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License or pay settlement, that's what Microsoft's lawyers are telling China's Huawei

Microsoft Corp. (MSFT) has drawn a great deal of flack from critics like Google Inc. (GOOG) for trying to force licensing on Android handset makers.  

The company insists that it’s merely trying to protect its inventions.  However, some question the fact that it's trying to force both manufacturers and OEMs to pay two separate fees on every Android device, in essence double-dipping on licenses.  Others point to the fact that some of its patents are on seemingly obvious software, such as loading images before text or displaying an animated loading icon when loading internet images.  These patents were largely granted during the lax late 90s and early 00s period at the U.S. Patent and Trademark Office.

The latest victim of Microsoft's patent wrath is Chinese telecommunications giant Huawei.  Rather than choose Microsoft's Windows Phone 7 platform, Huawei -- like most other manufacturers -- opted to primarily back Google's free, advertising supported Android platform.

In an interview with The Guardian, Huawei's chief marketing officer Victor Xu confirms that Microsoft is lusting after his company's Android profits.  He comments, "Yes, Microsoft has come to us.  We always respect the intellectual property of companies. But we have 65,000 patents worldwide too. We have enough to protect our interests. We are a very important stakeholder in Android."

Huawei Vision
Huawei is among the biggest Chinese Android OEMs. Pictured: Android 2.3 "Gingerbread" Huawei Vision [Source: Huawei via the Guardian]

Thus far Microsoft has forced two of the three largest Android handset manufacturers -- HTC Corp. (TPE:2498) and Samsung Electronics Comp., Ltd. (KS:005930) -- into licensing agreements, along with a host of smaller sellers [1][2][3].  Samsung was arguably the biggest surprise, as it was an industry veteran with thousands of patents which some believed would be enough to offer it protection from the licensing demands.

Shenzhen-based Huawei has seen most of its past revenue from mobile network infrastructure sales.  The company is the world's second largest maker of mobile network infrastructure behind Sweden's Ericsson SpA (STO:ERIC B) and ahead of France's Alcatel-Lucent (EPA:ALU) and Nokia Siemens (a joint venture between Finland's Nokia Oyj. (HEL:NOK1V) and Germany's Siemens AG (ETR:SIE)).  

But Huawei has grand aspirations for dominating the smartphone market, as well.  Mr. Xu states, "Over the next three years we are aiming to be in the top five smartphone makers, and in the top three in the next five years.  We have established very aggressive targets in the market."

Huawei Girl
Huawei dreams of becoming a top phonemaker. [Source: VR-Zone]

Huawei indicates that "negotiations are in progress" regarding a licensing agreement with Microsoft.  Huawei is looking to aggressively expand worldwide, so it must be wary of the more pro-plaintiff intellectual property atmospher outside of China.

Source: Guardian

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Patent Trolls
By SAmely on 11/8/2011 10:28:45 AM , Rating: 2
Patent Trolls can be equally bad, but I would say that I've lost less respect for Microsoft for licensing rather than a cease and desist stance.

RE: Patent Trolls
By Varun on 11/8/2011 11:32:53 AM , Rating: 3
Patent Troll: term used for a person or company who is a non-practicing inventor (from Wikipedia).

Microsoft is certainly not a patent troll.

I also hate software patents as a rule, but unfortunately they are in place. I agree with you at least MSFT is trying to license their technology rather than just block everyone.

RE: Patent Trolls
By theArchMichael on 11/8/2011 11:59:13 AM , Rating: 2
Excellent point... I actually hadn't even considered that until you pointed it out. Is there a term yet for a company that uses questionable patents, legal maneuvers and litigation to stifle competition a la Apple and Microsoft (when it goes into beast mode)?

RE: Patent Trolls
By Varun on 11/8/2011 12:02:59 PM , Rating: 3
A corporation? :)

RE: Patent Trolls
By killerroach on 11/8/2011 1:33:54 PM , Rating: 2
Excellent point... I actually hadn't even considered that until you pointed it out. Is there a term yet for a company that uses questionable patents, legal maneuvers and litigation to stifle competition a la Apple and Microsoft (when it goes into beast mode)?

Typically that's something that's addressed by antitrust law. If you have a market position such that you can leverage it to squelch competition, that's typically frowned upon...

RE: Patent Trolls
By michael2k on 11/8/2011 2:43:28 PM , Rating: 2
Excepting that antitrust law was only applied to Microsoft because they used contract language to act anti-competitively.

Apple, in this case, is using actual trademark, patent, and trade dress law to legally act anti-competitively.

Microsoft, in this case, is using patent law to get licensees; both of which are legal (to stop vs license).

It's not illegal to act anti-competitively when you are doing so legally...

RE: Patent Trolls
By kleinma on 11/8/11, Rating: 0
RE: Patent Trolls
By sprockkets on 11/8/2011 12:55:47 PM , Rating: 2
Both apple and MS fall into the submarine warfare category of patent warfare.

Of course, MS, apple and Google all funded intellectual ventures, which is becoming a patent troll, so...

"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings

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