Microsoft, Foxconn ink patent licensing deal
icrosoft (Redmond, Wash.) said the deal provides broad coverage under Microsoft’s patent portfolio for devices running the Android and Chrome OS, including smartphones, tablets and televisions. Microsoft said it would receive unspecified royalties from Hon Hai under the agreement.
Microsoft has been aggressive in threatening legal action against handset OEMs perceived as violating its massive software IP portfolio. Firms such as HTC Corp., Acer, LG Electronics and Samsung Electronics Co. Ltd. have already agreed to pay Microsoft royalties on Android-based phones. Motorola Mobility, now a subsidiary of Google, remains a holdout and is fighting Microsoft in court over patents.
Jim McGregor, founder and principal analyst at Tirias Research, said Microsoft is beginning to have success forcing firms that build smartphones and other products on behalf of others to sign licensing agreements for fear of being sued.
"Unfortunately, the contract manufacturers and ODMs are getting caught in the crossfire," McGregor said. "They almost have to have that legal indemnity to avoid getting sued."
Foxconn, the world’s largest contract electronics manufacturer, is well known for building products for Apple Inc.—including iPhones and iPads—and firms. The firm is estimated to manufacture more than 40 percent of the world’s consumer electronics.
Intellectual property battles have long been a part of the high-tech landscape, but seem to have ramped up in recent years. Companies like Microsoft, Apple and Google—which owns tens of thousands of patents—have been engaging in legal action and bidding to acquire other patent portfolios to strengthen their competitive positions.
Apple and Samsung famously squared off in court last year in San Jose, Calif., in a fight over smartphone patents.
Will Foxconn become OEM?
McGreggor said Foxconn may have agreed to the deal because it eventually hopes to become an OEM, making its own branded products. HTC took such a path—starting as a contract manufacturer before eventually making its own successful handsets.
"Some of it is related to the fact that they [Foxconn] are building products for companies that they know are being sued by Microsoft," McGreggor said. "Their customers are already getting sued. It’s kind of preemptive to keep that waterfall from going down."
Horacio Gutierrez, corporate vice president and deputy general counsel of Microsoft’s intellectual property group, said the deal with Hon Hai expands the success of Microsoft’s Android licensing program.
"By licensing both brand name companies and their contract manufacturers, we have successfully increased the overall effectiveness and global reach of the program," Gutierrez said.
"We recognize and respect the importance of international efforts that seek to protect intellectual property," said Samuel Fu, director of the intellectual property department at Hon Hai, in a statement. "The licensing agreement with Microsoft represents those efforts and our continued support of international trade agreements that facilitate implementation of effective patent protection."
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