Microsoft, HTC Agreement Could Alter Apple Patent Battle

Microsoft and HTC announced an IP (intellectual property) agreement April 27 that will see the phone manufacturer license Microsoft's patented technology for use in its smartphones running Google Android. In exchange, HTC will pay undisclosed royalties to Microsoft.

Since launching its IP licensing program in 2003, Microsoft has entered more than 600 licensing agreements with companies ranging from Apple and Hewlett-Packard to LG Electronics and Nikon. Most recently, Microsoft announced patent-portfolio deals with Amazon.com and Panasonic in February.

Such cross-licensing agreements allow companies to create stronger partnerships and avoid the patent-infringement lawsuits that occasionally make for high drama in the tech world. Apple and Nokia are currently engaged in one such battle, with Apple claiming violations to nine patents by certain Nokia mobile devices.

"HTC and Microsoft have a long history of technical and commercial collaboration," Horacio Gutierrez, Microsoft's corporate vice president and deputy general counsel of IP and licensing, wrote in an April 27 statement. "We are pleased to continue our collaboration with HTC."

But the collaboration between HTC and Microsoft may have more to do with those respective companies' battles against outside entities.

HTC is currently armoring up against an Apple patent-infringement lawsuit, filed March 2, which alleges the phone manufacturer violated 20 patents surrounding the iPhone's interface, architecture and hardware. Apple's corporate language with regard to the suit has been particularly strong, with CEO Steve Jobs writing in a March statement: "We think competition is healthy, but competitors should create their original technology, not steal ours."

That lawsuit arrived just as data from analytics firm Quantcast indicated that Google Android had gained 8.3 percent of the North American market for mobile Web consumption in February, in contrast to Apple declining 3.2 percent; while the iPhone continues to hold a comfortable lead over Google Android in overall smartphone market share, a number of analyst reports over the past year have Google's operating system poised to take an ever-larger chunk of that market.

HTC plans to vigorously contest that lawsuit. While Microsoft's April 27 statement makes only a vague allusion to the patents extended, the agreement will likely give HTC more leverage in its fight against Apple. However ironically, it also aligns the interests of Microsoft and Google, which compete fiercely in areas such as search.

HTC has been solidifying its U.S. position as a top smartphone maker with a number of Android-based devices, including the HTC Droid Incredible-which runs Google Android 2.1 off a 1GHz Snapdragon processor-and the Nexus One.