Microsoft Bangs TomTom to Submission
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News Analysis. Microsoft is the big winner in the settlement announced today with TomTom. |
The settlement was inevitable; only the terms were uncertain when Microsoft filed the patent infringement suit on March 2. The lawsuit was bad news for both companies—business for TomTom and PR for Microsoft.
Microsoft announced limited terms of the settlement, which covers past and future products. TomTom licenses disputed patents, which means it pays Microsoft money. Microsoft licenses four TomTom patents, and the press release specifically says Microsoft pays TomTom nothing. TomTom also agrees to remove some file management capabilities within two years. The agreement is for five years.
The settlement probably won't end the bad PR for Microsoft but intensify it for at least a short while. Reason: Linux. Microsoft had claimed that three of the disputed patents covered TomTom's implementation of the Linux kernel. The settlement is sure to further galvanize debate in the open-source community, which rallied to TomTom's defense.
Neither company really had the will for a protracted legal fight. It was more a question of who blinked first. Microsoft has enough problems, particularly with the European Union, where TomTom is based. The EU's Competition Commission has two open Microsoft antitrust investigations, one of which is close to conclusion. TomTom couldn't afford a protracted legal battle, particularly during a global recession. The company posted pro forma revenue of 1.748 billion euros in 2008, with net earnings of 143 million euros, which declined 36 percent year over year. With debt of 1.1 million euros, TomTom wasn't ready for a patent battle that could have raised questions about its future and products. Settlement was inevitable.
Microsoft is the big winner because the settlement:
- Affirms some of the more than 200 alleged patent violations by open-source software. TomTom's licensing adds some legitimacy to the patent claims; other alleged violators might be less willing to fight.
- Ends a dispute regarding the widely used FAT. The file system is intellectual property for which Microsoft expects to be paid.
- Furthers Microsoft's increased emphasis on intellectual property licensing. The company has realized that IP can generate lots of revenue. IBM caught onto this years ago.
- Puts a commercial Linux vendor in its place. For all the talk about interoperability, Microsoft still treats Linux as the enemy. What Microsoft can't gain competitively, it can get through litigation.
- Supposedly reaches terms that fall within the scope of GPLv2 (General Public License Version 2).
TomTom was an easy target because it couldn't easily fight back. But there was risk. Microsoft hasn't identified the patents alleged to be violated by open-source software. A court battle would have eventually forced Microsoft to fess up, even if under cover of trade secrets protected by the court.
[Please send your tips or rumors to watchtips at gmail.com.]
Comments (16)
"In the case of the three file management patents, Microsoft is providing an agreement not to sue CUSTOMERS for their use of TomTom's products."
Yet another reason why they're one of the most despised technology companies in the world.
Posted by Copernicus | March 30, 2009 3:29 PM
Unless you know what Microsoft were originally asking for, it is hard to tell if it is a victory or not. If they were asking $1 per unit before the case and are now they are getting $0.001 then it is not a victory and it is not really going to help their bottom line. It just helps with their negative publicity campaign.
The longer Microsoft waits to enforce these patents, the less chance they have of being successful. I don't see how they can identify patent infringements, yet not do anything to stop it for 2 years.
They were lucky to win this without the FAT patent being challenged, it is obvious to make a lookup table from short filenames to long ones. The actual patent is not on FAT itself, just the lame way it handles it's own limitations.
TomTom would rather remove the features than license them from Microsoft, what does that say about their ability to make money from their IP, or the value of it?
Posted by billybob | March 30, 2009 4:05 PM
From the GPLv2, section 7 http://www.gnu.org/licenses/gpl-2.0.html :
“...if a patent license would not permit royalty-free redistribution of the Program by all those who receive copies directly or indirectly through you, then the only way you could satisfy both it and this License would be to refrain entirely from distribution of the Program.”
Posted by Lawrence D'Oliveiro | March 30, 2009 5:05 PM
Has MS won. Does TomTom need to use Fat. Answer no.
Does a settlement validate a patent sorry no it does not. Please be aware Fat patents still could be junked before the 2 years is up due to prior art review.
For tomtom it was smart to take the 5 years then do a legal fight when problem could disappear.
This way if the fat patents get invalided TomTom gets to sue MS for there money back.
Posted by oiaohm | March 30, 2009 5:07 PM
Has MS won. Does TomTom need to use Fat. Answer no.
Does a settlement validate a patent sorry no it does not. Please be aware Fat patents still could be junked before the 2 years is up due to prior art review.
For tomtom it was smart to take the 5 years then do a legal fight when problem could disappear.
This way if the fat patents get invalided TomTom gets to sue MS for there money back.
Posted by oiaohm | March 30, 2009 5:09 PM
What do you mean "if the fat patents get invalided [sic]"? People have already tried to get those patents invalidated, and they failed!
Posted by Wes | March 30, 2009 6:04 PM
Affirms some of the more than 200 alleged patent violations by open-source software. TomTom's licensing adds some legitimacy to the patent claims; other alleged violators might be less wiling to fight.
Not true; this is a settlement and legally nothing is established or affirmed.
Ends a dispute regarding the widely used FAT. The file system is intellectual property for which Microsoft expects to be paid.
I don't see what the dispute is; MS have always claimed rights to FAT and have mumbled about being paid for a long time. The legitimacy of the FAT patents has not been tested in court.
Furthers Microsoft's increased emphasis on intellectual property licensing. The company has realized that IP can generate lots of revenue. IBM caught onto this years ago.
Does that mean MS is becoming a patent troll? I don't think so; software patents are far more valuable to MS an an anticompetitive measure than as an actual source of revenue.
Puts a commercial Linux vendor in its place. For all the talk about interoperability, Microsoft still treats Linux as the enemy. What Microsoft can't gain competitively, it can get through litigation.
Unfortunately. Keep in mind that US laws are only applicable within hte USA; MS may have a useful bullying tactic within the USA but thay haven't got one in Europe or many other places yet. They're still trying very hard to have software patents recognized as legitimate through all the EU members.
Supposedly reaches terms that fall within the scope of GPLv2 (General Public License Version 2).
That remains to be seen - but settlements are often secret documents which both parties are obliged not to disclose. I can imagine MS or TomTom being served with documents demanding a copy of the text - but even the party which can get a copy through legal means cannot make any of it public, so I guess we just have to wait and see what the FSF have to say after they've looked into it - that is, if they don't already know the terms of the settlement.
Posted by Anonymouse | March 30, 2009 10:52 PM
@Wes:
That's not quite right. There was an attempt to have the USPTO overturn the patents but this did not happen. The patents may still be invalidated in court, but no one really wants to spend money on that; TomTom could have tried, but it really is better business sense to settle.
Posted by Anonymouse | March 30, 2009 10:59 PM
_They're still trying very hard to have software patents recognized as legitimate through all the EU members._
Euro companies may just find a tit for tat with IP in the USA and possibly elsewhere if they go the road of trying to have patents invalidated in the EU.
Posted by Mike | March 30, 2009 11:15 PM
TomTom's debt "at the end of the fourth quarter stood at EUR1.12 billion" http://online.wsj.com/article/BT-CO-20090224-704317.html?mod=wsjcrmain
Suddenly the story makes a lot more sense.
Posted by Tony Toews | March 31, 2009 2:44 AM
This is good for the industry - proprietary and GPL-based coders. It says: "My property, my rights, my enforcement. You use, you pay.
No tickey. No washy.
Posted by omniprovident | March 31, 2009 10:25 AM
@Copernicus
"In the case of the three file management patents, Microsoft is providing an agreement not to sue CUSTOMERS for their use of TomTom's products."
Yet another reason why they're one of the most despised technology companies in the world.
-----
You're right; they'd be much better loved if only they'd sue customers. What bastards for saying they won't! Despicable indeed!
Also, those nutjobs at Fortune don't appear to live in the same "world" you're referring to. Check this nonsense out:
World's Most Admired Companies
http://money.cnn.com/magazines/fortune/mostadmired/2009/index.html
#SPOILER: Microsoft is #10!#
Anyhow, I'm sure in YOUR world your statement is true, and that's all that matters. Screw the REAL world.
Posted by Meem | April 1, 2009 2:35 AM
I promise not to punch women and children in the face. What a nice person I am! You should all thank me for declaring my intention to not mame small children.
Posted by billybob | April 1, 2009 6:36 AM
@billybob
"I promise not to punch women and children in the face"
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The difference here is there is a law that would protect the women and children from you, and prosecute you should you choose to punch them in the face. On the other hand, Microsoft would be within its legal rights to sue those customers, but has made it a point to say that it has no intention of exercising that right. They didn't HAVE to say that, but the OPs assertion that saying it was proof of what a despised company they are was just illogical, and smacked more of an emotional reaction than of something resembling common sense.
I'm not making a specific argument in support of Microsoft's behavior, rather I'm making a general point about lazy histrionics and unsupportable claims. People on both side of the issues are guilty of it, and this blog (IMHO) would yield a more meaningful discussion with less of that sort of drama.
Posted by Meem | April 1, 2009 11:35 AM
Tomtom was simply stupid for using fat in the first place and I already told them that years ago. Secondly they do not give support to linux users, that is stupidity number TWO. Thirdly M$cum can use this case for their next lawsuit just like the Novel case and all customers after that 'agreement'. M$cum is making money from something they have no right to. Like they need the money- maybe to pay for Gates retirement.
Posted by What The F--- | April 1, 2009 5:01 PM
Quote your retarded comments. " Ends a dispute regarding the widely used FAT. The file system is intellectual property for which Microsoft expects to be paid. "
This dispute is only just beginning, see the FSF comments. They have already begun to have the stupid retarded USPTO look at the validity of this patent now that it is clearly invalidated under Bilsky. How is that bringing the FAT dispute to and end?
Joe no matter how retarded you get it doesnt make anything you say even remotely true. Go get some medicine for your disease you idiot.
Posted by koppypoppy | April 2, 2009 5:32 AM