Microsoft Earns $2 Billion Per Year From Android Patent Royalties?
businessinsider.com
businessinsider.com
More seriously, I have a question for those who know more about this...
1. Are these generic, broad "idea" patents and hence there is nothing Google/OEMs can really do here to avoid licensing them? If not, why don't they use an alternative implementation to avoid the conflict?
2. If the answer to #1 is yes, how does Apple avoid this problem? Are they also licensing from Microsoft? Or is Apple in some sort of a mutual cross-licensing agreement here to fight the common enemy Google?
no alternative implementation would help as it is not about some specific patents, it is more about [litigation] threat that some patents in the vast portfolio can be found that may be in some sense considered violated. Basically it is racket called Android Licensing Program - you pay "protection money" to MS in exchange for it not bothering you.
What interesting here is that Google seems to leave its OEMs to fend for themselves, thus instead of fighting one Google over 2B/yearly pot (the show that first row tickets for would sell like for Superball), MS extorts fifty million here and hundred million there which is much easier and safer.
This might have been a valid criticism a couple of years ago but at the moment I believe Google is defending claims by Microsoft against Motorola claiming that Android device makers don't need third-party patent licenses. So it certainly seems like they're doing their fair share to stand up to MS -- more than any other OEM (it's not like Samsung is some mom and pop shop that couldn't put up a fight).
"Google's Motorola Mobility, which prefers litigation even though it's a grossly unsuccessful strategy for Google "
and
http://www.fosspatents.com/2013/04/setback-for-google-german...
[1] http://www.networkworld.com/news/2011/070611-microsoft-andro...
They may or may not be trivial, but I've only known the patent numbers for an hour, and you only knew them for 15 minutes when you posted--and it is not possible to have read them in sufficient detail to make such a judgement in that time.
To find out what a patent actually covers you have to read more than just the title and the abstract. The title and abstract are mostly useful for determining what a patent does not cover rather than determining what it covers.
The title just tells you the broad area the patent is in, and the abstract narrows that down a bit, but both will cover a lot of ground. That's why they are most useful for exclusion, not inclusion.
To find out what the patent actually covers, it is the claims that matter. The claims are interpreted in light of the specification, so you must read that to understand the claims.
For instance, a patent might have a title of "Acoustic Repelling of Mosquitoes", which seems really broad, but when you read the specification and claims, it might turn out that the patent only applies when the mosquitoes are a specific species, exactly three sound generators are being used, they are arranged in an equilateral triangle, the temperature is above 95F, and it is daylight.
(Actually, to really tell what is covered, you need to check the file for the patent from the patent office. The examiner and the applicant often go back and forth arguing over whether a claim should be allowed. The arguments and concessions the applicant makes to convince the examiner to allow the claim become limits on the claim).
Essentially, I looked at B&N's reply to Microsoft's complaint and it looked really weak to me. I wanted to know if my evaluation is wrong.
As an aside, the whole thread above that comment is pretty similar to this subthread.
OK, now that the disclaimer is done (and is longer than my answer, which will probably make people doubt my claim to not be a lawyer!), it looks to me like your take is accurate. Their answer does not give much detail.
Your speculation in the last paragraph, that this is normal for answers to complaints, is also correct I believe. The complaint and answer are not where the parties start to argue the case. The complaint is to tell the court what wrong you think was done to you, and why you think the court has jurisdiction over the defendant and over the subject matter.
The answer is to tell the court which things in the complaint that you concede are true, which you claim are false, and which you cannot answer at this time because you do not have enough information.
Basically, the complaint and answer together let the court know what it is dealing with.
The meaty details start coming in when the suit gets to the stage where the parties are filing pre-trial motions for things like summary judgement on various parts of the complaint, and later when the trial actually gets underway.
[1] http://www.theverge.com/2012/8/13/3239977/apple-and-microsof...
http://en.wikipedia.org/wiki/Apple_Computer,_Inc._v._Microso...
They are all in a sort of standoff, as they cannot sue each other without putting themselves at risk of counter-claims. In addition, there are a number of cross-licensing deals between various large patent-owning entities, as you correctly surmised. Microsoft found a way around these issues, by suing Android implementers (such as Samsung, HTC, etc.), who do not have such large patent portfolios with which to make a "second strike".
It was common knowledge from early days that Android infringed on several OS and mobile patents. Also note Andy Rubin sold Android predecessor - Danger OS to MS along with all IP. It was just a question of when and how the IP assertion happens.
It seemed like in the past their method was to say they have patents covering X (in the past X was Linux) and you can license them for some specified amount. I don't think they were specific. If you refused, they would throw out some specifics and take you to court (see TomTom).
I haven't paid much attention to patents in the mobile space so I'm not sure if things have changed.
I'm pretty sure Apple has a cross-licensing agreement with Microsoft, they appear to be more focused on a common enemy these days.
http://www.zdnet.com/microsofts-most-profitable-mobile-opera...
Kind of surprising that people didn't see this coming 2 years ago and make more noise.
http://www.zdnet.com/blog/open-source/microsoft-vs-android/8...
For at least what is problem the main money maker for Microsoft's patent licensing, the patent or patents covering aspects of the FAT32 filesystem, Apple escapes liability because Apple does not use FAT32 in iOS. Android does use it (for removable media).
Linux companies dodged this bullet for the most part, from both Microsoft and SCU, but it seems Microsoft "succeeded" this time against Android with their mostly garbage patents in the same way patent trolls and mass-bittorrent lawsuits have succeeded so far - by scaring people/companies into paying up, without having to get into any lawsuit, which is exactly what patent trolls have been doing for a while.
As soon as B&N was about to invalidate some of their main patents, they quickly "invested" $300 million into B&N (i.e. they settled), and B&N dropped the lawsuit. I wish more OEM's would've had the balls to call their bluff.
So EFF - any proposals for stopping corporate patent trolls like Microsoft, Rockstar Consortium and Intellectual Ventures, yet?
It's worth noting that many of the patents asserted in the B&N case had nothing to do with mobile and were equally applicable to any form of Linux. The only reason MS did not assert them to quell Linux adoption is a) they did not need to and b) it would have been seen as anti-competitive. As such we've been kind of lulled into a false sense of security about the huge stockpile of stupid patents these early operating systems companies have built up. It's more or less like nuclear waste - lying around waiting for someone to build dirty bombs with it. And of course, since there is a clock ticking on the expiry of the patents, MS and others will start becoming increasingly keen to deploy them if only to extract value before the expiry.
It's as simple as 'software patents'. This is the result of the current system.
The people submitting and upvoting stories like this are just as responsible for the shoddy state of tech journalism as these bloggers are.
Samsung, HTC, Apple and Nokia should account for over 50% of the global market. If my assumptions are correct, are the rest of the smaller players able to pay that much money on royalties alone?
I'll like to see some numbers. The article is seriously lacking data.
Samsung definitely pay a per-device royalty to Microsoft for Android devices, the latter even put a press release out about it a few years ago:
http://www.microsoft.com/en-us/news/press/2011/sep11/09-28sa...
Of that, $2 billion in losses are attributable to the Xbox platform.
How does it make a profit?
Volume!
Microsoft want to wrest control over your living room from the established consumer electronics companies (such as Sony...), much like Apple and Amazon.
Microsoft: Halo Series has Generated $3 Billion in Revenue
http://www.gamepolitics.com/2012/10/31/microsoft-halo-series...
So why change the article's title, HN?
From what I've read, in the US a patent is valid until 20 years after it is granted, retroactive to the date that it's filled. That can be a 40 years interval, or more, if the USPTO don't do it's job well (and I know of patents that did go over 30 years).
The trouble, of course, is that we're still in that window. A patent filed in 1994 but not issued for many years thereafter may still be in effect.
Granted, you can get around that one with a button that refreshes, but what if the patents is, say, on "operating system provided tabs"? Or on "plotting search results on a map"? Or on "communicating multi-part messages"? Now you have a problem, and you're going to have to pay licensing fees since you need those things just to create your mobile OS.
The other problem has less to do with the patents themselves and more to do with the legal system surrounding them: it's incredibly expensive and quite risky to litigate software patent disputes. You're dealing with a court system that doesn't necessarily fully understand technical matters, leaving the outcome of litigating ambiguous even in the best of cases (and keep in mind that a loss could potentially end your entire product, since the courts could order that you must pay an extremely onerous licensing fee or cease infringing, either of which probably means closing up shop), and the cost of litigation is enormous. It's usually wiser just to settle for an acceptable licensing agreement than it is to try to engineer around the problem and fight the ensuing lawsuit by asserting that your solution is not subject to the patent.
AFAIK, the list is still secret.
So I really don't buy the "B&N scared Microsoft into bribing it" story. To me, it seems more like a "B&N tried a Hail Mary shot at getting an antitrust thing going against Microsoft, and when that failed miserably, they sold a cheap stake in their ebook business" story. Consider that ebook content is something Microsoft's ecosystem didn't (and still does not) have compared to Apple, Google and Amazon's ecosystems. Consider also that this ebook content comes without the lawsuits and publisher-wrangling the others had to go through.
So, $300M for a quick entry into a market where its competitors are incumbents seems like Microsoft got a pretty decent deal, and I think that patent lawsuit provided leverage.
Further it's worth noting that the division that these Android royalties are attributed to also garners all other patent licensing royalties of any sort (e.g. FAT), as well as licensing charges such as ActiveSync licensing (ergo, every iPhone, among others).
Even if MS earns $1 Billion from patents that exclude "legitimate" licensing, I think that would be a big number and definitely should be looked into.
[1] - http://www.geekwire.com/2013/sherlund-microsoft-should-consi...
[2] - http://money.cnn.com/2013/06/03/technology/enterprise/micros...
[3] - http://www.gamesindustry.biz/articles/2013-06-03-microsoft-w...
[4] - http://www.examiner.com/article/sherlund-microsoft-needs-to-...
The people at Xbox are die hard gamers who really want to help you solve your problem whatever it might be. I don't know if spinning off one of the best divisions would be such a smart division specially when it is already profitable, unlike Bing.
He appears to be saying that the Xbox platform loses $2 billion per year. Everything I've read says that the Xbox has been profitable every year since 2008.
Just one example source:
http://www.digitalspy.com/gaming/news/a512543/microsoft-back...
The Ultimate SKU of Windows commanded a premium license fee due to the inclusion of Windows Media Center, created by the eHome division. eHome, from an accounting perspective was part of IEB, the group that had the Xbox P&L.
I don't remember the exact license fees but Windows Vista Home was something like $30 and Windows Vista Ultimate was $75 to OEMs. That means for every copy of the Ultimate MS sold about $45 of revenue went to IEB from Windows.
When we envisioned eHome and Media Center we thought we were going to revolutionize the living room. Instead we ended up building a feature in Windows MS could charge more for.
15 years ago, when no console maker had a viable strategy for going online, MS should have built a cross platform solution that made online gaming possible for every console. Does that sound familiar? A cross-platform solution for a number of competing hardware makers?
This division would probably be a huge part of Microsoft's business if they had pulled it off. Just think of the leveraging possibilities if every gamer over the age of 25 had an XBox live account, instead of the much smaller subset of gamers over 25 who also owned a Microsoft console.
I think they're back on the right track with Windows phone, but Google already beat them to the cross-platform solution.