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August 21, 2015

Microsoft escalates patent war with InterDigital

Antitrust suit claims InterDigital is trying to monopolise key industry patents. (Update: Microsoft's official statement.)

By Alexander Sword

Microsoft has filed a lawsuit against InterDigital, claiming that the wireless manufacturer is violating a pledge to fairly license fundamental mobile phone technology.

The IT giant aims to limit the amount of royalties it pays to InterDigital for several patents used in 3G and 4G devices.

The antitrust suit was filed in Wilmington, Delaware, in federal court.

Microsoft claims that InterDigital is "engaged in an unlawful scheme to acquire and exploit monopoly power over technology necessary for companies to make 3G and 4G cellular devices," according to Reuters.

Microsoft’s claim hinges on the argument that since the patents involved cover technology essential to an industry standard, the royalties owed should be limited. Microsoft claims that InterDigital exceeded the appropriate limit.

There is precedent for this claim: last month, Microsoft won a lawsuit which accepted the low licensing rate it pays to use Google-owned Motorola Mobility patents.

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Disputes between the two companies started in August 2007, while Microsoft’s handset division was still owned by Nokia, when InterDigital filed a trade case with the US’s International Trade Commission (ITC).

This alleged that Nokia engaged in unfair trade practice by producing for import, importing and selling after importing 3G handsets and components infringing two of InterDigital patents. InterDigital simultaneously filed a complaint in the US District Court in Delaware identifying the alleged infringements.

"Despite our efforts to resolve 3G patent licensing matters with Nokia, we have been unable to come to an agreement," said William J. Merritt, President and CEO of InterDigital at the time.

"As a developer of advanced innovative technologies and an owner of a large and growing patent portfolio, if we cannot negotiate an acceptable license agreement with a company using our inventions, we will aggressively defend our intellectual property rights."

A decision from the ITC is expected on 28 August.

(Update: Microsoft’s official statement)

"InterDigital falsely promised to license its patents on reasonable terms in order to get them accepted as industry standards, then used that status to charge exorbitant license rates," said a Microsoft spokesperson. "This violates its commitments, and hurts consumers and competition."

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