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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:
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 9/9/2011 1:37:05 AM , Rating: 2
To address your questions:

How do Microsoft and Apple sue hardware makers for their products, when it is Android that is infringing the patents?

The key is the lack of indemnity Google (you can view this as, hold the other party free of any of liability and thus Google accepting full liability) provides for patent infringement. The patent holder can come after you (the manufacturer or developer) and Google is not legally obligated to help you because they never said they would.

Almost all software manufacturers will indemnify their partners from patent infringements; which is why I said if Google started to do this, they could leverage the Motorola patents to protect all the handset manufacturers. However, they haven't. I certainly hope they do - but I think that's new, uncharted waters for Google's legal team.

Shouldn't Microsoft and Apple be going after Google?

I think there are several factors for this. One is Google isn't making any money directly off of licensing Android, so it's hard to go after Google for royalties.

Another is that's a much bigger fight than going after the handset makers. Since the handset makers are using an OS which may (or may not) infringe on MS/Apple patents and MAKING MONEY from it, MS is well within their legal rights to go after them. Why take on the big guy directly, when you can go after the little guys around him and do just as much damage?

For instance, that would be like Microsoft suing Asus, Gigabyte, MSI, Tyan, etc because people build PC with their parts and put a pirated copy of Windows on it. As far as I know this doesn't happen. So I can correlate that part of the problem lies with Samsung and company releasing the hardware with the OS attached to it.

Since none of those manufacturers included a pirated copy of the OS with the product, they are not violating their licensing agreement with MS. If another party uses those parts to build a PC and includes a pirated copy of Windows, than BOTH the person who installed it, AND the person using the computer are violating the licensing agreement and MS is within their rights to go after BOTH parties. Of course in practice, they only go after the companies who install / distribute pirated SW and not the individuals who violate the licensing agreement.

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