Understanding the Microsoft, Samsung Patent Deal

Photo Credit: Robert Scoble on Flickr

Today, Microsoft and Samsung announced a patent deal, under which Microsoft will make royalties on every Android Device Samsung sells and which will see the companies cross-licensing each others’ patent portfolios.

Cross-licensing each others’ patents will help both companies protect each other from legal attacks going forward. Samsung’s mobile phones and tablets will now be covered under Microsoft’s patent portfolio and vice versa for Microsoft. The move also paves the way for a deeper partnership in the development of new devices for the Windows Phone platform.

It’s important to note, however, that Samsung will not be able to use Microsoft’s portfolio of patents to defend against the ongoing lawsuit with Apple.

According to FOSS Patents, “It just means that Samsung is allowed to practice the inventions protected by Microsoft’s patents to the extent allowed by the agreement.”

Samsung’s signing of this deal also made a statement about Google’s proposed acquisition of Motorola Mobility. That statement: we have little faith that the acquisition will protect us from future patent lawsuits.

The main reason Google filed to acquire Motorola Mobility was to protect itself against intellectual property lawsuits. That Samsung is willing to pay a licensing fee to Microsoft for patent protection is an admission–or at least a hedge–that Google does, in fact, have intellectual property issues. Either Samsung recognizes that the Motorola purchase only protects Motorola-Android patents, or that the Android ecosystem is plagued with additional flaws that will not be covered under the Motorola acquisition.

For Microsoft, the deal works out great. Redmond has signed similar deals with¬†¬†Acer, General Dynamics Itronix, Onkyo, Velocity Micro, ViewSonic and Wistron and HTC. The Samsung and HTC deals alone see Microsoft getting royalty payments on 50 percent of Android phones sold in the U.S. In addition, Microsoft gets coverage under Samsung’s 25,000 U.S. patents and 100,000 global patents.

So why would Samsung agree to this deal? Well, it’s more affordable to pay licensing fees for protection than to get bound up in more intellectual property lawsuits.

Recall Microsoft’s similar deal with HTC back in 2010. HTC and Microsoft had been in a legal scuffle, because Microsoft was claiming that HTC infringed on its intellectual property with their Android devices. But the legal issue never escalated to an actual lawsuit, because the companies settled: HTC offered to pay a licensing fee of $5 per device.

That’s why if I were in Microsoft’s situation, I would be playing the same tune as the company’s legal counsel.

“These agreements prove that licensing works. They show what can be achieved when companies sit down and address intellectual property issues in a responsible manner.”

Photo Credit: Robert Scoble on Flickr Creative Commons

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