Business As Usual

May 23rd, 2012 by admin.

With the recent news that Motorola won a sales and  import ban against Microsoft in Germany (effectively removing Microsoft Xbox and Windows 7 products from that market), and is poised to repeat the ban here in the US, the circle is complete.

Rewind

Video and Audio Compression technologies have been developed by a host of companies over the past decades, and the result is a somewhat murky product development pipeline requiring patent licensing and cross licensing deals, the likes of which would make an LA freeway interchange look like a lonely unpaved road through the dustbowl. Add to this the fact that IP&L (Intellectual Property & Licensing) is the cash cow of many technology giants, and the prevailing practice is to develop patents for everything that can be thus recorded, in the hopes that there may exist licensing revenues somewhere in the future. These are the given circumstances for the present dance featuring Microsoft and Motorola Mobility (now under Google’s wing).

Battle Lines

As is often the case, much sabre-rattling has been going on, and clashes in court have ensued. Each side hoped that, when the dust settled, they would emerge with the upper hand. Nobody expected to outright win, but that’s not what IP conflicts are about, when the licensing giants are engaged in battle. It always looks terribly bloody and violent, and enormous (to us) sums of money are dispensed via legal teams. However, these sums are paltry, when compared to the licensing sums at stake. What’s a million or two, when one stands to gain tens and even hundreds of millions?

However, in this particular case, both sides gained and both sides lost, and now it falls to the lawyers and IP negotiators to assess where the bargaining chips have fallen, before progressing with the next stage of battle: the truce.

All In A Day’s Work

Motorola made a valiant effort to push Microsoft back on to its heels, successfully getting the tech giant kinda-sorta booted out of Deutschland (of course, it’s never quite so cut and dried). The company, recently acquired by Google, further strengthened their position when the ITC threatened Microsoft with major market restrictions and penalties in the US.

In the meantime, Microsoft successfully attacked Motorola’s flank, when the ITC ruled in its favor, on another licensing issue (another related article here).

Now that both camps hold trophies, they could either choose to continue attacking one another, if they believed more trophies were in the offing, or they could begin the next phase of a process all too familiar to large tech companies today: negotiation of a cross-licensing truce.

Instead of negotiating from the outset in good faith, companies today have discovered that negotiation under duress, even if that duress is mutual, tends to deliver greater savings. I’m not sure I believe it anymore, but the trend is to sue until the pot is sweet enough to settle.

As far as the Microsoft/Motorola Mobility clash is concerned, this could be a good time to trade trophies, and settle on a cross-licensing agreement that would allow both companies to get on with the business of selling their products to consumers (albeit at a slightly increased price point, necessary to cover their legal costs). However, now that Google has just purchased Motorola Mobility, the search-and-everything-else giant may opt to bloody its bitter rival a little more, and Motorola Mobility product sales may become collateral damage in the even larger battle between Redmond and Mountain View.

It would all be rather silly, were it not for the millions of dollars, hundreds of jobs, and possible legal precedents at stake…

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