Linked by Thom Holwerda on Wed 9th Nov 2011 16:13 UTC
Legal To anyone who has been reading anything on the web over the past few months, this shouldn't come as a surprise. Barnes & Noble is currently embroiled in a patent lawsuit started by Microsoft, after the bookseller/tablet maker refused to pay protection money to Redmond. Barnes & Noble has now openly said what we already knew, and has filed an official complaint at the US Department of Justice: Microsoft is engaging in anticompetitive practices. Update: Here's the slide deck B&N presented to the DoJ.
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RE[3]: ...
by mutantsushi on Wed 9th Nov 2011 18:59 UTC in reply to "RE[2]: ..."
Member since:

" The fact that they are suing for different licenses than they offered to license is one issue.
That's not an issue what-so-ever. If patent violations have occurred, that's the bottom line. "
No, that IS an issue. Maybe MS still has a valid case re: some patents - FINE. But if they are trolling for payments (affecting competition) for other stuff that isn´t valid, that is behavior that may very well be sanctionable. Note that other vendors have succombed to these tactics, so it is already affecting the market.

The fact that they are charging more for the licenses than they are for their entire Windows Phone 7 is another.
They can charge however much they want. [/q]
If they are charging a radically higher fee for patents vs. what they charge for WP7 which includes those and much more, there is a case for non-competitive practices because that is obviously not a level playing field, but one where they are leveraging their advantage in one ´market´ (patents) to advantage themselves in another market (OS´s). It doesn´t matter if the component actions might otherwise be legal, doing that is illegal... ESPECIALLY in the EU, even if they are using US patent law that can and obviously does affect competition within the EU.

It will be very interesting if this case goes forward, to see if the court subpoenas MS / other vendors to see what is the actual substance of what is being discussed behind NDA secrecy...

Edited 2011-11-09 19:01 UTC

Reply Parent Score: 5

RE[4]: ...
by siki_miki on Wed 9th Nov 2011 19:29 in reply to "RE[3]: ..."
siki_miki Member since:

They request same or more per device than for same license and their own OS combined, so it's worth investigating.
MS is not very careful given that they are proven monopolist abuser. However their stake is very low in the market so it's to early to call it monopolistic.

And anyway their tactic doesn't work for now. Android phones and the iPhone sell better because of the network effect, customer familiarity, apps, and more mature platform. That counts even in the commodity market where this fee is relevant in pricing structure (WP7 is strongly targeting that market). Maybe as Nokia helps them get to more than a few % they will be able to build up a kind of ecosystem that iOS and Android have, but maybe also there's no room for another smartphone OS. Consumers will decide about it.

Reply Parent Score: 3

RE[4]: ...
by tomcat on Wed 9th Nov 2011 22:07 in reply to "RE[3]: ..."
tomcat Member since:

No, that IS an issue. Maybe MS still has a valid case re: some patents - FINE. But if they are trolling for payments (affecting competition) for other stuff that isn´t valid, that is behavior that may very well be sanctionable. Note that other vendors have succombed to these tactics, so it is already affecting the market.

But there's zero evidence that that's occurred. What we do know is that MS has asked Android adopters like B&N to license its patents -- and B&N apparently believes that it isn't obligated to do so. Which is fine. They can take their chances in court. But merely asserting that they don't like patents -- or that patents are anti-competitive -- is a losing argument. That's the nature of patents. They restrict competition by granting the holder a monopoly on the invention. Anybody who wants to use the invention has to license it. That's our system. My bet is that B&N settles this out of court -- or they'll get their asses handed to them.

Reply Parent Score: 4

RE[5]: ...
by glarepate on Sat 12th Nov 2011 06:38 in reply to "RE[4]: ..."
glarepate Member since:

On the other hand, here is some information from an informed source (that stands in stark contrast your ideas.)

I thought you might like to see the letter [PDF] Barnes and Noble filed with the ITC and the slides [PDF] titled, "Microsoft's Anticompetitive Behavior in the Mobile Operating System Market", that Barnes & Nobles presented to the US Department of Justice's Antitrust Division in July and filed with the ITC as an exhibit, in which it lays out its complaint about Microsoft. It's a compelling read. There are some further exhibits also, including the Barnes & Noble letter to the US DOJ back in April.

In effect, Barnes & Noble says Microsoft is doing what's it's done in the past against Netscape and Java, only now the target is Android and the weapon of choice is patents.

I also thought you'd probably have questions about how there can be an antitrust complaint over patents, since by their very nature patents are a granted monopoly, so I found some resource material for you. For me too, actually, because I was wondering about it myself.

You'll find our old friend SCO Group on page 9 of the slide presentation, by the way, on a list titled "Microsoft Infringement Suits Against Open Source Software", with an annotation: "Microsoft provided financial support to SCO, enabling it to file and litigate several infringement suits targeting open source software." And Barnes and Noble alleges that the Nokia deal included an agreement to pool and then use patents in an aggressive attack against Open Source.

The Barnes & Noble Accusations

The overview, in the slides, of Microsoft's anti-competitive behavior is the following:

Publicly Claiming Control of Android and Other Open Source Operating Systems

Requiring Potential Licensees to Enter into Overly Restrictive Non-Disclosure Agreements

Demanding Royalties Commensurate with Owning the Entire Android Operating Sysem (and Similar to Royalties for a Windows Phone License) Even Though Microsoft Only Owns Trivial Patents

Imposing Licensing Provisions Unrelated to Microsoft's Patents and Designed to Prevent Competitor Innovation

Filing Frivolous Patent Infringement Actions Against Companies That Refuse to Enter Into Anticompetitive Licensing Agreements

Deal with Nokia Includes an Agreement to Engage in a Coordinated Offense Use of Patents Against Open Source Software

Purchasing Patent Portfolios that Threaten Open Source Software

We suspected when it was announced that the deal with Nokia was about patent aggression, and now we see it in black and white. Barnes & Noble lists three deals as anti-competitive, the Nokia deal, the CPTN-Novell patent deal, and the Nortel patent deal. You can see the "trivial patents" Microsoft used in discussions with Barnes & Noble and in its later patent infringement complaint -- not an identical list -- on page 5 of the slides.

Also, the patent infringement case Microsoft filed against Barnes & Noble is ongoing in parallel with the ITC case. Barnes & Noble's answer to the complaint is smoking hot too, and you can read it here. Barnes & Noble says in the answer that "the license fees demanded by Microsoft are higher than what Microsoft charges for a license to its entire operating system designed for mobile devices, Windows Phone 7."

Essentially, they accuse Microsoft of using patents as a weapon to carry out an anti-competitive strategy, a campaign of collecting patents for the specific purpose of attacking Android, "embarking on a campaign of asserting trivial and outmoded patents against manufacturers of Android devices”. We get to look behind the curtain of secrecy now, at last.

There are links to pertinent documents and more information as well.

Reply Parent Score: 3