Windows Phone Data, Nook Lawsuit, Earnings Filled Microsoft's Week

Microsoft's week saw a spike in its legal battle with Barnes & Noble, a focus on Windows Phone data and consumer adoption, and an earnings report.

Microsoft's week was big on the corporate side of things: an earnings report, a few statements about a particular policy and the prospect of a drawn-out legal battle with ... a book retailer?

As improbable as it may have seemed even five years ago, Microsoft is locking legal horns with Barnes & Noble, which fired off a counterclaim April 25 to Redmond's lawsuit over intellectual property. At issue is Barnes & Noble's e-reader, the Nook Color, which runs Google Android.

According to the bookseller, Microsoft is using its patent portfolio to squeeze royalties from manufacturers who install Android on their mobile devices, with its lawyers allegedly demanding large royalties for patent licenses related to the Nook.

"Microsoft is misusing these patents as part of a scheme to try to eliminate or marginalize the competition to its own Windows Phone 7 mobile device operating system posed by the open source Android operating system and other open source operating systems," reads the counterclaim, filed with the U.S. District Court for the Western District of Washington at Seattle. "Microsoft's conduct directly harms both competition for and consumers of eReaders, smartphones, tablet computers and other mobile electronic devices, and renders Microsoft's patents unenforceable."

In its original action, filed March 21, Microsoft had insisted the Nook violates its intellectual property.

"The Android platform infringes a number of Microsoft's patents, and companies manufacturing and shipping Android devices must respect our intellectual property rights," Horacio Gutierrez, Microsoft's corporate vice president and deputy general counsel for intellectual property and licensing, wrote in a March 21 statement. "To facilitate that, we have established an industry-wide patent licensing program for device manufacturers."

Microsoft and Motorola are currently locked in tit-for-tat intellectual-property lawsuits, with the former claiming the manufacturer violated nine patents with its Android smartphones. In April 2010, HTC announced it had agreed to pay Microsoft royalties in exchange for the use of "patented technology" in its Android-powered smartphones.

Barnes & Noble also raised the prospect of anti-competitive behavior on Microsoft's part, a potentially sore point for a company that spent years locked in a monopoly dispute with the U.S. Department of Justice.

"Microsoft's activities have a significant, wide felt, and highly detrimental anticompetitive effect and restrain competition in the market for mobile operating systems," the counterclaim reads at one point, "by suppressing the use and development of open source mobile operating systems, including the Android operating system, and the development of applications and devices employing the same."