Microsoft Sues Motorola Over Android-Based Phones

Microsoft Corp., the world’s largest software company, filed patent-infringement claims targeting Motorola Inc.’s Android smartphones, in the latest skirmish in the growing market for versatile mobile devices.

The nine patents relate to synchronizing e-mail, calendars and contacts, scheduling meetings, and notifying applications of changes in signal strength and battery power. Microsoft filed two complaints yesterday: one with the U.S. International Trade Commission in Washington, which could ban U.S. imports of the phones if a violation is found; and a second in federal court in Seattle in which Microsoft seeks unspecified cash compensation.

Microsoft, based in Redmond, Washington, is overhauling its mobile-phone operating system to Windows Phone 7 this year to stem market-share losses to Apple Inc.’s iPhone and phones with Google Inc.’s Android software. Its Motorola dispute is part of a burgeoning battle over smartphones that includes Oracle Corp. suing Google and Apple fighting HTC Corp. and Nokia Oyj.

“There’s a lot of patent lawsuits between handset vendors, and Motorola and Microsoft just add to the many already ongoing,” said Tavis McCourt, an analyst with Morgan Keegan & Co in Nashville, Tennessee. “It’s a new industry and it’s very unclear who owns the technologies; the products are moving faster than the intellectual property,” he said.

The ITC complaint seeks to bar imports of the Motorola Droid 2, Droid X, i1, Cliq XT, Devour, Backflip, Charm and Cliq, along with associated software.

Potential Countersuit

Microsoft in April signed a licensing agreement with Taoyuan, Taiwan-based handset company HTC and said that it was demanding royalties from other makers of Android phones.

“We have a responsibility to our customers, partners and shareholders to safeguard the billions of dollars we invest each year,” Horacio Gutierrez, Microsoft’s deputy general counsel for intellectual property and licensing, said in a statement.

He added in a blog posting that the “Microsoft innovations at issue in this case help make smartphones ‘smart.’”

Motorola, based in Schaumburg, Illinois, said it hadn’t seen the complaint, and wouldn’t comment on the details.

“Motorola has a leading intellectual property portfolio, one of the strongest in the industry,” the company said in an e-mail. Motorola said it will “vigorously defend itself.”

“You can expect Motorola to countersue on radio patents,” McCourt said. “Big picture from an investor perspective, these lawsuits rarely have a material impact and if they do, it’s many years later.”

Market Share Falls

Microsoft fell 11 cents to $24.38 at 4 p.m. New York time in Nasdaq Stock Market trading and is down about 20 percent this year. Motorola rose 3 cents to $8.56 on the New York Stock Exchange and is up 10 percent this year.

Google, which wasn’t named in the lawsuit, said it will “stand behind” its Android system and the partners who helped with its development.

“We are disappointed that Microsoft prefers to compete over old patents rather than new products,” said Aaron Zamost, a Google spokesman. “Sweeping software patent claims like these threaten innovation.”

Microsoft’s share in the global mobile-phone market fell to 5 percent in the second quarter, from 9.3 percent a year earlier, according to market-research firm Gartner Inc. Android climbed to 17 percent from 1.8 percent, while the iPhone rose to 14 percent from 13 percent.

The federal case is Microsoft Corp. v. Motorola Inc., 10cv1577, U.S. District Court for the Western District of Washington (Seattle). The ITC case is In the Matter of Certain Mobile Devices, Associated Software and Components Thereof, Complaint NO. 2757, U.S. International Trade Commission.

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net.

To contact the editors responsible for this story: Larry Liebert at lliebert@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net.

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