Android patent license deals continue to be struck: Microsoft-Nikon is (announced) deal no. 18

Litigation gets more publicity than licensing. It's bigger news if products are banned, or if someone is at least trying to get them banned, or if juries award damages in the hundreds of millions of dollars (or even in excess of a billion dollars). But licensing is how almost all intellectual property disputes are resolved, and how countless lawsuits are avoided in the first place.

Most Android and Chrome device makers understand that Google wrote most of the code, but did not do most of the pioneering work behind it. It implemented vast amounts of technology created and owned by others. Android has drawn and continues to attract more litigation than any other platform. At the same time its infringement issues give rise to a steadily-growing number of third-party patent license agreements.

Yesterday Microsoft announced a royalty-bearing license deal relating to certain Nikon cameras running Android. On this occasion I wanted to update my list of Android-related patent license agreements that have been announced (there may be others in place that no one ever talked about):

1. April 27, 2010: Microsoft Announces Patent Agreement With HTC

2. June 27, 2011: Microsoft and General Dynamics Itronix Sign Patent Agreement ("Agreement will cover General Dynamics Itronix devices running the Android platform.") (FOSS Patents coverage)

3. June 29, 2011: Microsoft and Velocity Micro, Inc., Sign Patent Agreement Covering Android-Based Devices (FOSS Patents coverage)

4. June 30, 2011: Microsoft and Onkyo Corp. Sign Patent Agreement Covering Android-Based Tablets (FOSS Patents coverage)

5. July 5, 2011: Microsoft and Wistron Sign Patent Agreement ("Agreement will cover Wistron's Android tablets, smartphones and e-readers.") (FOSS Patents coverage)

6. September 8, 2011: Microsoft and Acer Sign Patent License Agreement ("Agreement will cover Acer's Android tablets and smartphones.") (FOSS Patents coverage)

7. September 8, 2011: Microsoft and ViewSonic Sign Patent Agreement ("Agreement will cover ViewSonic's Android Tablets and smartphones.") (FOSS Patents coverage)

8. September 28, 2011: Microsoft and Samsung Broaden Smartphone Partnership ("Under the terms of the agreement, Microsoft will receive royalties for Samsung's mobile phones and tablets running the Android mobile platform.") (FOSS Patents coverage)

9. October 23, 2011: Microsoft and Compal Electronics Sign Patent Agreement Covering Android and Chrome Based Devices

10. January 12, 2012: Microsoft and LG Sign Patent Agreement Covering Android and Chrome OS Based Devices (FOSS Patents coverage)

11. April 25, 2012: Microsoft and Pegatron Corp. Sign Patent Agreement Covering Android- and Chrome-Based Devices

12. April 30, 2012: Barnes & Noble and Microsoft Form Strategic Partnership to Advance World-Class Digital Reading Experiences for Consumers" ("Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft's patents for its NOOK eReader and Tablet products.") (FOSS Patents coverage)

13. July 9, 2012: Microsoft and Aluratek Inc. Sign Patent Agreement Covering Android and Chrome Based Devices

14. November 7, 2012: Microsoft Signs Licensing Agreements for exFAT With Sharp, Sigma, NextoDi, Black Magic and Atomos Global ("The agreements cover Sharp Android tablets, Sigma and NextoDi high-end cameras and accessories, and Black Magic and Atomos Global broadcast-quality video-recording devices.")

15. November 11, 2012: HTC and Apple Settle Patent Dispute (FOSS Patents coverage)

16. December 11, 2012: Microsoft and EINS Sign Android Patent Agreement ("EINS manufactures Android tablets under the Cat brand in Germany.") (FOSS Patents coverage)

17. December 11, 2012: Microsoft and Hoeft & Wessel AG Sign Patent Agreement ("Agreement will cover Hoeft & Wessel devices running the Android platform.") (FOSS Patents coverage)

18. February 21, 2013: Microsoft and Nikon Sign Android Patent Agreement ("Agreement covers certain Nikon cameras running the Android platform.")

This list will grow considerably. At some point, even Google's Motorola Mobility will end up paying.

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Microsoft and Barnes & Noble settle Android patent litigation -- Motorola increasingly isolated

Patent settlements typically come at times when nobody predicts them rather than as a result of court-ordered mediation.

Today, Microsoft and Nook maker Barnes & Noble announced a strategic partnership relating to e-reading. Microsoft invests $300 million in exchange for an equity position of approximately 17.6% in a Barnes & Noble spin-off. The press release also says this about the Android-related patent litigation that was pending between the parties:

"Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft's patents for its NOOK eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers."

The term "royalty-bearing" is a real blow to Google, which tells Android device makers to refuse to pay but doesn't do what it takes to properly address Android's intellectual property infringement issues.

The fact that Barnes & Noble partners with Microsoft proves, if anyone still needed any proof, that its mostly antitrust-related "patent misuse" allegations against Microsoft, which the ITC threw out even ahead of trial and refused to reconsider, were bogus claims borne out of desperation (for lack of patents that could be used to bring counterclaims). Barnes & Noble may have had very bad advice from certain lawyers who self-servingly raised totally false hopes in Barnes & Noble's management as to what they could achieve by shouting "antitrust! antitrust!" Look at it this way: if you really thought someone was an anticompetitive abuser of patents, would you form a joint venture with him? There you have it.

An important effect of this settlement is that Motorola Mobility is now the only Android device maker to be embroiled in litigation with Microsoft. Just four days ago, Microsoft announced yet another Android- and Chrome-related patent license agreement (with Pegatron, a major Taiwanese company that manufactures devices for others). More than three months ago Microsoft already said that more than 70% of Android devices sold in the U.S. market have a license to Microsoft's patents reading on Android. Those device makers notably include Samsung, HTC and LG -- companies that defend themselves in court against patents all the time if they think there's a point in doing so in a given context.

Motorola's strategy is different. Motorola hopes to gain leverage, not only but primarily from abusive assertions of standard-essential patents, in federal court, at the ITC and in Germany, where a decision is scheduled to come down on Wednesday morning (May 2). That conduct has already triggered two EU antitrust investigations and has led a federal judge in the Western District of Washington to enter a temporary restraining order. But it's quite possible that Motorola, too, would have settled the dispute with Microsoft a while ago if Google had not offered to buy the company -- a transaction that hasn't been closed yet.

At any rate, the good news is that there's one Android-related dispute less as a result of the agreement Microsoft and Barnes & Noble just announced.

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ITC judge postpones Microsoft-Barnes&Noble decision by more than a month

There are two ongoing ITC investigations of complaints by Microsoft against Android device maker: one against Motorola, which just got delayed for the third time in as many months, and another, lower-profile one against Nook maker Barnes & Noble.

Now the resolution of the Barnes & Noble case has also been pushed back. The trial took place in early February, and the initial determination of the Administrative Law Judge (ALJ) in charge of this investigation was due on April 27, 2012 -- in two and a half weeks from now. Yesterday, the ALJ decided to push back the remaining deadlines in this case by well over a month. The final ruling, originally scheduled for August 27, 2012, will be due on October 1, 2012, and accordingly, the initial determination will be due on June 1, 2012.

Theoretically, this postponement can be reviewed by the Commission, the six-member decision-making body at the top of the ITC, but in all of the investigations I watch, such decisions were not reviewed.

The ALJ explained that he has evidentiary hearings coming up in two other investigations, and for some time he had hoped that at least one of the two would be settled along the way.

As always, it may be tempting but isn't really possible to read anything into such scheduling decisions with a view to the outcome.

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ITC denies Barnes & Noble request to reconsider its dismissed allegations against Microsoft

In late January, an Administrative Law Judge (ALJ) at the ITC tossed Barnes & Noble's mostly antitrust-related, conspiracy-theory-based, "patent misuse" claims against Microsoft ahead of trial in order to focus on the more relevant parts of the Android-related patent infringement investigation. Previously, the ITC staff ("Office of Unfair Import Investigations", OUII), which participates in many investigations as a third party representing the public interest, had already advocated that dismissal. And today, the Commission, the six-member decision-making body at the top of the U.S. trade agency, has fully backed the ALJ (and, by extension, the OUII).

Barnes & Noble had asked for a Commission review. Any ALJ determination can be reviewed and possibly modified (or remanded) by the Commission. It happens more frequently with respect to final initial determinations (findings of violations, or of the absence of a violation) than in connection with case management decisions, but in principle, if clear legal error is shown, anything can be reviewed. In this case, a notice issued today shows that B&N failed to present to the Commission a reason to doubt the ALJ's decision (click on the image to enlarge it):

That headline is a bit hard to read (because it's long and all-caps). Here's the summary, which says the same but in complete grammatical sentences and a more legible format:

SUMMARY: Notice is hereby given that the U.S. International Trade Commission has determined not to review an initial determination ("ID") (Order No. 32) of the presiding administrative law judge ("ALJ)") granting complainant Microsoft Corporation's ("Microsoft") motion for summary determination as to respondents Barnes & Noble, Inc.'s and barnesandnoble.com, LLC's (collectively, "Barnes & Noble") first affirmative defense of patent misuse. The Commission has also granted Barnes & Noble's motion for leave to the Commission to consider respondents' late filed exhibits to their petition for review of the ALJ's ID.

Just to avoid misunderstandings: the second sentence doesn't mean a partial victory for B&N but makes its defeat even greater. It means that B&N's request for a review was denied even though material it belatedly provided was generously taken into consideration (it could have been left unconsidered for failure to meet a clear deadline).

An all-star team of lawyers was unable to convince even one of three different "layers" of the ITC (staff aka OUII, judge, Commission) that its "patent misuse" theories were even worth being discussed at a trial. Even if they had been admitted to a trial, they could have failed there, but by not even deeming them worthy of trial time, the ITC has shown that B&N's claims must be lacking in a fundamental legal sense.

Therefore, I would be very skeptical of the prospects of any (legally possible) subsequent attempts by B&N, such as raising the same "arguments" in a federal lawsuit or appealing today's Commission determination to the Federal Circuit, to resuscitate accusations that are, at this stage, dead in the water.

Whether Barnes&Noble will be found to infringe any of the three Microsoft patents still at issue in the ongoing investigation is another question. Right before the trial started, the ITC staff (OUII) recommended a finding of no violation, but it sometimes changes its position after the evidentiary hearing, and at any rate, the ALJ and, subsequently, the Commission are not bound by the staff recommendation in any way.

By the way, the fact that the ITC staff sides with B&N, at least before the trial, on the question of a violation shows that it's clearly not biased against the Nook maker.

From a strategic point of view, the decision on B&N's "patent miuse" claims is, however, much more important. Microsoft has many patents that read on Android (it is asserting more than two dozen patents against Motorola in different litigations, mostly in the United States but some of them also in Germany). It can always start new lawsuits over additional patents until B&N agrees on the need to take a license (as 70% of the market already has). But for the reasons I outlined before, B&N will hardly make headway with its primary defense, "patent misuse", in any jurisdiction.

Anyone who doesn't like Microsoft's Android patent licensing program has to oppose the patent system as a whole. Without patents, there wouldn't be patent licensing. As long as there is a patent system, Microsoft is allowed to do what it is doing. That's how one could paraphrase the ITC's outright dismissal of B&N's accusations.

Patent licensing and litigation can give rise to antitrust-based affirmative defenses, or even antitrust intervention, but the legal hurdle is rather high for the use of non-standard-essential patents to constitute abusive, anticompetitive conduct as compared to the use of standard-essential patents. There are valid reasons, from a policy point of view, for this. Patents that are not standard-essential can be worked around, even if features may have to be dropped or hobbled. The patents that form parts of standards can also be worked around before the techniques they cover become a mandatory part of an industry standard. A statement recently issued by European Commission Vice President Joaquín Almunia explains this fact, and other related considerations, very well. Let me add that the very process of standard-setting generally raises antitrust issues (because it typically means that the leading players in an industry sit down at a table and use their collective market power to define a future standard others are forced to implement), while a company's independent filing of a patent application is, per se, not a competition issue.

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ITC staff presently unconvinced that Barnes & Noble violates three Microsoft patents

Bloomberg reports that the ITC staff believes Barnes & Noble should not be held to violate any of three Microsoft patents at issue in an investigation that could otherwise lead to an import ban against the Android-based Nook and Nook Color e-book readers.

Four weeks ago, Microsoft streamlined the case by dropping various patent claims, leaving claims from four different patents (out of the original five) on the agenda. Last week, Microsoft dropped the sole remaining claim of the '522 patent, thereby narrowing the case to three different patents. Such streamlining is common and expected during the course of ITC investigations.

An even more important kind of streamlining occurred last week when the Administrative Law Judge (ALJ) in charge of this investigation tossed out Barnes & Noble's "patent misuse" defense, which was for the most part based on antitrust allegations. B&N had claimed that Microsoft was exerting control over Android with its patents and presented conspiracy theories (involving Nokia and others) that the ALJ did not consider worthwhile exploring further.

As Microsoft pointed out in a statement quoted by ZDNet's Mary Jo Foley, the ITC staff may change its opinion after the evidentiary hearing that commenced today. After the trial, the parties as well as the Office of Unfair Import Investigations (OUII, commonly referred to as "the ITC staff") file their post-hearing briefs. Those are always sealed, so we won't be able to find out if the staff position changes. By the way, the OUII doesn't even participate in all ITC investigations these days due to resource constraints. For example, the ITC staff resigned from both investigations pitting Microsoft and Motorola against each other. It can also opt to follow an investigation only with respect to one or more patents at issue in a given investigation, instead of looking at all of them. That's what the OUII is doing in an investigation involving Apple and HTC.

Even after the OUII files its post-hearing brief, the ALJ forms his own opinion. The staff recommendation is not a preliminary ruling. The staff participates as a third party.

An initial determination by an ALJ isn't the final ruling either unless the Commission, the six-member decision-making body at the top of the ITC, adopts it in its entirety. Recently the Commission has modified a number of ALJ determinations. And even the Commission isn't the final judge: its decisions can still be appealed to the Federal Circuit.

The case history of Apple's first ITC complaint against HTC is a good example. In April 2011, the ITC staff advocated (also at the beginning of the trial) the dismissal of Apple's claims against HTC (and Nokia, but Apple and Nokia settled two months later anyway, before any further decision was made). But in mid-July, the ALJ found HTC in infringement of two Apple patents. The Commission agreed with the ALJ on one of those patents, ordering an import ban against infringing HTC Android devices. Meanwhile, Apple is appealing the Commission's negative findings with respect to one or more other patents to the Federal Circuit.

The ITC has generally proven to be tough terrain for patent assertions against smartphones and tablet computers, with a very high drop-out rate across the claims of all plaintiffs.

Microsoft holds far more Android-related patents than the ones it is presently asserting against Barnes & Noble. For example, it has more than two dozen patents in action against Motorola. Since B&N is unlikely to be able to revive its "patent misuse" defense, which it hoped might provide some leverage, I believe a settlement could happen anytime, but patent litigation in the United States is a slow process compared to how swiftly other jurisdictions adjudicate these cases. If B&N continues to refuse to take a license, there's always the possibility of Microsoft bringing additional ITC complaints and federal lawsuits. Absent a settlement, the ultimate outcome of this dispute certainly won't hinge on only three patents.

As the ITC trial unfolds, Microsoft also has a series of four trials in Mannheim coming up tomorrow. Motorola Mobility and its wholly-owned subsidiary General Instrument Corporation brought claims against Microsoft over four patents that will be discussed tomorrow afternoon.

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ITC throws out Barnes & Noble's antitrust claims against Microsoft ahead of trial: no signs of wrongdoing

Barnes & Noble's primary line of defense against Microsoft's allegations of patent infringement by the bookseller's Android-based devices has collapsed in its entirety. An Administrative Law Judge at the ITC today granted a Microsoft motion to dismiss, even ahead of the evidentiary trial that will start next Monday (February 6), Barnes & Noble's "patent misuse" defense against Microsoft.

The detailed order is not publicly available, but the headline of the following docket entry leaves no doubt at all about the outcome (click on the image to enlarge):

Here's the headline again:

Initial Determination Granting Microsoft's Motion for Summary Determination of Respondents' First Affirmative Defense of Patent Misuse

"Initial Determination" is the term for a decision by an Administrative Law Judge. It can be reviewed by the Commission, the six-member decision-making body at the top of the ITC, but I haven't recently seen an ITC review of any ALJ order comparable to this one (findings of violations are a different story). The ALJs are really the masters of this stage of the investigation.

Prior to the ALJ, the ITC staff -- or more precisely, the Office of Unfair Import Investigations (OUII), which participates in many investigations as a third party representing the public interest -- already supported Microsoft's motion all the way. The OUII basically concluded that even if all of what Barnes & Noble said about Microsoft's use of patents against Android was accurate, it would fall far short of the legal requirements for a patent misuse defense. For example, Barnes & Noble claimed that Microsoft asked for excessively high patent license fees, but the OUII quoted passages from U.S. law (statutory as well as case law) that clearly said that patent law doesn't require a patent holder to grant a license on any terms. I quoted from the OUII document here. (FRAND-pledged standards-essential patents are a different kind of issue because they raise issues under competition law, starting with the standard-setting process itself.)

Today's decision is important in multiple ways (the order of the items below is not meant to indicate any prioritization):

1. Barnes & Noble bet heavily on its patent misuse defense. It stressed this one by making it its First Affirmative Defense, and it invested heavily. It even brought former Microsoft antitrust foe David Boies on board. Based on today's order, Mr. Boies is very unlikely to get to complete any unfinished business he may have with Microsoft. More importantly, it's hard to see how Barnes & Noble can gain serious leverage against Microsoft. It doesn't have any such thing as a significant patent portfolio that it could use. Playing the "antitrust" card was its only chance to bring any counterclaims at all.

2. Barnes & Noble also complained to the United States Department of Justice, an antitrust regulator, about Microsoft's patent assertions against Android. Like the DoJ, the ITC is a U.S. government agency. If Barnes & Noble failed to meet the ITC's requirements for a valid legal theory and for evidentiary support, it's also unlikely to impress competition enforcers. At this stage, Barnes & Noble was allowed to conduct wide-ranging discovery of Microsoft. Even Microsoft CEO Steve Ballmer had to testify at some point (though he wouldn't have had to appear personally at next week's trial anyway). If Barnes & Noble can't state a claim that the ITC considers credible after a large-scale fishing expedition, it just doesn't seem to have a case at all.

3. As a result, Microsoft's intellectual strategy has, essentially, received a stamp of approval by a government agency. While Barnes & Noble claimed that Microsoft was seeking to eliminate Android as a competitive threat and brought all sorts of conspiracy theories, it's a fact that Microsoft has successfully concluded patent license agreements covering more than 70% of all Android devices sold in the U.S. market, a level of acceptance that wouldn't be possible if Microsoft's terms were as unreasonable as Barnes & Noble alleged. The commercial success of Microsoft's Android patent licensing program and the wholesale dismissal of Barnes & Noble's accusations are a meaningful combination. By contrast, Barnes & Noble's claims now look like bogus borne out of desperation and possibly other emotions.

4. I believe Barnes & Noble probably knew that its First Affirmative Defense was, at best, a long shot, but it may have hoped that Microsoft would settle on sweet terms just to avoid the harassment and the risk of issues coming up at a (partly) public ITC hearing -- issues that might not have much legal relevance anyway but that could be embarrassing. Following today's order, none of the evidence that Barnes & Noble's lawyers obtained in recent months will be presented at the trial starting next week. Also, Barnes & Noble's quest for further information, such as an attempt to force Nokia, through an international process, to disclose additional material and make its CEO Stephen Elop available for a deposition, has now come to an abrupt end.

5. There was a time when Microsoft had serious antitrust worries in the U.S. and in Europe, but like other companies that experienced similar situations, it got over the learning curve. It didn't back down out of scare when Barnes & Noble screamed "antitrust!" but kept pursuing its claims and executing its licensing-centric intellectual property strategy.

6. It's an interesting coincidence that Microsoft's Android patent licensing program gets cleared by an ITC judge on the same day on which the European Commission announced a formal investigation of Samsung's suspected abuse of FRAND-pledged standards-essential patents against Apple.

I also have a few opinions and observations to share. Back in April 2011, when Barnes & Noble first tried to play the patent misuse and "antitrust" card, I already expressed my doubts. Some of the claims, such as the allegation of Microsoft having claimed to "control" Android, were hard to understand, and some of the numbers (market shares etc.) flew in the face of what I know about the smartphone market. I was not only skeptical but also, in one particular way, concerned. My concern was that Barnes & Noble's "defense" was actually an assault on the very concept of patent licensing. In my view, licensing on commercially reasonable terms is a good thing. If Microsoft really wanted to destroy Android (which is what Barnes & Noble pretty much alleged to be the objective), it would seek injunctions against Barnes & Noble's and other vendors' Android-based devices instead of selling licenses to more than 70% of the market.

Simply put, as much as I understand that Barnes & Noble wants to defend itself vigorously, the tactics it chose to employ could have discouraged patent holders in general (not thinking of any particular company) from cooperative, licensing-oriented IP strategies.

Procedural history of this motion

Microsoft initially brought this motion on June 6, 2011, arguing that "Barnes & Noble's First Affirmative Defense [of patent misuse, including antitrust allegations] is deficient as a matter of both substantive law and applicable pleading requirements".

On June 15, 2011, the OUII (ITC staff) supported Microsoft's motions (as I mentioned above).

Nevertheless, the ALJ didn't want to grant the order prior to discovery. I don't know the exact date on which it was denied because it's not in the public record, but based on other documents in the public record that reference it, it must have come down in late September 2011 or in early October 2011.

While Microsoft's original intention may very well have been to have Barnes & Noble's "patent misuse" allegations stricken as early as possible (even prior to discovery, which is always somewhat burdensome on companies), the fact that the ALJ thew out Barnes & Noble's accusations at this stage means that even an extensive discovery process didn't establish a case for wrongdoing on Microsoft's part.

The trial starting on Monday is now going to be focused on patent validity, infringement and domestic industry questions. In order to allow an efficient trial, Microsoft recently dropped many of its originally-asserted patent claims from the investigation.

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Microsoft streamlines Barnes&Noble case by withdrawing one patent and seven claims from four remaining patents

Approximately four weeks ahead of the ITC hearing on Microsoft's complaint against Barnes & Noble, the scope of the investigation has been narrowed. Microsoft and Barnes & Noble filed a stipulation yesterday (which entered the public record today) according to which Microsoft withdraws all of the asserted claims from one patent and some of the asserted claims from the four remaining patents. The stipulation expressly states that this is "not an admission as to the merits of any claim" but merely meant to "simplify the Investigation, streamline the hearing, and converse the Parties' and Commission's resources in consideration of the amount of time allotted for the hearing".

The ITC's Administrative Law Judges routinely encourage complainants to narrow their case, and if patent claims get dropped, it typically happens a few weeks ahead of trial, in mid-trial, or shortly thereafter. Last week, Motorola dropped (a few weeks after the hearing) one of its patents-in-suit against Apple.

Here's a table that shows the impact of the stipulation:

Patent Number	Patent Title	Claims Dropped	Claims Remaining
6,339,780	Loading status in a hypermedia browser having a limited available display area	1-6, 9-14, 17-26, 29-42	none
6,891,551	Selection handles in editing electronic documents	7, 9, 11	1-3, 5, 8, 10
6,957,233	Method and apparatus for capturing and rendering annotations for non-modifiable electronic content	21	22
5,889,522	System provided child window controls	1, 2	12
5,778,372	Remote retrieval and display management of electronic document with incorporated images	1	5

This looks like a thorough streamlining to me. At the ITC, which operates under more rigid timelines and page limits than the district courts, less (in terms of fewer patent claims) can be more (in terms of the final outcome).

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David Boies joins Barnes & Noble's legal team in Microsoft ITC case

One of the United States' most famous lawyers filed his notice of appearance on Barnes & Noble's behalf in the ITC investigation of Microsoft's patent infringement complaint: David Boies, the chairman of the Boies, Schiller & Flexner law firm, which happens to be one of the two firms representing Oracle against Google.

Here's an excerpt from his notice of appearance, which was filed with the ITC yesterday and entered the public record today:

Boies joins a legal team led by Cravath, Swaine & Moore, a law firm that is particularly close to IBM (and vice versa), and Kenyon & Kenyon, a firm focused on intellectual property and especially ITC cases. That team has just recently been complemented by two lawyers from Quinn Emanuel Urquhart & Sullivan, a high-profile litigation firm that also represents Google as a third party in this investigation and the three leading Android device makers (Samsung, HTC and Motorola) against Apple as well as Motorola against Microsoft.

In connection with the technology industry, Boies is particularly well-known for his representation of

• the Department of Justice in the Microsoft antitrust case (in which Boies pushed for a breakup) and

• his representation of the SCO Group (and still of SCO's bankruptcy estate) in its unsuccessful legal crusade against Linux, which certain members of the open source community claimed was funded by Microsoft.

Outside of IT his most recent high-profile case is the representation of NBA players in the lockout fight.

Microsoft sued Barnes & Noble in March 2011. The bookseller and Android device maker probably doesn't own patents with which it could effectively countersue Microsoft and has been trying ever since to accuse Microsoft of anticompetitive practices in connection with its efforts to resolve Android's alleged infringement of its patents through license agreements.

I guess the primary reason for which Boies is becoming involved is to give this matter a higher profile, but ultimately Barnes & Noble's allegations will be judged on their merits. The ITC staff (the Office of Unfair Import Investigations, which participates in many ITC investigations as a third party defending the public interest) supported a Microsoft motion to dismiss Barnes & Noble's "patent misuse" defense even without any discovery.

In this context, the OUII (ITC staff) pointed out that patent holders do not have an obligation under patent law to grant a license to anyone: they can always refuse to do so. Microsoft, however, appears to be willing to sign license deals with every Android device maker. Recently it announced that 55% of the Android market is now licensed.

Microsoft recently expressed, in a motion filed with the ITC, a belief that there may be a Google hand in Barnes & Noble's defense. I don't know what led Microsoft to think so, but there are indeed only two possible explanations for the huge amounts of money Barnes & Noble's appears to be spending on legal fees in light of the fact that, in strictly financial terms, it's unlikely to recover those fees through lower license fees anytime soon. Either Barnes & Noble's management pursues this as a matter of principle regardless of whether this makes economic sense, which wouldn't be very business-like and therefore appears less likely, or someone else is contributing funds in order to make this litigation reasonably affordable to the embattled company.

Barnes & Noble has complained about the five patents Microsoft is asserting in the ITC investigation. However, Microsoft is also asserting more than 20 different patents against Motorola Mobility, and only one of those overlaps with the Barnes & Noble case. On Scribd you can find a PDF file that visualizes the history of Microsoft's litigation with Motorola Mobility between October 2010 and August 2011, and includes reference lists of the various cases and the asserted patents (pages 15-21). I haven't had time to update that document in almost four months, but it still serves the purpose of showing the diversity of Microsoft patents that are actually being asserted against Android in court. In less than three weeks, an Administrative Law Judge of the ITC will make his initial determination on seven Microsoft patents asserted against Motorola.

While Barnes & Noble has every right to defend itself vigorously, with or without help from someone with a far greater economic interest in this, I'm concerned that some people may be trying to give a fundamentally good thing -- the concept of patent licensing as a constructive solution to infringement issues that spurs competition and promotes innovation -- a bad name without proposing a viable alternative to licensing.

Barnes & Noble argues that Microsoft lost its right to enforce any of its patents against Android due to "patent misuse". In other words, Barnes & Noble takes the extreme position that it doesn't have to pay a cent regardless of whether if it is ultimately found to make use of technologies Microsoft invented and patented. If Barnes & Noble advocated the abolition of software patents, I could see why, but as long as those rights exist, they must be respected. If patent holders are cooperative and reasonable, there isn't a competition issue in my view.

If there's no case, it doesn't matter how famous someone's lawyers may be. I can't think of a better example than SCO.

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Microsoft asks ITC to compel Google to provide material related to Barnes & Noble's antitrust claims

In connection with Barnes & Noble's widely-reported claims that Microsoft is on an anticompetitive campaign targeting Android (on which I already commented more than six months ago), I have just discovered an interesting document on the ITC document server -- a motion to compel Google to respond to certain questions closely related to Barnes & Noble's allegations:

11-11-09 Microsoft Motion to Compel Google Re. B&N Antitrust

In this post, I'm not going to evaluate who's right or wrong in this context. I just feel that this document adds some valuable information for everyone trying to get the whole picture, even though such a discovery motion is obviously not a fully-developed argument.

I'm now going to mention some key facts and quote a few passages.

Scope of Microsoft's questions

The motion refers to a subpoena dated October 4, 2011. It's attached to Microsoft's motion as Exhibit A (starting on page 15 of the PDF document).

According to the letter, Microsoft's and Google's lawyers couldn't work out an agreement on five questions that relate to Barnes & Noble's patent misuse defense and antitrust allegations. The letter says that "on November 3 Google informed Microsoft that it would not search for documents responsive to the outstanding Requests, and for the first time indicated that it would not produce any documents generated after the October 5 date of Microsoft's subpoenas".

Those outstanding requests are related to "business evaluations, assessments, strategy discussions, or analyses of":

• "the actual or potential impact, on Android distribution, of patents held by Microsoft"

• "the impact on Android distribution of actual, potential, or threatened patent infringement lawsuits by Microsoft related to Android"

• "the impact on Android distribution of public claims by Microsoft or Microsoft executives or employees that Android infringes Microsoft patents"

• "Android's capability (current or projected) as a personal computer operating system"

• "competing mobile operating systems from Microsoft"

Microsoft points to a public statement by Larry Page that appears to undercut Barnes & Noble's claims

Microsoft's motion argues that "Google is the leader of the Android Open Source Project" and "therefore can be expected to have evaluated whether, as Barnes & Noble claims, Microsoft's alleged conduct has had any business effect on Android distribution". Microsoft says:

Statements from leading Google executives indicate that Google indeed generates such business evaluations. For example, as noted above, Larry Page, Google's chief executive officer, recently stated that "[w]e're seeing no signs that [patent litigation against Android is] effective . . . If anything, our position is getting stronger." (Ex. B) (emphasis added).

A Google hand in Barnes & Noble's antitrust claims?

On page 10 of the PDF document, footnote 2 says this:

Moreover, upon information and belief, Google has provided assistance to Barnes & Noble in defending against Microsoft's Complaint. If that is the case, Google cannot help develop Barnes & Noble's patent misuse claims behind the scenes, and then refuse to produce documents related to those claims in this Investigation.

The expression "upon information and belief" suggests that Microsoft may not have hard evidence of Google's assistance to Barnes & Noble, but appears to strongly suspect this to be the case.

Search of files limited to "business custodians" including Page, Brin, Schmidt, and Rubin

On page 12 of the PDF document, Microsoft says that it made a compromise proposal to Google with respect to these discovery requests:

In keeping with its efforts to reach reasonable, good-faith compromises with Google, however, Microsoft suggested to Google that it limit its search to the files of only nine business custodians, including Mr. Page; Andy Rubin (Google's Senior Vice President of Mobile and executive in charge of Android development, and purported developer of the Android operating system); and an investor relations custodian to be designated by Google, in order to obtain evidence regarding tbe basis for statements to analysts regarding the purported business effect of patent litigation against Android.

That sentence points to a footnote that provides more names:

The remaining six custodians included Eric Schmidt, Google's chairman and former CEO; Sergei Brin, Google's other co-founder; and the four custodians Google agreed to search with respect to Requests 1-3 and 7-12.

The four persons not named in the quote above are (according to pages 172 and 173 of the PDF document) Lan Roche, Android Sales Engineer; Chris Barton, Head of Android Business Development -- Americas; John Lagerling, Director, Android Global Partnerships; and Patrick Brady, Director of Android Partner Engineering. Page 172 also explains the need to have access to documents of the high-level players mentioned above:

Requests 4-6, 15, and 16 cover higher-level business discussions within Google of the impact on Android of the alleged conduct. Therefore, it is important that senior Google executives be included as custodians, including Messrs. Page, Brin, Schmidt, and Andy Rubin. These executives have commented publicly on the alleged impact of Microsoft patents, patent claims, and litigation on Android, and may possess important evidence relevant to Barnes & Noble's claims that Microsoft's alleged conduct has had an anti-competitive effect.

Those requests (4-6, 15, and 16) are the one at issue in this motion to compel. There were various other requests, apparently of a more technical nature, and it seems that Microsoft's and Google's lawyers made more progress on those.

ITC staff's position on Barnes & Noble's patent misuse claims

Microsoft's motion contains one quote from the ITC staff's response to a Microsoft motion to strike Barnes & Noble's patent misuse defense. That motion was brought several months ago. The Office of Unfair Import Investigations supported Microsoft in a June 15 brief. It determined that Barnes & Noble's claims failed to meet the legal standard for a patent misuse defense and pointed, among other things, to the rights that patent holders have, such as the right to withhold a license to their patents or to ask for license fees of their choosing (given that they can always refuse to grant a license at all). Microsoft's motion doesn't quote that particular passage of the OUII brief, which I just mentioned to show what kind of legal position the ITC staff took.

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Android device makers sign up as Microsoft patent licensees -- an overview of the situation [UPDATED, TWICE]

[Updated TWICE]

• on Thursday, June 30, following the announcement of a license deal between Microsoft and Japanese consumer electronics company Onkyo -- the third announcement of its kind during that week

• on Tuesday, July 5, following the announcement of a license deal between Microsoft and Taiwanese device maker Wistron

[/Updated TWICE]

In a little more than a week, Microsoft announced four new license deals with Android device makers:

• on Monday, with General Dynamics Itronix,

• on Wednesday, with Velocity Micro,

• on Thursday, with Japanese consumer electronics manufacturer Onkyo, and

• on Tuesday, July 5, with Taiwanese device maker Wistron

In April 2010, Microsoft had already announced a license deal with HTC. So as of July 5, 2011, there have been five such announcements

There are also patent agreements in place with other device makers such as Samsung and LG that may or may not extend to their Android devices. There may be even more: many patent license deals are never talked about in public.

I thought it might be helpful to analyze the information that is available on Microsoft's smartphone patent license deals. Those deals aren't just between Microsoft and its licensees. This should also be of concern to Google.

Personal perspective

I fought hard against Microsoft when the EU was considering a piece of legislation on software patents and continue to disagree with them on the desirability of such patents. My views are consistent. However, I recognized in a blog post last summer that their focus on licensing (rather than litigation) reflects a cooperative approach that allows all players to innovate.

The primary reason I campaigned against software patents was a concern over patents being used for exclusionary purposes. In a hypothetical world in which every patent holder grants licenses on reasonable terms, I would still oppose software patents but my concerns would mostly relate to such problems as the ones posed by Lodsys and MacroSolve.

Business perspective

On this blog I report a lot on smartphone-related patent litigation. Earlier today I wrote about Samsung's ITC complaint against Apple. Yesterday I discussed Oracle's damages claims against Google, amounting to $2.6 billion, and on Monday I evaluated the potential impact of certain reexaminations on the dispute between Oracle and Google. Tomorrow the ITC will hand its decision on Kodak's compaint against Apple and RIM. All of those stories are exciting to read and write about. But I've been active in this industry for more than 25 years, so I know that litigation (however exciting to watch) is a distraction and license deals that help to avoid or settle litigation are generally good news from a pragmatic, business-like point of view.

That said, I'm sure that Google is very unhappy about the fact that its vision of a "free" smartphone operating system is reduced to absurdity on a daily basis. Most people have understood by now that Android isn't truly "open" in light of Google's heavy-handedness. Android is neither "free" as in "beer" nor "free" as in "speech". I still like Android and use it extensively: my current phone is a Samsung Galaxy S II. But the facts are still the facts concerning Android's intellectual property issues.

Every device maker who feels forced to take a patent license on Android disagrees with Google's claims in the sincerest form: by putting his money where his mouth is. That is exactly what Google fails to do: it doesn't indemnify device makers because it's aware of Android's infringement.

This week's new licensees: General Dynamics Itronix, Velocity Micro, Onkyo

Frankly, if you had asked me last week to name the most famous makers of Android-based devices, I would have named more than half a dozen but I wouldn't have thought of General Dynamics Itronix, Velocity Micro, or Onkyo. However, at a closer look those are interesting licensees.

Itronix is a subsidiary of General Dynamics, a major defense contractor with a market cap of (as I write this) $27 billion. Its "rugged" (in terms of "robust") computers are "wearable": soldiers can attach them to their forearm, for example.

Not only would General Dynamics have had the financial strength to defend itself against a possible patent infringement lawsuit but it's also a company that's pretty patent-savvy. The patent database of the U.S. Patent and Trademark Office lists General Dynamics as the assignee of almost 1,000 patents (over the last few decades). By comparison, the same kind of search delivered only 701 results for Google. So it's a safe assumption that General Dynamics had the knowledge that's required to analyze patent infringement assertions, and arrived at the conclusion that taking a license was the way to go.

Since the other new licensee, Velocity Micro, is a privately-held company, it's harder to find information about it except for the company info section of its website and a Wikipedia entry, which also mentions several awards that the company has won.

What's interesting about Microsoft's license deal with Velocity Micro is that it extends to (among other devices) the Cruz Reader tablet computer. This is yet another addition to the list of tablet computers on which Microsoft collects patent royalties. That list also includes Amazon.com's Linux-based Kindle and HTC's tablets (such as the HTC Flyer).

With Thursday's announcement, Onkyo Corp. also agreed to take a patent license from Microsoft that covers Android-based tablets. (Onkyo also has some patent expertise, being the assignee of more than 100 U.S. patents.)

The fourth licensee to be announced in this series of four announcements, Wistron, states the following on its website about its history:

Until the separation from Acer [in 2002], Wistron operations were known as the Design, Manufacturing and Sergice (DMS) arm of Acer Inc.

So this is a company that supplies components to others. Microsoft's license agreement with Wistron may, therefore, relate to Android devices sold under a variety of different brands.

By contrast, Barnes & Noble refused to take a license for its Nook and Nook Color tablets and now has to defend itself against Microsoft in an ITC investigation and in court. When Microsoft's lawsuit against Barnes & Noble was announced, I already pointed out that it's a matter of of a level playing field that Microsoft has to require all competitors in that market to pay so as not to put those who pay at a disadvantage vis-à-vis non-paying infringers.

License deals between Microsoft and major smartphone and tablet makers

In the first part of this post I mentioned Microsoft's announcement of a royalty-bearing patent license deal with HTC relating to Android devices. The exact amount of the license fees paid by HTC under the deal was not revealed. More recently, Citigroup analyst Walter Pritchard claimed to know that HTC pays $5 per device and that Microsoft asks other Android device makers, according to him, for $7.50 to $12.50 per device. Those numbers could be accurate. The actual numbers could also be more or less. Licensors and licensees don't have any obligation to disclose their deal terms to the general public. HTC is a fast-growing, profitable company whatever the license fee may be.

An HTC competitor, Motorola Mobility, preferred to be sued. Considering how things are progressing at the ITC, I believe Motorola will ultimately have to pay royalties as well.

Several other major Android device makers -- including Samsung, LG and HP -- had or have patent license agreements in place with Microsoft according to this press release issued in August 2010 (on Microsoft's settlement with Salesforce.com). But the scope of those agreements isn't clear. Android-based devices may or may not be included. In that same press release, Microsoft also mentioned a license agreement with Apple. That agreement could also be broad or narrow. Maybe we'll find out one day.

What's clear is that Microsoft routinely enters into patent license agreements with companies of all sizes. There are about three dozen Android device makers out there, and we may see more announcements of license deals over time.

Android's problem: royalty demands by many right holders

Android doesn't have a "Microsoft problem". Microsoft is just one of many right holders who believe Android infringes on their intellectual property rights. It's obviously an important one with its portfolio of 17,000 patents, but it's by far not the only one.

Oracle is suing Google (as I mentioned). Apple is suing Samsung, Motorola and HTC. Nokia just settled with Apple and plans to grow its patent licensing business. Gemalto is an example of a medium-sized company asking for royalties. And there are literally dozens of smaller patent holders.

As a result, we'll see many license deals, and unfortunately also many more lawsuits. No single right holder is the issue. But Android device makers face a significant total cost of paying royalties to all those right holders.

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Barnes & Noble's answer to Microsoft's complaint raises more questions than it answers

Two days ago Barnes & Noble filed its answer to Microsoft's patent infringement complaint of March 21, 2011 with the U.S. District Court for the Western District of Washington. Barnes & Noble is the first defendant to reply. Its foreign manufacturers Foxconn and Inventec have yet to do so.

On April 19, 2011, the US International Trade Commission had instituted an investigation of Microsoft's corresponding complaint related to the same patents and products (investigation no. 337-TA-769). What happens all the time in such situations is that the federal lawsuit is stayed for the duration of the corresponding ITC investigation. I've seen it happen between Apple and Nokia, Microsoft and Motorola, and in other disputes. Therefore, Barnes & Noble's answer in the Western District of Washington lawsuit may not play a practical role anytime soon, and if the dispute is settled, it will likely be over before the federal case ever goes on trial.

No infringement counterclaims

The first thing I always look at when companies respond to infringement complaints is whether they assert any patents of their own as counterclaims. Barnes & Noble didn't do so, which is what I expected since I had previously seen a letter dated April 7, 2011, to the ITC, in which Barnes & Noble made the following claim:

"Barnes & Noble in particular was targeted by Microsoft because it is primarily a bookseller and not an electronics manufacturer, so it has no stable of defensive patents to use against Microsoft."

If that is so, how come the first Android device maker Microsoft sued is Motorola? That company has many thousands of patents, and has indeed asserted 21 of them against Microsoft in various counterclaims and countersuits.

While Barnes & Noble describes itself as a bookseller, financial investors increasingly view it as a mobile device maker because of the success of the Nook e-reader.

Barnes & Noble believes that a "stable of defensive patents" is needed in the mobile device market, and presumably Barnes & Noble held this belief all along but took its chances by entering the market even without a sufficiently strong patent portfolio. That was Barnes & Noble's own business decision. Maybe they thought they'd be the first mobile device maker never to pay patent royalties to anyone. If that's what they thought, it wasn't a realistic assumption. If they knew that patent royalties are simply a cost of doing business in this field, then it doesn't make sense that they now portray royalty demands by patent holders as a fundamental threat to the industry at large.

If it were up to me, software ideas wouldn't be patentable in the first place and companies like Barnes & Noble would never have to defend themselves against software patents. Even in that scenario they would still need to license hardware patents. However, the claim that they don't have a "stable of defensive patents" doesn't look like a realistic approach to the problem. If they want a different intellectual property framework, why didn't I ever see them take any political action to bring about change?

Additional Microsoft patents mentioned in Barnes & Noble's filing

Paragraph 24 of Barnes & Noble's answer talks about the patents that Microsoft offered to license to them:

"The proposed license would have covered the ’372,’780, ’522, ’551, and ’233 patents asserted in this action, along with other previously identified Microsoft patents, including U.S. Patent Nos. 5,579,517 ('the ’517 patent'), 5,652,913 ('the ’913 patent'), 5,758,352 ('the ’352 patent'), 6,791,536 ('the ’536 patent'), and 6,897,853 ('the ’853 patent')."

I have checked on those five patents and saw that four of them were previously asserted by Microsoft against Motorola (in different complaints). One of them is new: U.S. Patent No. 5,652,913 on a "system for providing intercommunication of I/O access factors stored in a shared data structure, accessed and maintained by both file system and device driver."

Broad accusations of anticompetitive conduct

A substantial part of Barnes & Noble's filing focuses on allegations that Microsoft leverages its patents "to render the Android™ Operating System and other open source operating systems uncompetitive and unpalatable vis-à-vis Microsoft’s own operating systems" (quote from paragraph 43 of the answer to the complaint). Two paragraphs later, Barnes & Noble mentions Microsoft's patent agreement with HTC as an example. However, the HTC example clearly contradicts Barnes & Noble's theory of Android becoming "uncompetitive und unpalatable": earlier this month, HTC's market capitalization surpassed that of Nokia (and previously that of RIM). If a patent license deal with Microsoft rendered Android uncompetitively expensive like Barnes & Noble claims, how come HTC is so very profitable?

Another paragraph later, Barnes & Noble mentions that its competitor Amazon.com pays patent royalties to Microsoft. With Amazon.com it's harder to tell how profitable the Kindle business unit is because the company is so diversified, but there are no indications that the need to license patents is driving Amazon out of that particular business.

I'm personally against any anticompetitive abuse of patents. If the way a company uses its patents crosses the line between reasonable monetization efforts and the destruction of legitimate competition, it has to be stopped. But if companies cry foul over allegedly anticompetitive conduct even though a reasonable license deal is proposed, it only becomes harder to make the case when there really is a need to present a competition argument.

The way Barnes & Noble argues just doesn't convince me, at least not at this stage. The broad accusations that Barnes & Noble makes aren't supported by evidence. Some of what Barnes & Noble plans to present may just not be suitable for the public record, such as the exact amount of the royalties Microsoft asked for or the restrictions Microsoft allegedly wanted to impose. However, I've just given some examples of claims that can be controverted just with publicly available information, such as the fact that HTC is doing phenomenally well regardless of a license deal with Microsoft, which makes it hard for me to believe that Microsoft is driving those Android device makers out of business.

If Android ever faces a competitiveness problem because of patents, it's not going to happen because of just one company. There are large corporations like Apple (most recently against Samsung, previously against HTC and Motorola), Microsoft and Oracle asserting their rights in connection with Android; medium-sized ones like Gemalto; and a large and growing number of smaller players. All in all, 41 Android-related infringement suits have been filed already by my count. The combination of all of them is a significant Android cost factor, but as long as software patents exist, companies like Barnes & Noble will have to pay royalties on some of them. That's the name of the game.

Cravath (IBM's primary law firm) working for Barnes & Noble on this case

Barnes & Noble's answer to the complaint was filed by the Seattle-based law firm of Hillis Clark Martin & Peterson in conjunction with Kenyon & Kenyon and, very interestingly, Cravath, Swaine & Moore. New York-based Cravath is closer to IBM than any other law firm (even though some others, such as Quinn Emanuel Urquhart & Sullivan, also do a fair amount of work for Big Blue). Eben Moglen also practiced law at Cravath.

Even though Cravath is mentioned only in the third place, it's possible that they did most of the work on Barnes & Noble's answer to the complaint since it's a much larger firm than the other two and its primary client, IBM, is the world's number one patent bully, so they presumably do a lot of work in connection with patent licensing and litigation.

Next steps

Like I said before, the federal lawsuit could be stayed for the duration of the ITC investigation. I will keep an eye on that one as it unfolds. Having read Barnes & Noble's answer to the federal complaint, I wouldn't be surprised if this was settled well ahead of any trial and if Barnes & Noble only sought sweeter deal terms.

It seems to me that Barnes & Noble tries to be the most unpleasant defendant it possibly can be without bringing an infringement countersuit. Its answer to the federal complaint and also its previously mentioned letter to the ITC smack of mudslinging. It's like they try to show Microsoft that they can say nasty things and try to make Microsoft look very bad. It's similar to what Google tried against Oracle, but even more aggressive and the arguments are even further-fetched. Oracle kept pursuing its strategy nevertheless (and that case may now go on trial before the end of the year). My guess is that Microsoft will also proceed irrespectively of the tone and content of Barnes & Noble's court filings. And as one of the very next steps it will be interesting to see Microsoft's answer to Barnes & Noble's answer to the complaint.

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Hybrid Audio LLC now also sues Motorola, Nokia, RIM, Samsung in addition to Apple, HTC, Dell (already sued in December)

After Apple's patent infringement lawsuit against Samsung, there are already a couple of other developments on the Android-related patent litigation front.

For the sake of a complete record, let me mention that the ITC announced yesterday that it is investigating Microsoft's complaint against Barnes & Noble, FoxConn and Inventec. The investigation number is 337-TA-769. I will follow the process. This vote comes as little surprise. The previous smartphone-related ITC complaints I saw also resulted in formal investigations.

In December I reported on Hybrid Audio LLC's patent infringement lawsuit against HTC, Apple and Dell over U.S. Patent No. RE 40,281 on "signal processing utilizing a tree-structured array". Yesterday, Hybrid Audio LLC basically expanded its suit by naming additional defendants. In order to do so,

• Hybrid Audio LLC filed for voluntary dismissal without prejudice of its original suit (case no. 6:10-cv-00677, Eastern District of Texas; at that point, the defendants had not yet responded to the complaint or moved to dismiss or transfer it), and

• filed a new suit (case no. 6:11-cv-00195, same federal court) over the same patent but with a longer list of defendants and, consequently, infringement accusations.

These are the additional defendants and the products named as examples of allegedly infringing devices:

• Motorola Mobility:
  "Xoom, Atrix, Droid 2, and Droix X"
  (all of those are Android-based)

• Nokia (two legal entities):
  "5610 XpressMusic, 6650, 6133, 5310 XpressMusic, E7, and 6275i"

• Research in Motion (two legal entities):
  "the BlackBerry smartphones"

• Samsung (three legal entities):
  "R0, R1, P3, U5, S3, S5, and Q2 MP3 Players, Messager Cell Phone, JetSet Cell Phone, t249 Cell Phone, DVD Players, and Digital Photo Frames"
  (while those aren't Android-based, a settlement with Samsung would most likely also include any infringing Android-based Samsung products, and if Hybrid Audio proved infringement by Android-based devices in connection with HTC and/or Motorola, even a ruling may effectively affect Samsung's Android devices; otherwise, it would be easy for Hybrid Audio to launch a follow-on suit if necessary)

So Hybrid Audio LLC decided to take on some additional behemoths. I in my post on Hybrid Audio's original suit back in December I discussed that company's background and the patent in more detail than in this post, which is intended to be just a little update.

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Microsoft sues Barnes & Noble, Foxconn and Inventec over 5 patents infringed by Android -- quick first comments

I just saw that Microsoft has announced a patent lawsuit against Barnes & Noble, Foxconn and Inventec over five patents allegedly infringed by Android. Barnes & Noble sells the Nook e-book reader. I also read a post on Microsoft's corporate blog that says "Licensing is the Solution" for patent infringements by Android.

Microsoft filed a complaint with the US District Court for the District of Western Washington, which I have downloaded from PACER.gov, and one with the US International Trade Commission (ITC). Microsoft lodged complaints against Motorola in the same two fora, and asserted the same patents in both of them. I haven't yet seen the ITC complaint against Barnes & Noble but wouldn't be surprised if the ITC complaint mirrored the federal lawsuit, just like in the Motorola case. [Update] Meanwhile Bloomberg has confirmed that the ITC complaint mirrors the federal lawsuit.

There are five patents-in-suit. One of them was previously asserted against Motorola in a counterclaim; the other four patents have not been previously asserted against Motorola, but if they're infringed by Android, then Microsoft could always elect to do so. Given the breadth and depth of Microsoft's patent portfolio, this isn't surprising.

The patents-in-suit are:

• US Patent No. 5,778,372 on "remote retrieval and display management of electronic document with incorporated images"

• US Patent No. 6,339,780 on "Loading status in a hypermedia browser having a limited available display area" (this is the one that was previously also asserted against Motorola)

• US Patent No. 5,889,522 on "system provided child window controls"

• US Patent No. 6,891,551 on "selection handles in editing electronic documents"

• US Patent No. 6,957,233 on "Method and apparatus for capturing and rendering annotations for non-modifiable electronic content"

At first sight, five patents may not seem to be a huge number, considering that in some other Android-related suits there are several dozen patents in play. But Barnes & Noble, Foxconn and Inventec will certainly be aware of the list of 23 patents asserted by Microsoft against Motorola (for the latest update on that dispute, read this blog post; there's also a visualization on Scribd).

While Barnes & Noble is the first defendant named in today's complaint, the implications of this lawsuit go way beyond just the Nook e-book reader. Microsoft also decided to sue manufacturing companies Foxconn and Inventec. If Microsoft prevails and obtains an injunction (and/or an ITC import ban) against those companies, they will be enjoined from selling any other Android-based products infringing the same patents unless there is a license agreement in place for a given product. According to Wikipedia, Foxconn manufactures devices for many major players, including some well-known vendors of Android-based devices such as Acer, Asus, Dell, Samsung and SonyEricsson.

Microsoft explains in the blog post I mentioned above that other companies are already paying royalties for Microsoft patents that read on Android:

"Last year, HTC took a license covering its Android-based smartphones, confirming the viability of our license-first approach. In the e-reader space, Amazon.com signed a patent license with Microsoft last year covering its Kindle device. And many other device makers have also taken licenses to Microsoft’s patents under a number of existing licensing programs."

HTC, Amazon.com and any other licensees compete with Barnes & Noble's Nook. For Amazon.com, Barnes & Noble is a particularly relevant competitor. If Barnes & Noble refused to pay (which is what Microsoft says), it's actually a matter of fairness that Microsoft enforces its patents because otherwise those who respect Microsoft's rights would be at a competitive disadvantage versus non-paying infringers. I would personally prefer for no such patents to be granted in the first place -- but if they exist and are enforced, which is the law of the land, then there must be a level playing field. A lawyer working for various companies paying patent royalties told me last year how important it is that everyone in a given market has to pay royalties or, alternatively, no one.

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