Barnes & Noble Claims That Microsoft Patent Shakedown Over Android Is An Antitrust Violation

from the sounds-about-right dept

Wed, Nov 9th 2011 1:05pm — Mike Masnick

There's finally been a growing recognition that intellectual property laws are about providing monopolies, and that misusing patent and copyright laws thus could be considered antitrust violations. While it's true that copyright and patents involve legal monopolies, misusing them would clearly be an abuse of a monopoly, and should be ripe for actual antitrust investigations (rather than silly antitrust attacks on companies just because they're "big.") So it's interesting to see that Barnes & Noble is pressing the feds to go after Microsoft on antitrust grounds for its Android licensing shakedown. Barnes & Noble is pretty direct in its accusations.

Instead of focusing on innovation and the development of new products for consumers, Microsoft has decided to invest its efforts into driving open source developers from the mobile operation systems market. Through the use of offensive licensing agreements and the demand for unreasonable licensing fees, Microsoft is hindering creativity in the mobile operation systems market.

The complaint also notes some odd behaviors on Microsoft's part, such as refusing to explain what patents it was threatening B&N over, unless B&N agreed to sign a non-disclosure agreement.

Microsoft specifically alleged that Barnes & Noble's Nook was infringing six patents purportedly held by Microsoft. When Barnes & Noble asked Microsoft for more detailed information related to these patents, Microsoft refused, claiming that the information was confidential and could not be shared unless Barnes & Noble first executed a non-disclosure agreement ("NDA"). Because both the patents and Barnes & Noble's Nook product are public -- meaning there was no need for an NDA -- Barnes & Noble refused to sign.

The company continued negotiating with Microsoft over what seemed like a pretty bizarre discussion concerning whether B&N had to sign an NDA just to find out what patents Microsoft wanted the company to license. Because B&N did eventually sign a limited NDA, it's asking the DOJ to step in and subpoena the details it can't reveal. Still, B&N claims that Microsoft's patents would severely limit its ability to innovate:

This proposed licensing agreement covered Barnes & Noble's use of Android on its existing eReader devices but is structured in such a way to presume that Microsoft's portfolio of patents dominate, and thereby control, the entire Android operation system and any devices that use Android. Indeed, the proposed license would have severely limited and, in some cases, entirely eliminated Barnes & Noble's ability to upgrade or improve the Nook or the Nook Color, even though Microsoft's asserted patents have nothing to do with improvements.

Unfortunately, I just don't see the Justice Department gearing up for this, but that's really unfortunate. It should be watching out for abuses of patent law that appear to impact wider innovation. Instead, it's running around chasing companies based on size, not actual impact.

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Filed Under: android, antitrust, patents
Companies: barnes & noble, microsoft

38 Comments

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The Incoherent One (profile), 9 Nov 2011 @ 1:09pm

Well...
Not like they would have to tell the truth about what they found anyways.
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Joshy, 9 Nov 2011 @ 1:15pm

If your violating "unknown Patents" and are unable to determine which ones. Isn't that a sign you created an obvious product without the need for the specialized knoweldge of those patents. Kind of like if you put round wheels on a car instead of square wheels because it was obvious that only a round wheel would work. But only now Microsomebody is now asking for cash for your car having round wheels??
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- Lawrence D'Oliveiro, 9 Nov 2011 @ 1:17pm
  
  Re: If your violating "unknown Patents" and are unable to determine which ones ...
  Your unfortunately, your independent invention is not your defence against your patent infringement.
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  - MrWilson, 9 Nov 2011 @ 1:19pm
    
    Re: Re: If your violating "unknown Patents" and are unable to determine which ones ...
    But it should be.
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  - R.H. (profile), 9 Nov 2011 @ 1:20pm
    
    Re: Re: If your violating "unknown Patents" and are unable to determine which ones ...
    And I believe that this is the problem. Why isn't independent invention a defense? It's completely possible for two independent groups to invent the same thing at the same time.
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- Robert A. Rosenberg (profile), 10 Nov 2011 @ 9:13pm
  
  Re: Round Wheels
  The comment about using round wheels since only they will work reminds me of a science fiction story that I read years ago. The basic premise was that a space ship crashed on a primitive planet and the crew needed to transport something via a wagon but they could not use wheels on the wagon since the circle was sacred to the natives. They got around the restriction by using wheels that were shaped like rounded triangles. This shape has a constant diameter and thus will roll just like a circular wheel but since it was not a circle was not in violation of the native's religious views.
  
  The bottom like is that this shape (which is the same as that of the Wankel Engine Rotor) can work just as well as the standard round wheel.
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MrWilson, 9 Nov 2011 @ 1:17pm

This just illustrates what is wrong with the patent system. If you have to go to the trouble of pointing out to another company how their product violates your patents, then it just shows that they didn't derive their product from your patents and therefore your patents should be invalidated based on their obviousness.
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- IronM@sk, 9 Nov 2011 @ 11:29pm
  
  Re:
  I know it's a technicality, but it's one that bears mention. It's not B&N who is allegedly infringing on these patents, it's Android. Microsoft is just after B&N for the rent.
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Lawrence D'Oliveiro, 9 Nov 2011 @ 1:20pm

Hope For DoJ?
Didn�t the Justice Department announce an antitrust investigation over MPEG-LA�s solicitation of patents to go after WebM? So it seems like it�s looking out for companies who try to take their patent �protection� too far.

So maybe there�s a chance it will go after Microsoft in this case.
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Anonymous Coward, 9 Nov 2011 @ 1:55pm

Secret patents
I'd be interested in hearing Microsoft's justification for keeping those patents secret. The whole case perfectly illustrates the problem with secret patents.

At least in theory, if Microsoft had chosen to publicize those patents, B&N could have found those patents before they chose to invent something. That's the whole way the patent system is supposed to work -- when you're inventing something, you check to see if portions of it have already been patented, and then choose whether to license those patents or to invent your own alternative.

Instead, Microsoft chose to keep those patents secret. This more or less means that B&N couldn't know the Nook was (potentially) infringing, until they'd already developed and released it. And now, they have to fight a costly infringement suit.

In other words, keeping patents secret does not protect IP (and certainly doesn't protect it from independent invention). All it really does is to open up the potential for shakedowns, and add hidden costs to innovation that are impossible to estimate in advance.
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- Chosen Reject (profile), 9 Nov 2011 @ 2:43pm
  
  Re: Secret patents
  Microsoft isn't making the patents secret. I don't think that's even possible. What they're being secretive about is which patents they think B&N is infringing. My guess is they won't say without the NDA because they don't want a crowdsourced patent rejection. Once the Linux/Android/Open Source community finds out which patents they are using against everyone, there will be a massive amount of work to get those patents invalidated. But if they can get companies to sign NDAs then that work will never get done.
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  - Willton, 9 Nov 2011 @ 3:18pm
    
    Re: Re: Secret patents
    Microsoft isn't making the patents secret. I don't think that's even possible. What they're being secretive about is which patents they think B&N is infringing. My guess is they won't say without the NDA because they don't want a crowdsourced patent rejection. Once the Linux/Android/Open Source community finds out which patents they are using against everyone, there will be a massive amount of work to get those patents invalidated. But if they can get companies to sign NDAs then that work will never get done.
    
    This. One thing to note, however, is that B&N can call the bluff of MS and just wait for a lawsuit, assuming one ever comes. IF MS files a complaint, it will have to disclose the patent numbers of the allegedly infringed-upon patents. If MS is concerned about having the IT community cooperate to invalidate MS's patents, then it may not wish to bring suit.
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- TheStupidOne, 9 Nov 2011 @ 2:55pm
  
  Re: Secret patents
  A patent, by its very definition, is public. Microsoft however probably has 6 patents that are broad enough that they feel that they can threaten Android with, but those patents aren't specific enough for anybody who is looking for patents that Android would infringe on to actually find. Thus Microsoft is attempting to protect their revenue by keeping their victims, i mean licensees, from talking about those patents and getting them invalidated.
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- LyleD, 9 Nov 2011 @ 4:10pm
  
  Re: Secret patents
  I don't think it has much to do with the secretiveness (although, that's certainly not good practice)..
  
  It looks more like it's M$'s 'License' itself.. They're not just licensing access to those patents.. They're adding terms that bind the licensee to specific obligations., i.e. Contractual Obligations that have nothing to do with the patents themselves..
  
  So, it's more than just a shakedown.. Anti-trust indeed...
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Anonymous Coward, 9 Nov 2011 @ 2:00pm

I suspect that the NDA is to cover the difference between the patent as written, and the patent in actual operation. That is to say that reading the patent may only give a partial explaination of all that the system can do, or may actually be doing in practical application, current or (more likely) future iterations of Windows or it's mobile OS.
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Anonymous Coward, 9 Nov 2011 @ 2:02pm

I'm confused, don't companies constantly license their patented technology? How is Microsoft's patent preventing ANYONE from innovating? It might make it more expensive to innovate, but it does not prevent them from innovating. Specifically, if the patent is vital to technology, the patent holder will be forced to license the technology to other vendors.

It's always the late-comers who want to know why all the beer is gone. Hey you showed up late to the party dude, it's your own fault. If you want beer you better get to the party early.
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- Nathan F (profile), 9 Nov 2011 @ 2:09pm
  
  Re:
  The problem is that Microsoft is keeping the patents and its details a secret so there was no way for B&N and Android to know it was infringing on the patent till after the fact.
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  - Anonymous Coward, 9 Nov 2011 @ 3:17pm
    
    Re: Re:
    And if B&N could let the world know which patents MS is talking about, then the the android and/or linux developers might be able to build workarounds. That wouldn't help MS licensing model.
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- Anonymous Coward, 9 Nov 2011 @ 2:27pm
  
  Re:
  Shut up Wesley!
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- Anonymous Coward, 9 Nov 2011 @ 2:43pm
  
  Re:
  Yes, you're right, Microsoft is late to the party.
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- The eejit (profile), 9 Nov 2011 @ 2:51pm
  
  Re:
  There is no licensing going on here. They're demanding an NDA before revealing, which is a common extortioner's tactic.
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  - Overcast (profile), 9 Nov 2011 @ 4:18pm
    
    Re: Re:
    There is no licensing going on here. They're demanding an NDA before revealing, which is a common extortioner's tactic.
    
    Interesting observation. I wonder when we'll start to see extortion counter suits... hmmm...
    
    There's an idea.
    
    And why not? It seems to me a false copyright/patent claim that results in a court battle or coercion for money is certainly extortion.
    
    http://legal-dictionary.thefreedictionary.com/extortion
    
    "Under the common law and many statutes, an intent to take money or property to which one is not lawfully entitled must exist at the time of the threat in order to establish extortion. Statutes may contain words such as "willful" or "purposeful" in order to indicate the intent element. When this is so, someone who mistakenly believes he or she is entitled to the money or property cannot be guilty of extortion. Some statutes, however, provide that any unauthorized taking of money by an officer constitutes extortion. Under these statutes, a person may be held strictly liable for the act, and an intent need not be proven to establish the crime."
    
    All that needs done - is to prove it was no mistake.
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Anonymous Coward, 9 Nov 2011 @ 2:06pm

Mised the best part
While I can't find a source other than Ars Technica, but supposedly the license fees being demanded for the patents in question were greater that the fees Microsoft asks for Windows Phone.
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ProjectPaatt, 9 Nov 2011 @ 2:41pm

Finally
I'm happy to learn that finally someone these days is not afraid to stand up and complain about microsoft, there is just too much of this MSBS >:[ .
It's really just sounding like
"im useing you!"
"why?"
"cant tell you..."
It just seems to be a trend of corporate people who dont know anything but business trying to make some money off of other people
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out_of_the_blue, 9 Nov 2011 @ 3:01pm

Even when you come out /for/ anti-trust, you have to hedge.
This is exactly WHY DOJ should go after corporations merely because big: it's /always/ the case that they use every means that can be thought of to hinder competition. We don't /want/ monopolies, even if "natural".

The refusal to even disclose the alleged patents infringed makes this a clear case of /extortion/, not any legitimate business. Corporations must operate openly, or prosecuted simply for that.

"Instead, it's running around chasing companies based on size, not actual impact." -- Name three. If Microsoft, the biggest known corporate criminal, doesn't get chased, then it's only because the anti-trust div is actively ignoring it.
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- Anonymous Coward, 9 Nov 2011 @ 3:04pm
  
  Re: Even when you come out /for/ anti-trust, you have to hedge.
  How big?
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Anonymous Coward, 9 Nov 2011 @ 3:20pm

"Instead, it's running around chasing companies based on size, not actual impact."

but ... but ... but... Google is too big to fail!!!
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Overcast (profile), 9 Nov 2011 @ 4:14pm

Litigate, litigate, litigate.

No wonder there's no time to innovate.

Heck, at this rate, you'll get sued *no matter what*, if you are in business, so you may as well just try to turn a quick buck while you can.
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Anonymous Coward, 9 Nov 2011 @ 4:15pm

microsoft wont be able to sue out of irrelevancy in the mobile market, just delay their death.
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LyleD, 9 Nov 2011 @ 7:52pm

M$ filed suit!
Not sure where this fits in.. But this is from March 2011 when M$ actually sued B&N.. Seems to be related? idk..

It does list 5 software patents though that look like they could easily be applicable to almost any GUI..

http://www.scribd.com/doc/51247553/MSFT-vs-Barnes-and-Noble

5,778,372 - Remote retrieval and display management of electronic document with incorporated images
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2F netahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=5,778,372.PN.&OS=PN/5,778,372&R S=PN/5,778,372

6,339,780 - Loading status in a hypermedia browser having a limited available display area
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2F PTO%2Fsearch-bool.html&r=20&f=G&l=50&co1=AND&d=PTXT&s1=6,339,780&OS=6,33 9,780&RS=6,339,780

5,889,522 - System provided child window controls
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fse arch-adv.htm&r=12&f=G&l=50&d=PTXT&p=1&p=1&S1=5,889,522&OS=5,889,522& amp;RS=5,889,522

6,891,551 - Selection handles in editing electronic documents
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fse arch-adv.htm&r=14&f=G&l=50&d=PTXT&p=1&p=1&S1=6,891,551&OS=6,891,551& amp;RS=6,891,551

6,957,233 - Method and apparatus for capturing and rendering annotations for non-modifiable electronic content
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fse arch-adv.htm&r=5&f=G&l=50&d=PTXT&p=1&p=1&S1=6,957,233&OS=6,957,233&a mp;RS=6,957,233
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IAmNumber813 (profile), 9 Nov 2011 @ 11:44pm

"Unfortunately, I just don't see the Justice Department gearing up for this, but that's really unfortunate."

If I were Microsoft CEO Steve Ballmer, I would be seriously considering a graceful and face-saving exit strategy from the Barnes & Noble patent lawsuit.

Barnes & Noble law firm, Cravath Swaine & Moore, are no lightweights: they are IBM's "go to" white-shoes law firm that has successfully defended IBM (since the 1950s) against major federal anti-trust claims and major intellectual property challenges in IBM's bread & butter mainframe space (i.e., do a google search on "Neon zprime lawsuit" for their latest conquest:

"IBM guns down Neon's mainframe accelerator in Texas"
http://www.theregister.co.uk/2011/06/01/ibm_prevails_over_neon_zprime

At this level, its all about "relationships": How many law firms can schedule a private meeting with high-level officials/lawyers in the Justice department in D.C. to deliver a detailed 29-page power point presentation describing Microsoft's patent abuses? (I wonder what they ate during the catered lunch.)

http://www.geekwire.com/2011/barnes-nobles-29page-slide-deck-calls-bs-microsofts-android- patent-campaign
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chris, 10 Nov 2011 @ 12:44am

I guess the justice department figures that as long as B&N can license the patents, then there shouldn't be any problem.

Also, in a lot of cases, the licensing of patents is not voluntary on behalf of the holder. In other words they cannot refuse to offer a license.
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- Lawrence D'Oliveiro, 10 Nov 2011 @ 2:48am
  
  Re: I guess the justice department figures that as long as B&N can license the patents, then there shouldn't be any problem.
  Which patents would those be, then?
  
  Everybody goes on about �the patents�, as though they know which ones they are.
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abc gum, 10 Nov 2011 @ 6:29am

Is this the pinnacle of modern day extortion?
Bravo Microcrap
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Anonymous Coward, 10 Nov 2011 @ 12:51pm

"Because B&N did eventually sign a limited NDA"

NDA's involving the exercise of a publicly granted monopoly privilege should be illegal. The public should have a right to know how its laws are being used so that we can ensure they are being used to benefit the public. If you want free market capitalism then don't use a government granted monopoly privilege as part of your business model.
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- Anonymous Coward, 10 Nov 2011 @ 12:51pm
  
  Re:
  (and this whole time I thought patents were about encouraging transparency).
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Grady, 10 Nov 2011 @ 1:58pm

Well, I hate to do this....
Simple question really....

If M$ is violation of antitrust laws....why isn't Apple?

Apple has some blatantly obvious patents that they are trying to sink various companies with........
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- techflaws.org (profile), 11 Nov 2011 @ 3:32am
  
  Re: Well, I hate to do this....
  But they don't keep them a secret, right?
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