Apple sued by company in patent deal with Microsoft

Patent holder in which Microsoft has a financial interest files lawsuit claiming Apple is infringing on eight patents related to wireless communications protocols.

A Luxembourg company that Microsoft has a financial interest in has filed a patent-infringement lawsuit against Apple, opening a new front in the intellectual-property wars.

Core Wireless Licensing SARL claims in a lawsuit filed last week in Eastern Texas District Court that Apple infringed on eight patents related to 2G, 3G, and 4G communication protocols used in the company's iPhone and iPad devices. The lawsuit seeks unspecified damages and future royalty payments for "each and every product sold by Apple in the future that is found to infringe," according to The Wall Street Journal.

Apple representatives did not immediately respond to a request for comment.

Core Wireless is a patent holding company that apparently obtained its portfolio of 2,000 patents and patent applications from Nokia. Canada-based Mosaid Technologies then acquired Core Wireless last September. The deal for Core Wireless, which was reportedly valued at a little less than $20,000, is subject to minimum performance thresholds, Mosaid said in a 2011 press release announcing the deal:

Core Wireless will retain approximately one-third of gross royalties from future licensing and enforcement of the patents and will bear all of the costs associated with their administration, licensing, enforcement and monetization. Core Wireless' ongoing ownership of the portfolio is subject to minimum future royalty milestones.

While the press release didn't mention Microsoft as a beneficiary of the deal, the software giant then licensed those patents, a company representative confirmed.

"We are pleased to have secured a license to the Nokia patents now acquired by Mosaid for Microsoft's products and services," Microsoft deputy general counsel Horacio Gutierrez told CNET sister site ZDNet last year. "In return, we have a passive economic interest in the revenue generated from the licensing of those patents to third parties. The marketplace for intellectual property is incredibly dynamic today, and this agreement is an effective way to make these Nokia innovations available to the industry and to unlock the considerable value of this IP portfolio."

The lawsuit puts Microsoft and Apple in an awkward position, as the two recently partnered in a consortium that purchased Nortel Networks' remaining portfolio of 6,000 patents and patent applications for $4.5 billion. Other companies involved in the deal, which won regulatory approval last month, include Research In Motion, Sony, and Ericcson.

Patent fights have become a popular source of revenue lately, especially in the smartphone sector. Google recently paid $12.5 billion for Motorola Mobility , an acquisition that initially surprised many until Google said it was interested in the troubled cell phone maker mainly for its strong patent portfolio. Motorola has mixed it up with Apple in several courtrooms around the world, but the two recently clashed over patents in Germany, forcing Apple to temporarily remove older iPhones from its online store in that country.

Meanwhile, Microsoft has inked patent-protection deals with half the world's original design manufacturers, which pay undisclosed royalties to the software giant for use of Google's Android and Chrome operating systems used in smartphones, tablets, and other consumer electronics. Rather than going after Google for patent violations, Microsoft has targeted device makers, pressing them to license Microsoft's patents that it alleges Android and Chrome infringe upon.

 

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