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Microsoft sues InterDigital for 'monopoly power' over mobile patents

Redmond raises stakes as ITC verdict looms in decade-long battle

Microsoft has sued for relief from patent demands made by InterDigital ahead of a decision in August by the US International Trade Commission that could see Lumia phones barred from crossing America's borders.

InterDigital holds several patents for technologies that must be included in standards-compliant 3G and 4G comms handsets. Microsoft's suit claims these patents are being abused so that unreasonable licensing charges can be wrung out of anyone in the mobile phone world.

"InterDigital has monopoly power in the Relevant Technology Markets. It is the sole supplier in those markets, has excluded all competition, and has the power to charge supra-competitive prices and is in fact doing so," the court documents explain.

"InterDigital's actions have injured competition by excluding alternate technologies, and imposed unjustified costs on Microsoft and other companies that are consumers of the technologies."

Licensed technology used in mobile standards is designated a standards-essential patent (SEP), meaning the rights holder sells the rights on "fair and reasonable" terms. From an engineering standpoint, that's a difficult one to decide in a court of law, and the resulting court cases have kept IP lawyers in lovely summer houses for years.

Microsoft's suit claims that InterDigital is breaching the US 1890 Sherman antitrust act as a SEP partner by – amongst other things – charging too much, tying in useless patents to essential ones, not actually making any products, and discriminating against Redmond because it's a small player in the market.

InterDigital has 800 patents covering technology in the LTE standard and over 1,000 for 3G handsets, the suit claims, and this gives it unreasonable dominance over mobile manufacturers. The proposal asks for an end to current litigation and damages against the defendant.

Microsoft inherited its problems with InterDigital when it purchased Nokia's phone business last year. Way back in 2005, the then-Finnish firm had a run-in with InterDigital that cost the mobile manufacturer $250m plus interest, excluding legal costs for the appeal, and the case has dragged on ever since.

InterDigital has made a good living from royalty payments from mobile makers. Google, Intel, BlackBerry, and Samsung have all inked deals with the firm for the use of its technology; Samsung accounted for 15 per cent of its revenues last quarter.

Unlike most patent trolls, InterDigital doesn't just buy up patents from penniless investors and sue anyone that moves. The company, formed in 1971, employs a few hundred engineers in the US and Canada to develop systems for data transfer, power consumption, and networking interfaces for the tech industry.

It also has linkups with standards bodies and the university sector, and has proven adept in the past at getting technology covered by its 20,000+ patent library hardwired into international standards. It is a frequent attendee on the telco conference circuit and is very good at networking.

Microsoft has played hardball with InterDigital, which has responded with an ITC complaint that could cripple Redmond's already tiny section of the mobile market. With that decision pending, Microsoft has decided to put more skin in the game and double its chances of getting a favorable verdict – or lose the lot. ®

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