Supreme Court Decision, 'Windows 8' Rumors Marked Microsoft's Week

Microsoft's week involved losing a major Supreme Court case and siding with AT&T's acquisition plans for T-Mobile. 'Windows 8' rumors also abounded.

By the end of this week, things were looking pretty dire for Microsoft (NASDAQ:MSFT) on the government front.

On June 9, the U.S. Supreme Court rejected the company's appeal in its long-running patent-infringement suit with Canadian firm i4i, rendering Redmond vulnerable to the nearly $300 million judgment delivered by the lower courts.

The Supreme Court case is filed under Microsoft Corp. v. i4i Limited Partnership and Infrastructures for Information, No. 10-290.

Microsoft had needed to win five votes to succeed in its appeal, which sought to overturn earlier rulings that Word 2003 and 2007 violated i4i's rights for custom XML. Instead, the justices voted unanimously in favor of the U.S. Appeals Court's earlier ruling. (Chief Justice John Roberts, an apparent owner of Microsoft stock, had recused himself from hearing the April arguments in the case.)

In April, Microsoft's legal counsel argued that the overwhelming standard of evidence needed to invalidate patents made it too difficult for companies to beat back frivolous patent-infringement suits. The court evidently disagreed.

"This case raised an important issue of law which the Supreme Court itself had questioned in an earlier decision and which we believed needed resolution," a Microsoft spokesperson wrote in a June 9 email to eWEEK. "While the outcome is not what we had hoped for, we will continue to advocate for changes to the law that will prevent abuse of the patent system and protect inventors who hold patents representing true innovation."

Microsoft first asked the Supreme Court to hear its appeal in August, seeking to overturn earlier rulings concerning i4i's patents. The previous April, a federal Appeals Court had rejected Microsoft's request for an 11-judge review of the lawsuit, which resulted in that multimillion-dollar judgment.

Microsoft's legal ride extended back to August 2009, when the federal judge in the U.S. District Court in Eastern Texas ordered that all copies of Word 2003 and 2007 be removed from retail channels within 90 days. Microsoft's attorneys managed to argue a delay, only to have the U.S. Court of Appeals uphold the verdict four months later. Microsoft then asked for that multi-judge review, in addition to issuing a patch for Word that sidestepped the alleged infringement.

The Supreme Court wasn't Microsoft's only government interaction this week. The company also joined a handful of tech giants-including Facebook, Oracle, Research In Motion and others-in publicly backing AT&T's bid to acquire T-Mobile.

"Given the network capacity challenges, policymakers must give meaningful consideration to AT&T's acquisition of T-Mobile as a means of addressing their near-term wireless broadband capacity needs," read a June 6 letter to Federal Communications Commission Chairman Julius Genachowski, signed by the companies in question.

"Such action will help to meet the near-term wireless broadband needs of consumers," the letter continues, "and ensure that we are globally competitive as the world increasingly embraces wireless broadband connectivity."

For its part, the FCC has asked AT&T for evidence supporting the carrier's claims that its spectrum is insufficient to provide future service. Government regulators are also interested in finding out whether AT&T's acquisition will result in lost jobs. FCC officials have told eWEEK they have no intention of giving the acquisition request a "rubber stamp."

Both the FCC and the U.S. Department of Justice will ultimately need to examine whether the acquisition violates antitrust regulations, and possibly ask the carrier for concessions such as price caps. Sprint has also filed an official objection to the acquisition with the FCC, arguing that the move would ultimately harm broadband competition and consumers.

"AT&T is simply seeking a government bailout for problems of its own making and expects the cost of the bailout to be shouldered by American consumers," read a May statement by Vonya McCann, senior vice president of government affairs for Sprint. "Instead of paying Deutsche Telekom [owners of T-Mobile] $39 billion, AT&T could invest a fraction of that amount to expand its LTE [Long-Term Evolution] deployment to nearly all Americans."

But Microsoft's week wasn't all governmental fun-and-games. A spate of rumors suggests Microsoft could be planning to manufacture its own brand of "Windows 8" tablets.

Citing unnamed "sources from the upstream supply chain," the publication DigiTimes suggested in a June 8 article that Microsoft would collaborate on the branded tablet with Texas Instruments and a variety of Taiwanese manufacturing partners.

"Xbox 360 is currently the only own-brand product line that Microsoft has achieved success," it added, "while Zune media player, Kin smartphone and own-brand TVs all had unsatisfactory performance."

In recent demonstrations at the 2011 Computex conference in Taiwan and the D:All Things Digital Conference in Rancho Palos Verdes, Calif., Microsoft whipped the curtain back from the next-generation Windows, which the company internally refers to as "Windows 8." In place of the "traditional" Windows interface, with a desktop and Start button, Windows 8 offers a set of colorful tiles that open applications-a design that draws many of its visual cues from Windows Phone, Microsoft's latest smartphone operating system.

Windows 8 is designed to work on form factors, ranging from desktops and laptops to tablets. In theory, this will allow Microsoft to not only preserve its substantial market share in the realm of traditional operating systems, but also to make inroads into the burgeoning consumer-tablet market currently dominated by Apple's iPad.

Indeed, in order to facilitate Windows 8's appearance on tablets, Microsoft is designing the operating system to support SoC (system-on-a-chip) architecture, in particular ARM-based systems from partners such as Qualcomm, Nvidia and Texas Instruments. ARM architecture powers the lion's share of mobile devices on the market today.