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24 April 2013Patents

ZTE strikes licensing deal with Microsoft

Chinese smartphone-maker ZTE has become the 20th company to license Microsoft patents reading on Android technology.

In a blog post on Tuesday, Microsoft said the deal covers patents used in phones, tablets computers and “other devices” running Android and Chrome OS, which are both Linux-based operating systems.

The deal, whose remaining details are private, comes a week after Microsoft penned a similar agreement with Taiwanese company Hon Hai, which owns electronics company Foxconn, the manufacturer of more than 40 percent of the world’s consumer electronics devices.

“The ZTE and Foxconn agreements show once more that technology companies around the world, including some of the world’s largest and fastest growing manufacturers anchored in China, recognize licensing is an effective way to share technology and build on each other’s work, Horacio Gutierrez, deputy general counsel, legal and corporate affairs at Microsoft wrote in the blog post.

Microsoft has now signed 20 licensing deals, including with Samsung, HTC and LG, which cover its patents applying to Android technology. The company claims that 80 percent of Android smartphones sold in the US and “a majority” of those sold worldwide are covered by Microsoft agreements.

Ralph Loren, partner at Edwards Wildman Palmer LLP, said in the absence of details he assumes that Microsoft has charged ZTE either a low percentage (either 2 or 3 percent) of its sales or a flat payment. Whichever option they take, companies usually charge the same price each time they license, Loren said, to avoid breaching competition rules.

“Microsoft has been a master at playing the marketplace and avoiding litigation,” said Rodney Sweetland, partner at Duane Morris LLP. “They are known as being reasonable – cutting good deals and not seeking to break people’s backs. They take a measured approach, as opposed to a scorched earth world-wide war.”

The latest deal means there are just two major Microsoft companies using Android technology – Chinese technology firm Huawei and Google-owned Motorola Mobility – which are yet to sign licensing deals.

“There is now more pressure on them – they are the last ones standing and at something of a competitive disadvantage,” said Sweetland, adding that he would be surprised if Motorola signed a deal, as it appears to favour to litigation.

Loren said that licensing is much more sensible than litigating, an approach that could result in cash-rich smartphone-makers “spending all their lives in court”.

“With licensing, you get some value by monetising your IP,” he said.

In what is being seen as a direct message to Motorola, Microsoft’s statement about the ZTE deal concluded by saying:

“We have worked for multiple years to reach an amicable solution with the few global companies who have yet to take a license, but so far they have been unwilling to address these issues in a fair manner. We’d prefer to consider these companies licensing partners and remain hopeful they can join the rest of the industry in the near future.”

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21 February 2014   Microsoft has struck a deal with electronics company Hop-on that allows it to license patents reading on Android and Chrome technology.