The Legal Infrastructure of Business: Microsoft v Motorola: Conflict in the Smartphone Market

In what has become a burgeoning trend in the tech world, Microsoft filed complaints against Motorola with the ITC and a Seattle federal court on Friday alleging that Motorola's line of Google software-based Android smartphones infringe on nine of its patents.  the lawsuit seeks unspecified monetary damages and a permanent injunction.  the alleged infringements relate to seemingly standard smartphone capabilities associated with: calendars, contacts, email synchronization, scheduling meetings, and  notification of changes in battery power and signal strength.

“We have a responsibility to our customers, partners, and shareholders to safeguard the billions of dollars we invest each year in bringing innovative software products and services to market,” said Horacio Gutierrez, a deputy general counsel at Microsoft.  "Our action today merely seeks to ensure respect for our intellectual property rights infringed by Android devices.  Judging by the recent actions by Apple and Oracle, we are not alone in this respect."

As companies like Google have expanded their footprint in the tech space businesses are competing in new and unexpected ways leading to increased competition.  the Microsoft suit is the latest in a series of legal challenges between various phone makers and software firms over who owns patents to the technology used in smartphones; Google's Android at heart of much of it.  last year Nokia sued Apple,  Apple sued Android handset maker HTC Corp., and Oracle Corp sued Google over Android software.

Success in the mobile business is critical for Microsoft as growth in the PC business has slowed.  Smartphones represent a high-growth category.  Several years ago Microsoft had a smartphone offering, Windows Mobile.  When Apple came out with the iPhone though, the iPhone dramatically raised the bar for smartphones.  In comparison to Apple's touchscreen interface and mobile Web surfing, Windows Mobile seemed outdated and difficult to use.  As a result, the company began losing ground.

Coupled with the introduction of the iPhone,  Microsoft struggled to win adoption of its software due to its pricing structure.  the company charges handset makers an $8 licensing fee to use Microsoft software in their phones.  Google, in comparison, gives Android away free and seeks to profit through advertising.  the free model has been widely adopted by handset makers and software programmers causing some rivals, like Motorola, to shift exclusively to Google's free option.  one must wonder whether this had any hand in Microsoft's decision to file suit.

Competitors, like Microsoft, lament Google's free strategy saying it ruins the economics of the industry.  Many people believe that, if successful, the recent string of lawsuits could help raise the costs for companies that use Android.  Conversely, success could also hamper innovation in the smartphone space. 

Speculation abounds as to the timing and true intention of the filings.  the suit was filed just 10 days before Microsoft is set to launch the new version of its mobile software, Windows Phone, which it hopes will win back market share from  the iPhone and Android-based phones.   Mark Kesslen, a patent lawyer at Lowenstein Sandler who is not involved in the case commented "Microsoft appears to be using its patent portfolio to either slow down the growth or get some piece of the market share through some other means."

Motorola released a statement saying the company intends to "vigorously defend itself in this matter."

Due to the recent date of filing, the case it not widely available on the internet yet.  I found a copy here:

http://www.scribd.com/doc/38550703/Micrsoft-Motorola-Patent-Suit

Sources include articles from: FastCompany, Reuters, TechFlash, WSJ.com

The Legal Infrastructure of Business: Microsoft v Motorola: Conflict in the Smartphone Market


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