Microsoft Now Collects Licensing Fee on Over Half of All Android Devices

Microsoft this week revealed that it has signed a patent licensing agreement with Compal, a Taiwan-based ODM, or Original Design Manufacturer, that makes Android-based devices that are sold by other companies. As Microsoft notes, this deal is the tenth such licensing agreement it has made overall, and the ninth in the past four months. Most notably, with this agreement, companies accounting for more than half of all Android devices have now entered into patent license agreements with Microsoft.

"Amidst continuing clamor about uncertainty and litigation relating to smartphone patents, we're putting in place a series of agreements that are reasonable and fair to both sides," Microsoft executive vice president and general counsel Brad Smith and deputy general counsel Horacio Gutierrez wrote in a blog post announcing the agreement. "Our agreements ensure respect and reasonable compensation for Microsoft's inventions and patent portfolio. Equally important, they enable licensees to make use of our patented innovations on a long-term and stable basis."

Microsoft isn't alone in pursuing the makers of Android-based smartphones, which former Apple CEO Steve Jobs described as "grand theft" and "a stolen product" posthumously in his official biography, echoing statements I've made about the Android OS as well. Jobs' company, Apple, is also suing the biggest Android smartphone makers, HTC, Motorola Mobility, and Samsung. A handy chart provided by Microsoft shows how the two firms are fighting Android legally.


While others have complained that legal protection of patents thwarts innovation, Microsoft says that patent licensing cuts both ways and protects all companies. "Over the past decade we’ve spent roughly $4.5 billion to license in patents from other companies," the aforementioned blog post reads. "These have given us the opportunity to build on the innovations of others in a responsible manner that respects their IP rights. Equally important, we've stood by our customers and partners with countless agreements that contain the strongest patent indemnification provisions in our industry. These ensure that if our software infringes someone else's patents, we'll address the problem rather than leave it to others."

The elephant in the room, of course, is Google. And while Microsoft, like Apple, hasn't yet gone after the root cause of the problem with Android--the company that makes it---both firms are clearly trying to make Google's partners--which don't get any indemnification protection from the online giant--pay up.

Google, meanwhile, belatedly responded to Android's many alleged patent violations earlier this year by announcing its intention to purchase Motorola Mobility, which owns a patent portfolio that it could use to enter into cross-licensing agreements of its own.

Whatever happens going forward, one thing is clear: Over half of all Android devices now sold result in Microsoft being paid a licensing fee. And while the software giant doesn't have a direct hand in any of those devices, that's a nice little business.

More important, it means that the supposedly free Android OS isn't all that free anymore. And that eliminates a key advantage--perhaps the key advantage--that platform has over Apple's iPhone and Microsoft's Windows Phone.

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