Reports from CES 2012 indicate that Windows Phone 7 may be a competitive mobile platform, however Microsoft has decided to hedge its bets and continue making money from Android by signing a patent-licensing agreement with LG. The terms of the agreement will likely require LG to pay Microsoft royalties for all LG tablets, phones, and other consumer devices running the Android or Chrome OS platform. This deal likely mirrors Microsoft's ten previous patent-licensing agreements with Android and Chrome OS manufacturers, including Samsung, HTC, Acer, and ViewSonic.
By signing the recent agreement Microsoft is "pleased to have built upon [its] longstanding relationship with LG", a relationship which began in 2007, when LG sold its soul to Microsoft by signing a "broad patent-licensing agreement" covering "Linux-based embedded devices". The current agreement is apparently an extension of the earlier one as Android is based on Linux. I would be interested to know how LG feels about continuing its "mutually beneficial agreement" with Microsoft.
Although Microsoft earns royalties from a majority of Android devices sold in the US, they have continued to litigate against manufacturers who have not agreed to their terms, such as Barnes & Noble and Motorola. Indeed, Motorola, recently acquired by Google, is perhaps the last major Android device manufacturer not paying some type of royalty to Microsoft for the privilege of making smartphones and tablets. So, much for free and open.
Despite Apple's gratuitous stream of patent litigation suits against Android device manufacturers, the commercial reality is that patent-licensing arrangements are much favoured over litigation. In fact, according to Microsoft, an astounding 70% of all Android smartphones sold in the U.S. are covered under Microsoft's patent portfolio. It's hardly a surprise that Microsoft is making more money from Android than from its own Windows Phone.
Google has yet to issue a statement on the matter, but judging by its earlier comments, I doubt it will be pleased by LG's capitulation.
For more information on the patent agreement, check out Microsoft's press release below:
Microsoft and LG Sign Patent Agreement Covering Android and Chrome OS Based Devices
REDMOND, Wash. — Jan. 12, 2012— Microsoft Corp. and LG Electronics have signed a patent agreement that provides broad coverage under Microsoft’s patent portfolio for LG’s tablets, mobile phones and other consumer devices running the Android or Chrome OS Platform. The contents of the agreement have not been disclosed.
“We are pleased to have built upon our longstanding relationship with LG to reach a mutually beneficial agreement. Together with our 10 previous agreements with Android and Chrome OS device manufacturers, including HTC, Samsung and Acer, this agreement with LG means that more than 70 percent of all Android smartphones sold in the U.S. are now receiving coverage under Microsoft’s patent portfolio,” said Horacio Gutierrez, corporate vice president and deputy general counsel, Intellectual Property Group at Microsoft. “We are proud of the continued success of our program in resolving the IP issues surrounding Android and Chrome OS.”
Microsoft’s Commitment to Licensing Intellectual Property
The agreement with LG expands upon a pre-existing agreement, and it is another example of the important role IP plays in ensuring a healthy and vibrant IT ecosystem. Since Microsoft launched its IP licensing program in December 2003, the company has entered into more than 1,100 licensing agreements and continues to develop programs that make it possible for customers, partners and competitors to access its IP portfolio. The program was developed to open access to Microsoft’s significant R&D investments and its growing, broad patent and IP portfolio.
More information about Microsoft’s licensing programs is available athttp://www.microsoft.com/iplicensing/.