Barnes & Noble: Microsoft wanted ‘shockingly high’ fees for Android in Nook

[Updated with Microsoft's statement.] Barnes & Noble is rejecting Microsoft’s claims that the use of Android by its Nook e-reader violates the Redmond company’s patents — and alleging that Microsoft is going out of its way to put up financial roadblocks for Google’s mobile OS.

Mary Jo Foley of ZDNet.com has details on the book giant’s response to Microsoft’s complaint, including Barnes & Noble’s allegations that Microsoft and Nokia are in cahoots on patents in a way that may violate antitrust laws. Here’s the B&N filing via Groklaw: PDF, 50 pages.

Among the statements by Barnes & Noble are details of meetings between the companies …

At the meeting, Microsoft alleged that the Nook infringed six patents purportedly owned by Microsoft. Microsoft had prepared claim charts purportedly detailing the alleged infringement but insisted that it would only share the detailed claim charts if Barnes & Noble agreed to sign a non-disclosure agreement (“NDA”) that would cover the claim charts as well as all other aspects of the parties’ discussions. Noting that the patents were public and that the infringement allegations pertained to Barnes & Noble’s public product, Barnes & Noble refused to sign an NDA.

Insisting that an NDA was necessary, Microsoft discussed the alleged infringement on a high level basis only. Microsoft nevertheless maintained that it possessed patents sufficient to dominate and entirely preclude the use of the Android Operating System by the Nook. Microsoft demanded an exorbitant royalty (on a per device basis) for a license to its patent portfolio for the Nook  device and at the end of the meeting Microsoft stated that it would demand an even higher per device royalty for any device that acted “more like a computer” as opposed to an eReader. …

After sending the proposed license agreement, Microsoft confirmed the shockingly high licensing fees Microsoft was demanding, reiterating its exorbitant per device royalty for Nook, and for the first time demanding a royalty for Nook Color which was more than double the per device royalty Microsoft was demanding for Nook. On information and belief, 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.

We’ve asked Microsoft for comment and we’ll update this post depending on the response.

Update: Here is Microsoft’s statement: “Our lawsuits against Barnes & Noble, Foxconn and Inventec [the Nook's manufacturers] are founded upon their actions, and the issue is their infringement of our intellectual property rights. In seeking to protect our intellectual property, we are doing what any other company in our situation would do.”

  • http://orcmid.com/blog/ orcmid

    The challenge to the Eniac patent by Honeywell Information Systems was based on anti-trust and anti-competitive behavior of the patent holder (Sperry Univac by then, I think). Some had licensed (including IBM).

    Ultimately, the court invalidated the Eniac patent based on the determination of prior art.

    It’s hard to know about NDAs and unwillingness to discuss specific claims. Most of these dealls appear to be conducted in private and we only know about an infringement claim if the parties end up suing each other. It would appear that however negotations (or demands) took place, the determinations of fact with regard to patents is going to be resolved by a court unless the parties settle. I’m not sure who has the most to lose in that event, and I wonder if the parties know either.

  • Jman

    This is incredibly disingenuous of Microsoft. All of the major software manufacturers have large, overlapping patent portfolios that they — for the most part — agree not to enforce on each other to avoid protracted legal fights where everybody loses (except attorneys). Maybe they feel that B&N and the manufacturers of the Nook are dealing from a position of weakness patent-wise and are using this as leverage to limit competition.

  • Gary

    This strategy from Microsoft has been pretty clear for some time now. When they were being investigated by the EU, there were a lot of public statements made by Microsoft that other companies would start having legal troubles and that Linux wasn’t really free. The strategy is simple. Make Linux/Android cost so much in licensing and legal hassle that people use Windows/WP7 just to avoid the hassle. They are using their legal might to push people away from something that is and should be completely free.

  • Franki

    If Microsoft were serious about getting their patents validated in court, they’d have sued Google. They don’t want to risk them being invalidated so they are going after smaller outfits and getting exorbitant licensing payoffs.. I hope Google supports B&N bigtime to actually take this to the matt and have Microsofts stuff all thrown out.

    Then HTC can stop making MS payments as well.

    What MS doing is without a doubt shockingly anti-competitive, if they hadn’t done patent deals with Apple, you could bet they’d be sueing them now too IMHO.

    • Anonymous

      They haven’t sued Google because Google don’t make any money from Android directly, rather than indirectly though advertising for example. The OEMs make money from selling devices running Android. The reason HTC pay up is not because they’ve just gone “Ok Microsoft here’s some money” it’s because they have investigated the patents in question and have gone “it’s unlikely we will be able to prove these patents invalid in court” and for that reason they have ponied up as have some other OEMs, except Motorola.

  • http://twitter.com/Pandersonpllc Patrick Anderson

    B & N is patent-weak, but the defense isn’t going to hold water. Even reading B&N’s one-sided characterization of the licensing discussions, I can say that the posturing and behavior is par for the course. I discuss all of this, and more, here: http://gametimeip.com/2011/04/27/questionable-strategy-employed-against-microsoft-patent-assertion/