Print 11 comment(s) - last by Skywalker123.. on Apr 25 at 2:04 PM

Top Chinese phonemaker will pay Microsoft royalties on its devices

And then there was one less.

I.  ZTE Caves to Licensing Demands

On Tuesday, Microsoft Corp. (MSFT) VP and general counsel Horacio Gutierrez posted that his company had successfully coerced... er... convinced top Chinese Android smartphone maker ZTE Corp. (SHE:000063) to pay royalties.  The news comes hot on the heels of Microsoft's announcement that top Taiwanese manufacturer Hon Hai Precision Industry Comp. Ltd. (TPE:2317had agreed to licensing.  Hon Hai owns the Chinese manufacturing subsidiary Foxconn.

In his commentary Mr. Gutierrez comments that Microsoft pays for licensing all the time, just like it's forcing OEMs to.  He writes:

Much of the current litigation in the so called “smartphone patent wars” could be avoided if companies were willing to recognize the value of others’ creations in a way that is fair. At Microsoft, experience has taught us that respect for intellectual property rights is a two-way street, and we have always been prepared to respect the rights of others just as we seek respect for our rights. This is why we have paid others more than $4 billion over the last decade to secure intellectual property rights for the products we provide our customers.

ZTE will pay Microsoft on every handset it makes. [Image Source: Reuters]

The licensing deal with ZTE is a big deal as the Chinese OEM is vying with Huawei Technologies Comp. (SHE:002502) for the title of the world's second largest Android phonemaker.

II. Licensing Remains Microsoft's Top Smartphone Cash-Driver

Nearly three-quarters of Android manufacturers now license Microsoft intellectual property.  Microsoft has pressured top Android OEMs like HTC Corp. (TPE:2498and Samsung Electronics Comp., Ltd. (KSC:005930) into licensing payments of $10 or more per Android device sold.

Reports from 2011 indicated that Microsoft is making far more money from these licensing agreements than from its own smartphone product, Windows Phone.  Given that Android growth has outpaced Windows Phone growth and Microsoft has scored many more royalty deals since then, it's relatively safe to say that situation remains even more true today.

Royalties are where the money's at for Microsoft. [Image Source: Life's Cheap Thrills]

Among the top companies to try to fight Microsoft's licensing threats have been Google Inc. (GOOG) subsidiary Motorola Mobility and Barnes & Noble Inc. (BKS).  Barnes & Noble -- perhaps the most vocal critic of Microsoft's threats -- caved in April of last year, "partnering" with Microsoft and agreeing to pay royalties.

Google/Motorola -- whose legal counsel compared Microsoft to a "deranged Easter bunny" -- is still fighting the good fight when it comes to patents.  However, the company faces a major judgment day this Friday in Germany.  If it loses, it may see its handsets not only banned, but also seized and destroyed.  Some experts believe that a loss in Germany could force Google to swallow its pride and agree to licensing after long encouraging OEMs to fight Microsoft's demands.

Source: Microsoft

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RE: die M$...please!
By amanojaku on 4/24/2013 1:43:24 PM , Rating: 1
Say what you want about MS, but at least it's seeking the licensing route for technology it actually created, rather than trying to ban competing products that can't help but be similar due to function. Like that one company that claimed ownership of the green call button, a rectangular device with curved edges, and a touchscreen display that lacked physical buttons...

RE: die M$...please!
By Skywalker123 on 4/24/2013 4:48:03 PM , Rating: 3
Like when MS tried to rip off Stackers memory compression tech?

RE: die M$...please!
By amanojaku on 4/25/2013 12:01:41 PM , Rating: 1
Your ignorance is just appalling. First of all, MS is licensing its technology TO ZTE and every other Android handset maker. And it has every right to:
Unlike Motorola's patents, Microsoft's relating to Android are not standards-essential - and so it is not obliged to license them, or can name its price.

With regards to Stac Electronics, MS didn't try to rip Stac off. MS tried to license Stac's compression technology and had been in negotiations for around two years. The negotiations fell apart, so MS made its own disk compression utility, licensed from Vertisoft . Stac then sued MS and Vertisoft, claiming MS stole source code.

Interestingly, Stac was found to have infringed on MS's pre-loading technology, and had to pay MS for damages.

MS eventually decided to invest in Stac Electronics and pay royalties, eliminating the need for either company to pay damages to the other.

The Stac and ZTE cases are nothing at all like Apple's douchebaggery in trying to prevent the competition from selling product.

RE: die M$...please!
By Skywalker123 on 4/25/2013 2:04:35 PM , Rating: 2
you're more than ignorant and a fool to boot. I am not commenting on zte, rather Microsoft's willingness to rip patents when and where they can

You have the story completely wrong.

n 1993, Microsoft released MS-DOS 6.0, which included a disk compression program called DoubleSpace. Microsoft had previously been in discussions with Stac to license its compression technology, and had discussions with Stac engineers and examined Stac's code as part of the due diligence process. Stac, in an effort led by attorney Morgan Chu, sued [1] Microsoft for infringement of two of its data compression patents, and won; in 1994, a California jury ruled the infringement by Microsoft was not willful, but awarded Stac $120 million in compensatory damages, coming to about $5.50 per copy of MS-DOS 6.0 that had been sold. The jury also agreed with a Microsoft counterclaim that Stac had misappropriated the Microsoft trade secret of a pre-loading feature that was included in Stacker 3.1, and simultaneously awarded Microsoft $13.6 million on the counterclaim. [2]
While Microsoft prepared an appeal, Stac obtained a preliminary injunction from the court stopping the sales of all MS-DOS products that included DoubleSpace; by this time Microsoft had already started shipping an "upgrade" of MS-DOS to its OEM customers that removed DoubleSpace. By the end of 1994, Microsoft and Stac settled all pending litigation by agreeing that Microsoft would make a $39.9 million investment in Stac Electronics, and additionally pay Stac about $43 million in royalties on their patents.

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch

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