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Microsoft Gets More Royalties from Android IP

Companies appear to be estimating that paying royalties is cheaper than going to court.

Microsoft continues to rake in money from companies making products that use the Android operating system.

In the latest case, two more companies have "recognized the value of Microsoft's IP": Aluratek Inc. and Coby Electronics Corp. The deals represent new intellectual property (IP) wins for Microsoft, which claims to have struck agreements with 70 percent of U.S. hardware device makers that are using the Linux-based Android mobile OS.

Tustin, Calif.-based Aluratek makes consumer electronic devices, including electronic readers and tablet devices that fall under Microsoft's IP claims. Coby Electronics is a Lake Success, NY-based maker of consumer electronics products that offers a line of Android-based tablets.

Microsoft apparently got the two companies to agree to pay royalties, rather than dispute the patents in court.

"The licensing agreements with Aluratek and Coby Electronics demonstrate yet again that licensing is the path forward to resolving intellectual property disputes within the industry, and can be effective for companies of all sizes," said Horacio Gutierrez, corporate vice president and deputy general counsel of the Intellectual Property Group at Microsoft, in a released statement. "Aluratek and Coby Electronics are the latest two companies to recognize the value of Microsoft IP in Android and Chrome, joining the majority of Android vendors in taking a license for this IP."

Microsoft has relentlessly sought licensing deals with mobile device makers using Android, even to the point of suing its own partners. Few hardware vendors have resisted Microsoft's IP claims in court, with Motorola and Barnes & Noble being notable exceptions. In April, B&N agreed to pay royalties to Microsoft associated with Android use on B&N Nook e-readers, while Microsoft agreed to invest $300 million in a new B&N subsidiary.

It's thought that Microsoft makes more money from Android-associated IP claims than it does from licensing its own Windows Phone OS. However, Microsoft also faces legal costs and fallout from the companies with the financial means to resist such claims. For instance, Motorola, now owned by Google, has made intellectual property claims on Microsoft's Xbox gaming console that received a favorable ruling in a German court. That decision implies a ban on Xbox sales in Germany, but it's being disputed in a Seattle court because standard-essential patents were involved. The issue of standard-essential patents costs is also being considered at the European Commission, based on complaints from Microsoft and Apple.

Microsoft sued Motorola over its Android use in October of 2010. It was part of a series of Microsoft claims about Android IP violations. Although the company has more broadly hinted that Linux violates 235 Microsoft patents, only a handful of Microsoft patents associated with software usability have survived the few court tests.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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