So Who’s a Bully…

Justice tends to be blind when it comes to patents...

Well as we’ve waxed here in the past, our book purveying friends at Barnes and Noble claims that our good friends in Redmond Washington being Microsoft have over 60,000 patents!  What makes this even more interesting is that fewer than 20,000 of those were granted by the patent office to Microsoft.  So where did the remainder come from you ask, good question as presumably they purchased the other 40,000 from other firms.

In turn this buying frenzy has result in one of the world’s largest “patent thickets” as Microsoft has so many patents that it’s difficult to build a software product as complex as a mobile operating system.  Well let’s say without infringing dozens, maybe even hundreds, of them at a time doing so.

Here as most big companies would do, Microsoft is taking full advantage of this ability, and approaching each Android-based phone manufacturer in turn and demanding stiff licensing fees.  In fact, many which have been approached claim these fees are at least as high as the fees Microsoft charges for its own Windows Phone 7 operating system. In addition it appears Microsoft has been let’s say a little cagey at best about identifying the specific patents allegedly infringed by these Android vendors. Some might even characterize this process if they didn’t know better as a high-tech shakedown of sorts.

So the big question which needs to be asked is does Microsoft’s conduct in these cases actually run afoul of antitrust laws?  Yet the issue is that anti-trust has limited abilities to deal with twenty first century issues such as these and are as slow as molasses on a cold January day in Wisconsin.

There also seems to be an inherent tension which exists between antitrust law and patent law. In that antitrust law exists to prevent the abuse of monopoly power, whereas patent law on the other hand seems to deliberately foster monopoly power. For the most part, the ways the courts have typically dealt with this tension was to simply give patent holders the upper hand in their decisions as yes you could say justice is truly blind.

Additionally, antitrust gives leeway to the patent monopolist ability to set price, as it may even go beyond that as the owner may refuse to license their patent completely.  So logically if a company has the right to “refuse” to license, then they must also have the right to set an unrealistically high price too.  In all, this means that Microsoft might be on somewhat safe ground around its use of its “patent portfolio” to extract revenues from Android licensees even at rates which its own offering look cheap.

Yet Microsoft might still be in the woods as it could become vulnerable if regulators became convinced that it is using its patent portfolio to kill off competition to its dominant desktop operating system. Yet to prove this as anticompetitive behavior, one would have to show that the activity made no sense other than harming rivals.  Well there is no question there is a lot more to unfold in the arena before the curtain closes for sure…

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About Joseph Campbell

As a strong believer in the fact that "people work for people", it has been a life driver to better to understand the complexities of the various aspects which drive efficiency within this axiom, especially the concepts of leadership. Supporting this, I have been fortunate enough to having experienced this as leader on a global basis over the last decade and half. During this time it has been clear there are three core drivers being Life, Leadership and Economics.
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