probably annother 4 million company licenses.

I'm not sure exactly how much money Microsoft makes with a OEM or business license, but thats probably anywhere between 80 and 400 million anual income (and thus almost profit, as it is software thats already developed) being lost. And probably similar numbers on income coming from the XBOX on top of that.

Of course that would only be the tip of the iceberg. If one of the most technologically advanced nations in the world, with thousands of national, highly capable software development companies, is told that it can no longer use Windows, than they will work on alternatives. At the very least you would quickly see an extrem rise of application software and games being ported to either Linux or MacOS. MS would not really be happy with that, not at all.

What we need to do...
By Motoman on 5/2/2012 5:34:44 PM , Rating: 5 to let ALL companies get ALL of their competitors banned EVERYWHERE.

...such that nobody can sell anything, anywhere.

As soon as all corporations and governments realize how utterly retarded patent law is, with everyone's consumer goods industries completely crippled, it'll get fixed.

RE: What we need to do...
By vXv on 5/5/2012 8:22:54 AM , Rating: 2
Yeah that seems to be the only way out of this mess.

By LTGJAMAICA on 5/2/2012 4:27:59 PM , Rating: 1
The Patent legislation is worldwide and needs to be streamlined by the WTO or some similar body. You cant have different countries interpreting laws differently.

RE: Patent
By vXv on 5/5/2012 8:26:37 AM , Rating: 2
You cant have different countries interpreting laws differently.

That's the point of having different countries ... each country has its own laws and courts. Unless they are bound to some treaty like some EU wide "laws". They aren't really laws either but directives that each country has to implement as national law.

RE: Patent
By ShieTar on 5/19/2012 3:59:45 PM , Rating: 2
Still, the problem as becomes obvious here is that these days with the global markets, you can have american or asian companies fighting in german courts. Laws, and the rules used by courts to judge on infringements, are not fully logical software routines, but are based very strongly on the existing common understandings of society.

In short, german companies would not have gone to court based on such trivial patents, and thus the german laws and courts were not designed to handle such behaviour. Thus, when american lawyers are allowed to play with german law, we experience the catastrophic collapse of all reason and logic that we have witnessed over the last few months.

What OS does the court use?
By laok on 5/2/2012 9:27:05 PM , Rating: 1
Or it is the time for them to change to Mac or Linux?

RE: What OS does the court use?
By greylica on 5/3/2012 6:07:56 AM , Rating: 2
Linux and GNU/GPL, far better...

German courts or Motorola?
By dasgetier on 5/3/2012 4:10:51 AM , Rating: 2
Now whose fault is this?

It is like it is
By BabelHuber on 5/3/2012 7:48:54 AM , Rating: 2
At first glance the German process regarding patents looks a little bit weird, but this approach has been implemented on purpose:

A lot of German companies like Adidas, Puma or Stiehl have heavily been copied by other companies in the past, especially chinese ones.

So, if you are e.g. Stiehl and see that your chainsaw-design was taken over 1:1 by a competitor, you can sue him.

The court will look at the 2 chainsaws and say: 'Most likely this is an illegal copy, so we directly ban it from selling until the lawsuit has been decided'.

If it wouldn't be done this way, big companies could illegally reuse patents on purpose, knowing that they fail at court. But also they would know that they can sell their stuff until the court has decided about the issue, which could take months or even a year.

Of course in the end the patent-owning company could sue the patent-violating company afterwards, but then the damage has already been done.

OTOH in cases like Motorola vs. Intel, this approach has its weaknesses since the matter at hand is so complicated.

So banning first creates some problems while solving others. Hence it is not so easy to adjust those laws.

By lukarak on 5/7/2012 2:01:49 AM , Rating: 2
Companies that own FRAND patents shouldn't be allowed to refuse licensing and then sue.
If something is a standard, then you give up on choosing who can license your IP, and you loose the right to set the price.

Chart comparison
By sarfralogy on 5/3/12, Rating: 0
Microsoft up against walls...
By Silent-Ninja on 5/2/12, Rating: -1
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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