Google and Microsoft Resolve Differences over Patents

Another signal about the rising global smartphone war has emerged. Google Inc. and Microsoft Corp. have resolved to end their long-running patent dispute over smartphones and Microsoft's Xbox game consoles and other Windows products. The two companies are dropping about 20 lawsuits in the U.S. and Germany. The agreement also drops all litigation involving Motorola Mobility, which Google sold to Lenovo Group last year while keeping its patents.

The two companies, which did not disclose financial terms, have been litigating over technology innovations for five years. Google’s former Motorola Mobility unit had been demanding royalties on the Xbox video-gaming system, and Microsoft wanted to block Motorola mobile phones from using certain features. The companies have been at war ever since Microsoft claimed that Google’s Android operating system for mobile devices had incorporated its technology without paying royalties. Among the lawsuits Redmond, Washington-based Microsoft filed that year was one against Motorola Inc. It was a case that Google later inherited as part of its purchase of Motorola Mobility.

"Google and Microsoft have agreed to collaborate on certain patent matters and anticipate working together in other areas in the future to benefit our customers," the companies said in a joint statement. 

The companies pledged in a statement to work together in other ways related to intellectual property including development of a royalty-free, video-compression technology to speed downloads, in an initiative that also involves Amazon.com Inc. and Netflix Inc. They will also lobby for specific rules on a unified patent system throughout Europe.

"This opens up the door for partnerships between Google and Microsoft, as [Satya] Nadella is changing the image of the company into a lover and not a hater of other technology stalwarts, said Daniel Ives, an analyst at FBR Capital Markets.

Microsoft claimed that Motorola was demanding the equivalent of $4 billion a year in royalties on the Xbox and accused it of backing away from pledges to fairly license patents on fundamental technologies. An appeals court in July upheld a finding that Motorola breached that agreement.

After accelerating the pace of patent suits in the second half of last decade, Microsoft has now settled many of the cases. However, as Microsoft and Google continue to make products that compete directly with each other, the agreement notably does not preclude any future infringement lawsuits, a Microsoft spokeswoman confirmed for the software development company in Gurgaon.