Another One Bites the Dust: ZTE Caves to Microsoft's Android Licensing Demands
April 24, 2013 11:27 AM
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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. (
) VP and general counsel Horacio Gutierrez posted that his company had successfully coerced... er... convinced top Chinese Android smartphone maker ZTE Corp. (
) to pay royalties. The news comes hot on the heels of Microsoft's announcement that top Taiwanese manufacturer Hon Hai Precision Industry Comp. Ltd. (
had 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
Technologies Comp. (
) 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
Electronics Comp., Ltd. (
) into licensing payments of $10 or more per Android device sold.
Reports from 2011 indicated that Microsoft is
making far more money from these licensing agreements
than from its own smartphone product, Windows Phone. Given that Android growth has
outpaced Windows Phone growth
and Microsoft has scored
since then, it's relatively safe to say that situation remains even more true today.
Royalties are where the money's at for Microsoft. [Image Source: Life's Cheap Thrills]
Among the top companies to try to fight Microsoft's licensing threats have been Google Inc. (
) subsidiary Motorola Mobility and Barnes & Noble Inc. (
). Barnes & Noble -- perhaps the most vocal critic of Microsoft's threats --
in April of last year, "partnering" with Microsoft and agreeing to pay royalties.
Google/Motorola -- whose legal counsel
compared Microsoft to a "deranged Easter bunny"
-- is still fighting the good fight when it comes to patents. However, the company faces a major judgment day this Friday in Germany. If it loses, it may see its handsets not only banned, but also
seized and destroyed
. Some experts believe that a loss in Germany could force Google to swallow its pride and agree to licensing after long encouraging OEMs to fight Microsoft's demands.
This article is over a month old, voting and posting comments is disabled
RE: die M$...please!
4/25/2013 2:04:35 PM
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  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. 
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.
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