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Acer, maker of the popular Iconia Android 3.0 Honeycomb tablet has become the latest device maker to cave in to Microsoft's licensing demands.  (Source: Amazon.com)
Acer, Viewsonic agree to pay Microsoft's toll

Microsoft Corp. (MSFT) has already inked lucrative licensing details with General Dynamics Corp. (GD) (owners of Itronix, a maker of rugged tablets) [source]; Velocity Micro, Inc. [source]; Onkyo Corp. [source] (JSD:6628); and HTC Corp. (SEO:066570) [source].  It's pressuring Samsung Electronics Comp., Ltd. (SEO:005930) into a similar licensing deal.  Reportedly it wants up to $15 per device sold.  

So what do all these companies have in common?  They all use Google Inc.'s (GOOG) Android operating system and all are afraid that Microsoft may make good on its threat to sue them if they don't pay licensing fees.

Now Taiwan's Acer Inc. (
TPE:2353) has agreed [press release] to a similar licensing arrangement, though it declined to disclose how much it had agreed to pay per device.  Acer makes the popular Android 3.x "Honeycomb" Iconia tablet.

Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft comments, "We are pleased that Acer is taking advantage of our industry wide licensing program established to help companies address Android's IP issues. This agreement is an example of how industry leaders can reach commercially reasonable arrangements that address intellectual property."

Of course of amiable phrasing "Help... address Android's IP issues" translates roughly to "forced to pay under threat of lawsuit".

Google does offer Android to device makers for free, so licensing isn't game over to Android manufacturers unlike Apple, Inc.'s (
AAPL) lawsuit campaign [1][2][3][4][5][6], which simply looks to ban Android devices from the market.  However, it does shift the balance of power slightly in the favor of Microsoft, who is trying to push its own Windows Phone 7 smartphone operating system on the masses, by making it less profitable to make Android devices.

Many more manufacturers will like opt the route of Acer and HTC -- simply paying Microsoft's demanded toll.



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By Zuul on 9/8/2011 4:45:27 PM , Rating: 4
Because of the current legal language, the patent portfolio only serves to protect Google themselves, not the Samsung/HTC's of the world. Google could hold 5 times as many patents as everyone else and it wouldn't help the manufacturers.

Until Google is willing to change the indemnity and take the responsibility off of their partners, it's open season on anyone who uses Android.

From a legal perspective, it's extremely risky to use Android as a core part of your business (ie: building a smartphone line around it) knowing that. I can only assume that the risk management and contracting groups within the companies have already weighed the risk and built a plan around dealing with it. Likely, they have all planned around paying royalties well in advance should it happen - which is what normally happens. That's why they are easily agreeing to Microsoft's approach.

Where it really throws things in a pickle is Apple. Apple has no desire to collect royalties. It's MUCH harder to plan around someone trying to shut your business down when you have no leverage to begin with.

An analogy would be if you owned a McDonalds franchise and someone comes along and sues YOUR franchise because the 'M' McDonalds logo infringes on their copyright. You realize that 'hey, it's not my logo - I'm just a franchise' and you go to McDonalds corp to ask them to fight it for you. McDonalds then turns around and says, 'sorry, it's your problem because I never agreed to protect you from that.'


"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone














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