Microsoft Files U.S. Antitrust Suit Against InterDigital

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Microsoft Corp. is claiming InterDigital Inc. has been violating its pledge to offer fair and reasonable licenses on patents related to fundamental mobile-phone technology.

The company filed an antitrust lawsuit Thursday in federal court in Wilmington, Delaware, a week before a U.S. trade agency is set to rule on a long-running dispute on whether Microsoft-made Nokia phones infringed its patents and should be blocked from the U.S.

A U.S. trade judge in Washington said in April that Microsoft has been unwilling to license InterDigital patents on standardized technology. In the new complaint, Microsoft argues that it’s InterDigital that’s the bad actor.

Microsoft said in its suit that it wants to stop “InterDigital’s abusive licensing practices and unlawful monopolization” in the field of third- and fourth-generation cellular technologies. It said InterDigital has “engaged in an unlawful scheme to acquire and exploit monopoly power over technology necessary for companies to make 3G and 4G cellular devices.”

InterDigital said it will fight the case “vigorously.”

“InterDigital has a long track record of standards contributions and fair licensing practices,” said Patrick Van de Wille, a company spokesman.

Licensing Agreement

The trade case was first filed in August 2007, before Nokia sold its handset business to Microsoft. While the International Trade Commission’s main power lies in its ability to block imports of products into the U.S., Wilmington-based InterDigital has said the primary goal of its litigation is to push for a licensing agreement.

Microsoft, based in Redmond, Washington, is crying foul. In addition to the threatening ITC case, InterDigital is trying to force an overpriced license that covers all of InterDigital’s patents, not just those needed to comply with the industry standard, the software maker contends.

Companies that get together to create the standards for things like how Wi-Fi works pledge to license any patents on reasonable terms, to balance out their advantage in ensuring their inventions get included in the standard.

While industry standard-setting boards had previously been content to let companies duke out among themselves any royalty disputes, the issue has exploded into a policy debate that’s spread across three continents among courts, regulators and the boards themselves.

High Rates

Microsoft was emboldened by a July 30 appeals court ruling it won in a dispute with Motorola Mobility. There, the court ruled that Motorola, then a standalone company, breached its obligations by demanding an unfairly high royalty rate. Motorola had argued it was just the usual opening gambit to negotiations.

U.S. trade Judge Theodore Essex found in April that InterDigital had fulfilled its obligation to make a reasonable offer to license its technology but that Microsoft was unwilling to negotiate. The full commission is considering the judge’s findings and is scheduled to release its final decision on Aug.

28.

Members of the U.S. Federal Trade Commission have taken different sides of this case, with Chairwoman Edith Ramirez, a Democrat, saying Essex was wrong in his analysis, while Republicans Maureen Ohlhausen and Joshua Wright are backing the judge.

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