Why is Microsoft basically licensing Google's products? | Hacker News Reader

Why is Microsoft basically licensing Google's products?

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59 pointsnextparadigms44 comments

Microsoft is not licensing Google's products. They're licensing their own intellectual property, which happens to be used in Google's products.

I know this sounds absurd to a lot of people, but it makes sense on some levels. Take the names out of the mix and it's a bit easier to detach your emotions

* PhoneCorp invents a new interface that is unique, useful, and makes phones very easy to use

* BizPhones thinks this technology is good and would also like to incorporate it in to their product

* BizPhones negotiates a licensing agreement so they can use the technology, making it possible for more consumers to enjoy the benefits, and fairly compensating PhoneCorp

Things get a little confusing when you have more parties involved. Google doesn't "sell" Android, so there are no fees to extract -- and they'd be expensive to sue -- so rather than chase that ball, Microsoft looks for companies that are making money by selling devices that use Android. Microsoft holds patents for technologies used in the product and is asking for royalties. If a handset manufacturer and Microsoft can find terms they agree to, it makes sense to just license the technology and keep on moving down the road to making more money.

This, in and of itself, does not represent a broken system, IMO. Those who invent important technologies deserve to be compensated. Where the system is broken is in the award of patents for obvious solutions to problems. Or award of patents for systems that cannot be worked around, effectively granting an IP monopoly.

A major roadblock to changing the system lies in the fact that large companies have tremendous amounts of money invested in patent portfolios. We're talking billions, maybe trillions of dollars in aggregate. No one wants to see all that investment washed a way with the flick of a legislative pen.

> I know this sounds absurd to a lot of people, but it makes sense on some levels. Take the names out of the mix and it's a bit easier to detach your emotions

> * PhoneCorp invents a new interface that is unique, useful, and makes phones very easy to use

> * BizPhones thinks this technology is good and would also like to incorporate it in to their product

> * BizPhones negotiates a licensing agreement so they can use the technology, making it possible for more consumers to enjoy the benefits, and fairly compensating PhoneCorp

That description is clearly in favor of one side of the argument here.

Here is an alternative description:

> * PhoneCorp files a patent for a fairly general and obvious concept.

> * BizPhones makes a phone, without reading PhoneCorp's patent. The phone sells like hotcakes.

> * PhoneCorp threatens to sue BizPhones for 'infringing' its patent, if BizPhones doesn't pay a 'license fee'.

People don't write hundred million dollar checks for a single obvious invalid patent. There's like 20 companies signed up. There's a reason they all sign up and it's probably pretty compelling evidence that MS has multiple unlikely to be overturned or easily worked around patents being infringed.

You forgot to mention that most of them are also Microsoft's Partners and has other business interests with MSFT.

There are definitely reasons for them signing up. Among them:

1. The risk of being sued. Even if the patents are bogus, they will still lose a lot of money from defending themselves.

2. Microsoft sweetens the deal with other business interests of theirs. For example, a discount on Windows licenses.

To further clarify. Imagine, for the sake of a nice example, that MS owned the patent to pinch-to-zoom.

Google incorporate pinch-to-zoom in android but don't actually sell any product featuring pinch-to-zoom so aren't actually infringing on the patent.

Some other company produces an android device and thus creates a product that uses pinch-to-zoom and thus infringes on MS' patent.

>They're licensing their own intellectual property, which happens to be used in Google's products.

The only one claiming that is Microsoft. Until the issue has been decided in court, we can't know that Google has infringed on any of Microsoft's intellectual property. According to the article, none of the claims have yet been contested in court. Therefore, we don't know for sure that Microsoft's technology is being infringed upon by Google.

The flip side of this is that Microsoft's claims must be so compelling that no one wants to even test them in court.

Either that or no one that Microsoft has shaken down has the financial wherewithal to challenge Microsoft's claims.

It's also worth noting that there's a long history of IP fights in the mobile especially over 2G/3G technologies yet we still have an assortment of fantastic modern SmartPhones to choose from. What Microsoft is doing is really nothing new and the handset makers were pretty quick to strike deals probably because it's nothing new to them. When Samsung makes a television they are paying a variety of companies license fees on various parts/technologies for example. Why would SmartPhones be any different?

So this wouldn't be considered "patent trolling"? I know Microsoft has had quite a history with Android and I always assumed it was just them using their patents to make some quick money.

Great answer, by the way. Definitely cleared up a lot of questions I had.

The term "patent trolling" is generally reserved for companies who have no intention of bringing a product to market. Keep in mind that Microsoft has a competing product in the market, and spends millions of dollars on R&D.

Patents are a way of protecting a legitimate R&D effort. Imagine the disincentive with regard to R&D if a company had no protection from a competitor simply taking their idea once they came to market.

The key is to protect patents from abuse, while still providing a means to protect legitimate effort in innovation for a reasonable period of time.

Imagine the disincentive with regard to R&D if a company had no protection from a competitor simply taking their idea once they came to market.

Yes, allowing any random developer to create a spreadsheet or first person shooter or social networking app would obviously bring innovation to a crashing halt.

Wow three straw men in one sentence. Well played I guess.

Great points.

Google knows they are infringing MS's patents, that's why they are shopping for their own war chest rather than going for a trial.

Yes, in the same sense that I "know" that every nontrivial piece of software I've written likely infringes on many patents that should never have been granted.

The system is broken and we've seen that already, even if initially it had the best of intentions. I am of the opinion that you should only be able to license complete products or services that just work.

For example if you make Super AMOLED panels, then you can license the technology to LG so they can also make Super AMOLED panels, or you can directly sell them the panels, if they don't want to build them themselves.

The difference between this and what Microsoft is doing, is that those patents are worthless to the licensees. They can't build any product out of them. So they are paying a license to not get sued, not because they want the technology. Doesn't anyone find something wrong with this? The incentives are all wrong here, and it's focused too much on rent seeking.

You shouldn't be able to license a "technology" unless it's a marketable product. This is how we got into this mess, where thousands and thousands of trivial patents can be licensed. But say you really do invent some awesome technology, and it's not a complete product. Then you should only be allowed to sell that technology (with you not being able to use it anymore), but never to license it.

There are reportedly 250,000 patents in a smartphone. Microsoft themselves have less than 10% of that amount in total, probably much less considering not all their patents are mobile related. So how does technology get to evolve even if you go out of your way to create a phone that is as unique as possible, you still probably infringe about 200,000 of them. This is why the "patent system" is so screwed up, and doesn't really reflect how technology really evolves in the real world.

>You shouldn't be able to license a "technology" unless it's a marketable product.

You just gave this long explanation of why it's reasonable to charge LG for Super AMOLED licensing. AMOLEDs are not marketable products. No one buys an LCD randomly to keep in their pocket. They buy a phone that happens to use an AMOLED display.

Regardless of whether the patents in question are valid, your argument makes no sense. Basically no one ever licenses entire products except for end-user licenses. When it comes to licensing for other companies' production, they generally license various technologies which are not by themselves marketable products.

  No one buys an LCD randomly to keep in their pocket.

Straw-man. A phone maker buys an LCD to make a phone. Or an AMOLED display to build a more desirable phone.

Marketable doesn't mean "marketable to end-users". It means marketable to anyone, including other businesses.

As Tloewald said, this is begging the question.

If I can sell you a license to a patent so that you can build a more desirable phone, how is that different from selling you a display for the same reason? If there's a market, then it's marketable.

Software patents are often attacked with silly arguments that don't hold up to scrutiny. Software patents should be fought with reasoned arguments, not invalid logic.

This definition of marketable is Circular. If I can sell you a license it's marketable.

It's a protection racket. Novell (and now Attachmate) pay MS directly for "indemnity" for their SuSE customers. https://secure.wikimedia.org/wikipedia/en/wiki/Software_pate...

RedHat has said that they won't pay MS specifically, but they seem to be paying off a bunch of other patent trolls. http://fosspatents.blogspot.com/2011/04/red-hat-is-now-regul...

So if the patents are overturned what kind of damages do you get against MSFT for forcing you to license them?

Nothing. MS isn't forcing anyone to do anything. When faced with a patent holder who claims you distribute an infringing product, you have two choices:

1. Pay up. 2. Don't pay up.

If you don't pay up, and the company wants to take you to court, then you have to either prove yourself to be non-infringing, or get the patents invalidated.

MS is of course being pretty shady by picking targets that are very likely to want to avoid litigation with a huge company with a legal war chest. But unfortunately, patent law allows companies to "overlook" potential infringers if they want, to no ill effect.

Realistically, none. The fine print on the license will cover this eventuality.

In any event, if they didn't overturn Amazon's 1-click patent they're not going to overturn patents on other obvious things, so I doubt it will happen.

Hello - we are a big company with an infinite amount of lawyers

We are claiming, without having to show any evidence, that you are violating one of our patents but we aren't to going to tell you which one.

If you pay us money we will leave you alone.

If it turns out we were lying we still get to keep your money and there is no penalty on us.

And we don't need patent reform?

Well, I'm assuming they have patents that apply, because apparently there are lots of things that are covered by dozens of patents. Broadly written patents are easy to get and very difficult to break. That's not a workable state of affairs.

Yeah, we need patent reform. Hell, I'd go even farther than that. I'd get rid of them altogether. The system we have today works at cross purposes to the original purpose of patents - it discourages innovation, because if you come out with a new product odds are it's covered under a hundred broadly written patents. Why bother, unless you're a huge company with a large patent portfolio of your own?

Maybe you could sue for damages if you can prove they actually lied about it.

You can almost always sue. But given that MS is probably holding an actual patent granted by the USPTO (and haven't just made one up and said it's real), it's a guaranteed loser.

"Because they can."

If I can convince you that your product will cost you a billion dollars in damages unless you pay me $20, you are just going to pay me $20 because that's nothing and it's the cheapest way to solve the problem. It takes backbone to stand up and say, "your patents are invalid, I refuse to pay" because you will be spending a lot of money on lawyers and getting your products un-embargoed.

The way it works here is: a phone costs $1 for R&D, $50 for parts, and $300 in markup. If they add a $5 license fee to that a few times, who cares? They're still selling their $51 phone for $400.

What are the patents in question? We have no idea if it’s frivolous or not without answering that question.

(It’s fine not to be happy about it, but that’s very different than arguing the merits.)

This is much closer to how the system is suppose to work. You invent a technology and allow the consumer to benefit from it by licensing it out to anyone who wants to use the invention in their product.

Deleted comment

Suppose I am a company that makes a technology. I then decide it's in my interest to patent it. In creating this patent, it's in my best interest to make it as broad as possible, because

- It allows me to get licensing revenue from more companies who may not have implementations that are exactly like mine.

- It hides some of the details of my implementation, keeping some of the "special sauce" secret, while still protecting it.

It is thus my goal to make my patented as broad and obfuscated as possible, but still valid. The incentive structure is lined up wrong. It should be set up so that the easier it is to turn the patent into an implementation, the more worth it should have. Of course, that's a difficult problem to solve.

I thought that these agreements didn't actually involve any payments to Microsoft, and in some cases even involved payments going the other way, to give MS fuel for its FUD.

> a system that allows a company

Well that's your problem right there- you're under the impression that things are only legal if they're specifically allowed. It's the other way around, though, isn't it?

Why shouldn't Microsoft be allowed to do this? What part of this should be illegal? Maybe you could call it racketeering but that's a stretch imho.

The intellectual property system that lets you sue your competitors because they are using your IP is a privilege. It's not a right. Not a human right. It's not in UN or otherwise ratified lists of human rights - right? And corporations aren't person anyway.

So, it's a privilege, so the public does have the veto power. If it says, "no patent racketeering" - they don't do it or cease to exist as a legal business.

The problem is that nobody is there to call the veto.

I think you just stated this wrong. Read this:

http://cyberlaw.stanford.edu/blogs/olson/archives/003331.sht...

Just a different take on why IP is a natural right.

The author gives a suggestion that we in software may want to heed: "stop calling it intellectual property". Maybe "intellectual discovery" instead?

Where are any links on intellectual property being human right?

Patents aren't "in software". Patents are written by lawyers, for lawyers, and are obviously a property of kinds (can be sold without being a service).

Wow, my post read almost the complete opposite of what I intended. I meant to say that the author gives another argument for why IP is NOT a natural right.

Spell checking is nice, but my main problem is writing the opposite of what I mean.

After reading through the comments, I come to the cynical conclusion that it is actually Google who is selling Microsoft products (if you consider IP a product). They are not selling it by taking money, but they are distributing Microsoft's products inside Android so that Microsoft can go along and collect the money from the ones who use Android to sell their phones. So what is the "commission" that Google takes for selling Microsoft's IP? Well, it allows them to sell their own products which is advertisement. And why are the phone manufacturers willing to pay to Microsoft? I guess because they figured out that it is cheaper to pay Microsoft if it allows them to sell more phones.

So it is a win-win situation for everybody except the end-costumers who buy the phone. As I said, this is just a cynical view, which might explain that nobody is not yet going to court.

Google doesn't use patents and that's a great boon to their benefit. Google makes money from self-made technology and uses no other patents, that's what matters. Microsoft is evil.

To be fair, Google has been getting into the patent game too. It bought a ton of patents, and while it hasn't sued with them, it has transferred some of them to partner companies that did sue. So Google is involved in the patent battle, by proxy.

I do agree though that Microsoft is clearly abusing the patent system far more. It files far more lawsuits, and I have yet to see one about a patent that actually sounds reasonable.

>And, notably, Microsoft has never sued Google over those products.

Apple has never sued Google either. And no one has ever sued kernel developers. It doesn't make any sense at all suing someone that isn't directly making gobs of money from selling the software/hardware. Also, big tech giants don't usually sue each other over patents, since the other side can retaliate in kind and then the end result is cross-licensing minus wasted lawyer money and PR cred.\

It's Samsung, HTC, Motorola etc. making the real money from Android.

> ..when there is simply no evidence that those products infringe on any Microsoft patents.

Follow the lawsuits against Motorola and Nook for this. If they lose, the other licensees may think twice about continuing to pay. Also, Apple is trying to get in on the action.

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