Microsoft and HTC make love, not mobile war

The mobile phone wars have reached such a level of complication that the IPKat has resorted to drawing diagrams to show who is suing who. The schematic interestingly sees Apple and HTC at the heart of the recent battles (see previous posts here). However, recent news sees Microsoft getting into the mix. But Microsoft is seemingly making love not war after entering into a licensing agreement with HTC, the Taiwanese handset maker of Google's Android operating system. The licence apparently acknowledges Microsoft's broad "patent portfolio" claims over the technology associated with the Android mobile platform. HTC manufactures phones for Google, including the Nexus One, that use the Android technology and is currently embroiled in patent litigation brought by Apple in March. Some commentators have suggested that Apple's litigation against HTC was really directed towards Google.

The details of the licence, announced Tuesday, have not been disclosed save for this statement from Microsoft's vice president and head of IP and Licensing, Horacio Gutierrez who stated that:

“HTC and Microsoft have a long history of technical and commercial collaboration, and today’s agreement is an example of how industry leaders can reach commercial arrangements that address intellectual property. We are pleased to continue our collaboration with HTC.”

The long historical relationship referred to is that of HTC being one of the main producers of smartphones that run the Windows operating system.

If you, like the IPKat, are confused as to who owns what in these phones you are not alone. Gutierrez (left) writing in his blog last March stated that with all innovation, especially for inventions in nascent technology markets, there is a period of time where rights holders grapple and litigate in order to sort out who owns what. He said:

"The smartphone market is still in a nascent state; much innovation still lies ahead in this field. In all nascent technology markets, there is a period early where IP rights will be sorted out. This is particularly true in a market, such as smartphones, in which a number of different technologies previously offered on a standalone basis now converge into a single device. Indeed, smartphones are a product of the ‘open innovation’ paradigm – device manufacturers do not do all of their development in-house, but add their own innovations to those of others to create a product that users want. Open innovation is only possible through the licensing of third party IP rights, which ensures that those who develop the building blocks that make a new technology possible are properly compensated for their investments in research and development."

How will Microsoft and HTC's licensing agreement impact Apple's court and ITC complaints that claim HTC infringes 20 of Apple's patents in their Android phones? The blog-o-sphere is lighting up with conspiracy theories as to what has motivated the license deal. Some say that Microsoft believed that the Android technology infringed their patents, while others say that Microsoft is coming to the rescue of the patent-poor HTC in their battle against the Apple empire. This Kat believes the truth may lie somewhere in the middle of these two extremes.

Although the Android operating system is proving to be very popular in the market right now, if the IPKat was a mobile phone manufacturer she would not be raising her head above the parapet until the mess of IP ownership over this technology is untangled.

Today, HTC has introduced a new handset named the Incredible, based on Google's Android operating system.

For more information see these articles in the Financial Times, Seattle Post Intelligencer, Wall Street Journal and CNET.

Trial judge says "Boileau" to patent licence; appeal court agrees

The draft judgment of the Court of Appeal for England and Wales in Oxonica Energy Ltd v Neuftec Ltd [2009] EWCA Civ 668 has started circulating, though the final, approved text has yet to reach this member of the IPKat team and awaits posting on BAILII. This appeal relates to a contractual dispute, heard by Peter Prescott QC acting as a Deputy Judge. Peter Prescott summed up the whole matter up in the first two paragraphs where he said:

"How do we interpret a formal commercial agreement if it is ambiguous and we have reason to believe that its draftsman did not have a deep understanding of the relevant law? I think that is what this case is about.

The secret of drafting legal documents was best described by Nicolas Boileau, who was not only a literary critic but a qualified lawyer: "Ce que l'on conçoit bien s'énonce clairement et les mots pour le dire arrivent aisément". What one conceives well can be stated with clarity and the words to say it come easily. We should all have that framed and displayed on our desks. But too often the opposite precept is followed. Bits of legal boilerplate are bolted together so that it is the words that are allowed to shape the concept instead of the other way round. In that regard the invention of the word processor has worked wonders. Sometimes, I fear, it has dispensed with the 'concept' altogether. Misfortune not infrequently follows."

The Court of Appeal (Lord Justice Jacob giving the judgment with which which Judge and Arden LJJ concurred) dismissed the appeal, adding this comment concerning the interpretation of the patent licence:

"16. Each side supported its position with what I can call “big” arguments supported by various subsidiary arguments based on inference from other clauses. The latter have minor significance here given the poor drafting and the Mitsui principle of construction [".. the poorer the quality of the drafting, the less willing the court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention, if the language used, whatever it may lack in precision, is reasonably capable of an interpretation which attributes to the parties an intention to make provision for contingencies inherent in the work contracted for on a sensible and businesslike basis": Mitsui Construction Co Ltd v A-G of Hong Kong (1986) 33 BLR 14)]. So it is not necessary to deal with these in detail. What matters are the big arguments.

17. Not surprisingly, each side said that the other’s position amounted re-writing the document rather than construing it. I do not agree with either view. Given that neither side suggests the agreements are void for ambiguity (a position of last resort in relation to the construction of any contract) the search is on to ascertain what the reasonable reader would make of the disputed phrase in the context of the two documents and the background".

The IPKat has complained about bad drafting on numerous occasions and continues to do so. Sometimes they are the result of inappropriate welding together of boilerplate terms; on other occasions they reflect a failure of licensor and licensee to reach agreement on certain issues or -- even worse -- an agreement not to flesh out some specifics, in case the attempt to do so should reveal a lack of consensus concerning them. But, given the regularity with which fudged and fuzzy contract terms get litigated, is the short-termism that leads to the signing of a botched job a better policy than nailing down the foreseeable issues before signing the licence?

Cure for bad drafts here