Microsoft Announces Massive Foxconn Licensing Deal
April 17, 2013

Microsoft Seals Deal On Foxconn Licensing Agreement

Michael Harper for — Your Universe Online

Many of today´s modern gadgets, including the iPad and iPhone, are made by one company: Foxconn. In fact, Foxconn is so large that it produces nearly 40 percent of the world´s high-tech gadgets. With so many partnerships and multiple factories to crank out the goods, Foxconn has become a strategic company to do business with on the global economy.

Microsoft announced yesterday that it had struck a new deal which will make Foxconn´s parent company Hon Hai Industries the largest licensee of Microsoft patents. Now, every time Foxconn cranks out a Google product, such as a computer running Chrome OS or smartphones running Android, Microsoft will get a slice of cash from the deal.

For years Microsoft has been asking Android phone makers to license any Microsoft patents they may use. The Redmond-based company now claims that Microsoft patents are being licensed in more than 50 percent of the world´s Android devices.

As Ars Technica reports, Microsoft even made more money from renting out their patents in 2011 than they did from their own mobile product.

“We are pleased that the list of companies benefitting from Microsoft´s Android licensing program now includes the world´s largest contract manufacturer, Hon Hai,” said Horacio Gutierrez, the corporate vice president and deputy general counsel over Microsoft´s Intellectual Property in a press statement.

“By licensing both brand name companies and their contract manufacturers, we have successfully increased the overall effectiveness and global reach of the program.”

Hon Hai´s own director of Intellectual Property (IP) also praised the new partnership, noting that the company already holds some 54,000 patents worldwide. According to Samuel Fu, the IP director for Hon Hai, this agreement exemplifies their desire to protect IP.

Neither company gave any exact details on the partnership, though the press release does mention that Foxconn will be paying Microsoft to use their patents, not the other way around.

According to Ars Technica, the deal is part of a broader Microsoft strategy to get both the companies which design a device (the OEM) and the companies which physically build the device (or ODM, such as Foxconn) to license their patents. Since these patents cannot legally be licensed twice, if both the OEM and ODM need to license the same patent, they must work out who pays this licensing fee between themselves. It´s a detail which Microsoft Taiwan´s chief legal officer tells Reuters will be a way to make sure each company is paid for their patents.

"Foxconn's clients don't need to worry about infringing Microsoft's patents anymore, because Foxconn has signed the agreement for them," said Vincent Shih in an interview with Reuters.

This move could protect Microsoft and ensure that they get money from their patents even when the phone manufacturers (or OEMS) are locked in a legal battle.

This is the second recent move by Microsoft to protect their patents against litigation and lawsuits. Just last month the Redmond company published their entire patent portfolio online in an effort to prevent any accidental infringement by other companies.

Any company looking to build a device or product can peruse Microsoft´s portfolio via their Patent Tracker to find out whether the Windows Phone 8 maker already owns the pertinent patents.

It´s a move towards openness which the company hopes others will follow and thereby help to wind down the patent wars that have raged in the tech world for several years now.