11.10.11

As Microsoft Extortion Continues, Submission Filed to the Department of Justice for Patent Abuse

Posted in America, Antitrust, GNU/Linux, Google, Microsoft, Patents at 1:53 pm by Dr. Roy Schestowitz

Barnes & Noble has had enough of that bullying

Summary: The abusive monopolist and patent racketeer from Redmond (plus its proxies, e.g. IV and MOSAID) may come under federal scrutiny at long last

EVER since the story of CPTN we have hardly seen federal agents doing anything about Microsoft’s patent abuses (abuses with patents). Even the Nortel episode hardly brought up any federal perils, unlike the Motorola one. Microsoft cannot play by the rules, so it does not play by them, it changes them. Instead, it attacks the competition’s right to exist and it recruits proxies to help with it, just like it did with SCO.

“Microsoft cannot play by the rules, so it does not play by them, it changes them.”B&N is back in the headlines after its somewhat old complaint because it seeks a Department of Justice probe into Microsoft extortion against Linux/Android. To quote: “Barnes & Noble says Microsoft is attempting tamp down competition in the mobile market by demanding licensing fees for the use of Android, and has asked the Department of Justice to step in.

“Barnes & Noble has accused Microsoft of attempting to stifle innovation in the mobile device market by demanding royalties for the use of Android, for which Microsoft owns a number of key software patents, reports Bloomberg. The book giant has asked the US Department of Justice to launch an antitrust investigation against Microsoft.”

Here is excellent coverage, but for corporate press lovers there is another shallow report:

Barnes & Noble is asking the U.S. Department of Justice to investigate Microsoft’s patent-licensing tactics, accusing the software giant of trying to thwart competition with flimsy infringement claims.
“Microsoft is attempting to raise its rivals’ costs in order to drive out competition and deter innovation in mobile devices,” Barnes & Noble lawyer Peter T. Barbur wrote in an October 17 letter to Gene I. Kimmelman, the chief counsel for competition policy in the Justice Department’s antitrust division. “Microsoft’s conduct poses serious antitrust concerns and warrants further exploration by the Department of Justice.”

It is clear why Microsoft became borderline criminal. It cannot compete. According to its partner ComScore, Windows keeps losing share in mobile despite all the PR, intimidation, etc.

In spite of marketing blitzes and many available phones, the latest numbers from comScore show that Microsoft continues to struggle to gain market share, actually losing .2 in percentage of subscribers running a Microsoft mobile OS in the latest figures.

We also learn from a Microsoft-friendly source about Microsoft’s latest extortion attempt. One FOSS proponent writes: “Watching #BBC2 Newsnight to hear the piece on Software Patents.”

Was it objective at all? Were patent lawyers interviewed? Monopolies? We ask this because of the very shallow seminal article from the MSBBC (it seems like it was first) that set the tone for coverage about extortion (which got described using euphemisms, instead). To quote one article:

Microsoft wants a share of Huawei’s Android profits

[...]

“Microsoft has come to us,” said the Chinese manufacturer’s chief marketing officer at an event in London last night,

AOL goes with this angle: “Eric Schmidt: Microsoft Pushes Patent Deals Out Of Fear Of Android”

The Guardian, which likes to quote and give a platform to one manipulative Microsoft lobbyist (on the subject of patents) disappoints a bit and another British publication chose the headline “Google lawyer: Microsoft is leeching off Android”

Going back to the complaint from B&N, it is included in the page from a Microsoft booster who writes:

A 29-page slide deck – made public this week in Microsoft’s patent lawsuit against Barnes & Noble — outlines, in great detail, the bookseller’s objections to the software company’s campaign to collect patent licensing fees from Android device makers.
According to the cover page, the presentation was given by Barnes & Noble’s lawyers to Justice Department antitrust officials this summer.

As another Microsoft booster puts it:

Beyond Microsoft’s own patents, Barnes & Noble also raised concerns over deals that Microsoft has entered into with Nokia and MOSAID. In September, MOSAID acquired 2,000 wireless technology patents from Nokia. Instead of paying for these patents, MOSAID announced that it had entered a revenue-sharing scheme with Nokia and Microsoft; two-thirds of any revenue generated by licenses or lawsuits will be given to Microsoft and Nokia.

At least they did not lose sight of MOSAID [1, 2, 3].

SFGate (San Francisco Chronicle) finally balances old propaganda from Microsoft with Google’s willingness to bash the patent system, which helps show hat Google did not quite forget where it came from, unlike Microsoft. [via]

Google lawyer: Why the patent system is broken

Google stands at the center of the escalating mobile patent wars, as the developer of the Android operating system that triggered scores of lawsuits and countersuits.

Depending on whom you ask, the company is either the high-minded adult in the debate du jour over intellectual property – or a blatant patent thief.

In an interview with The Chronicle, Google’s patent counsel, Tim Porter, argues that the system itself is broken.

For too long, the patent office granted protection to broad, vague or unoriginal ideas masquerading as inventions. That inevitably led to the legal dramas now unfolding, he said.

There’s certainly no question that the Mountain View online giant’s smart-phone software has been hugely successful. By offering a free operating system, it enabled companies like HTC, Motorola and Samsung to deliver devices that could compete with Apple’s breakthrough gadgets.

Android now claims 43 percent of the smart-phone operating system market, compared with 28 percent for the iPhone and 18 percent for RIM’s BlackBerry, according to a recent Nielsen report.

It is nice to see that Google is still going head to head with the USPTO. But it is not doing enough. Google can hopefully help B&N in its case against Microsoft, which even Rupert Murdoch’s press reports on. Bloomberg also has a widely cited report that says:

Barnes & Noble Urges U.S. to Probe Microsoft on Patents

Barnes & Noble Inc. (BKS) asked U.S. regulators to investigate whether Microsoft Corp. (MSFT) seeks to monopolize the mobile-device market by demanding patent royalties on electronics running on Google Inc.’s Android operating system.

“Microsoft is embarking on a campaign of asserting trivial and outmoded patents against manufacturers of Android devices,” Barnes & Noble said in an Oct. 17 letter to Gene Kimmelman, the Justice Department’s chief counsel for competition policy. “Microsoft is attempting to raise its rivals’ costs in order to drive out competition and to deter innovation in mobile devices.”

The world’s largest software maker accused New York-based Barnes & Noble of infringing five patents and filed a complaint with the U.S. International Trade Commission in Washington, seeking to block imports of the Nook readers. Barnes & Noble made public four letters and a presentation to the Justice Department in a filing with the commission yesterday.

Microsoft, based in Redmond, Washington, contends it owns patented inventions that are used in the Android operating system, and has struck licensing deals with companies including Samsung Electronics Co. and HTC Corp. (2498), two of the biggest makers of Android phones.

“All modern operating systems include many patented technologies,” Microsoft said in a statement. “Microsoft has taken licenses to patents for Windows and we make our patents available on reasonable terms for other operating systems, like Android. We would be pleased to extend a license to Barnes & Noble.”

The H which is pro-FOSS, writes that:

Barnes & Noble, book seller and maker of Android based Nook devices, has called on the US Department of Justice to investigate Microsoft’s demands for patent royalties on devices that run Android. Bloomberg reports that, in a letter to Gene Kimmelman, the DOJ’s chief counsel for competition policy, Barnes & Noble says that “Microsoft is attempting to raise its rivals’ costs in order to drive out competition and to deter innovation in mobile devices.”

This is important, but there is also other important news, which happens to come from the OIN. Many companies have just joined it, namely:

During the third quarter of 2011, the list of new corporate OIN licensees affirming their support for Linux and freedom of action included the following:

1. Ark Linux 2. BackBox Linux 3. Bigtux 4. CAINE-Live CD 5. Clique Studios 6. Conecta Research 7. Edimax Technology Co., Ltd.

8. Endless Ideas BV 9. Fuduntu 10. Helal Linux 11. HTC Corporation 12. iGolaware 13. Lactien Computing 14. LG Electronics, Inc. 15. Likinux 16. LinuxCertified Inc. 17. Linux-EduCD 18. LuninuX OS 19. NEWTOOS Project 20. nLight, s.r.o. 21. OpenAPC Project Group 22. Otakux GNU/Linux 23. Poseidon Linux 24. Socialinventurebiz 25. Solderpad Limited 26. Sophos Limited 27. Swift Linux 28. UbuBox SalentOS

OIN is important when Microsoft is sending out its proxies with the aim of increasing ther cost of Android. Here is the new post titled “Microsoft will be happy to hear that Google is to keep Android free” and the opening line says:

Microsoft CEO Steve Ballmer: ’Android has a patent fee. It’s not like Android’s free. You do have to license patents.’

A Microsoft proxy has just extorted LG, which had also signed a Linux patent deal with Microsoft. It’s all about elevating the costs. The Microsoft lobbyist promotes this and defends this extortion from a Microsoft proxy called Intellectual Ventures. LG and HTC both joined the long list of Microsoft’s extortionist’s victims but also the OIN. Where is the OIN and is it silently helping against Intellectual Ventures?

To quote the article derived from the cryptic announcement:

Both HTC and LG announced patent licensing agreements today, as activity in the mobile patent space continues to heat up. First, both companies joined the Open Invention Network (OIN), an intellectual property company formed to protect Linux-based innovation by pooling patents. Members donate certain patents from their portfolios to the community on a royalty-free basis, agreeing not to assert those patents against other member companies over Linux-related products or innovations. While it’s debatable whether this patent alliance can provide HTC and LG significant protection from the various threats to Android, it seems clear that both companies believe that there’s safety in numbers – with OIN touting companies like Google, IBM, HP and Sony as community licensees.

Not so long ago it was claimed that Microsoft patent trolls were getting attention they did not want. Microsoft’s former CTO, for example (now the world’s biggest patent troll), was quite formally suggested as federal scrutiny target. Microsoft and its lobbyists really hate the OIN, which probably means that the OIN plays a secret role in all this, mitigating the issue albeit not to a sufficient degree.

“Google’s Eric Schmidt to visit Taiwan to promote Android,” says a headline from DigiTimes. Ballmer may visit Taiwan to engage in racketeering. According to a headline from the Times of India, Google says that Microsoft is abusing patentsand “Google’s legal boss is fed up with patent warfare,” writes Anna Leach in the British technology press. They get the message across:

Legal tangles over patents are stifling innovation and will lead to stagnation in the tech industry, said Google’s chief patent lawyer in a newspaper interview in the San Francisco Chronicle.

“The concern is that the more people get distracted with litigation, the less they’ll be inventing,” said Tim Porter, Google’s patent counsel.

Google are particularly touchy on the patent issue, with their mobile OS Android on the receiving end of several attacks from Oracle, Microsoft, and Apple. Apple have specifically targeted Android’s partners – Samsung and HTC – in obstructive lawsuits that span the globe.

With evident ongoing extortion it is important to see articles like this one. To demonstrate how outrageous this is, consider the part which says: “Huawei could soon be added to the list, after Huawei Device’s chief marketing officer Victor Xu said talks with Microsoft were “in progress,” according to reports.”

Having to “license” products from a company that has nothing to do with Android except its crimes against Android (racketeering)? Who would conceivably permit this? What type of lesson does that teach future generations?

Here is another article on the subject and a good roundup:

Google: Microsoft uses patents when products “stop succeeding”

A Google patent lawyer says that the patent system is broken, and he accuses Microsoft of abusing the system. Speaking to the San Francisco Chronicle on Sunday, Google’s Tim Porter pointed to Microsoft’s attacks on Linux as an example of its broader corporate strategy.

“When their products stop succeeding in the marketplace, when they get marginalized, as is happening now with Android, they use the large patent portfolio they’ve built up to get revenue from the success of other companies’ products,” he said.

Microsoft has argued that the patent royalties it seeks from Android vendors are part of the natural evolution of a new industry. Porter disagrees.

“Microsoft was our age when it got its first software patent,” he said. “I don’t think they experienced this kind of litigation in a period when they were disrupting the established order. So I don’t think it’s historically inevitable.”

Of course, the reason Microsoft didn’t have to worry about patents during its first dozen years was because the courts and the patent office didn’t allow patents on software until the 1980s. Indeed, the idea of patents on software alarmed Bill Gates, who wrote in 1991 (when Microsoft was already older than Google is now) that “the industry would be at a complete standstill” if software had been eligible for patent protection in the early days of the industry. He worried that “some large company will patent some obvious thing,” enabling the company to “take as much of our profits as they want.”

“When products begin to falter, pursue patents” says this headline from ZDNet adding:

Five things I learned from the Q&A:

1. “Innovation happens without patents.” In other words, deregulation helps.
2. A large part of the current mobile court scrum is due to “a 10- or 15-year period when the issuance of software patents was too lax.”
3. “You shouldn’t patent something that’s obvious.” The question, of course, is what’s obvious to whom.
4. Huge damages awards are fueling patent lawsuits. Bring these more into scale with the complaint and reduce the backlog of frivolous claims.
5. This environment has pressured companies like Google to spend enormous sums of money to purchase patent portfolios for legal defense.

Vint Cerf (Google )is quoted on the subject in the BBC:

Lodsys is a new type of business – one that doesn’t actually make anything or come up with new ideas – but lives by registering patent claims and then taking court action against companies it claims have used its technology.

For those targeted by such firms there is a choice – employ expensive patent lawyers or simply agree to hand over licensing fees.

For a small business, without the resources to fight lengthy legal battles, it is deeply worrying. “It’s another risk that we will now have to consider,” David Hart told me. “When you do anything of an innovative nature there’s a danger it won’t work, that’s one risk, now this is another.”

What’s at the heart of this is something that is much easier to obtain in the US than in Europe – software patents. For many on both sides of the Atlantic, they should not be allowed at all.

Vint Cerf, one of the fathers of the internet, seems to agree. When we interviewed him at Google, where he now works, he told us that software patents posed a real threat to innovation. “I see it as hindering innovation in a really dramatic way.”

Mr Cerf looks back to the seventies when, with another computer scientist Bob Kahn, he was developing some of the key technologies that led to the birth of the Internet. He says they never patented any of their ideas.

In conclusion, there is a lot going on this week and it is covered in the corporate press (so we needn’t urgently report on it). Microsoft is being reported to the Feds for its abuses with patents, Google speaks out against the patent system, the OIN grows a lot bigger, and Microsoft’s patent trolls also face risk of federal action. Microsoft’s malicious plans might collapse, just like its platform (WM7) that failed so miserably. █

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