

Why is Microsoft basically licensing Google's products? - nextparadigms
http://www.techdirt.com/articles/20111013/17205316345/can-we-just-admit-that-its-insane-when-microsoft-has-licensing-program-someone-elses-products.shtml

======
bradleyland
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.

~~~
azakai
> 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'.

~~~
Steko
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.

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

------
nextparadigms
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.

~~~
dpark
> _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.

~~~
jdc

      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.

~~~
dpark
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.

------
sp332
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...](https://secure.wikimedia.org/wikipedia/en/wiki/Software_patents_and_free_software#Microsoft.27s_patent_deals)

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...](http://fosspatents.blogspot.com/2011/04/red-hat-is-now-regular-
customer-of.html)

~~~
nobody314159
So if the patents are overturned what kind of damages do you get against MSFT
for forcing you to license them?

~~~
tsotha
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.

~~~
nobody314159
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?

~~~
tsotha
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?

------
jrockway
"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.

------
mwsherman
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.)

------
kapitalx
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.

------
rfugger
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.

------
evan_
> 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.

~~~
guard-of-terra
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.

~~~
kenjackson
I think you just stated this wrong. Read this:

[http://cyberlaw.stanford.edu/blogs/olson/archives/003331.sht...](http://cyberlaw.stanford.edu/blogs/olson/archives/003331.shtml)

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?

~~~
guard-of-terra
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).

~~~
kenjackson
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.

------
reirob
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.

------
whackberry
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.

~~~
azakai
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.

------
recoiledsnake
>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.

