Here's how Microsoft games the patent system to get Android licensing fees

In the last several weeks, a host of makers of Android devices have agreed to pay Microsoft fees for alleging using Microsoft patents when deploying Android on their devices. Why is that happening? It appears that Microsoft may have found a way to legally game the patent system.

Quite a few phone makers have agreed to pay the fees. Last year, HTC agree to pay royalties for the patents. Then in the last week in June, two more manufacturers inked a deal with Microsoft. Velocity Micro signed a deal for for its Android-based Cruz table, and General Dynamics Itronix signed a deal for a small Android GPS device that can be worn on the wrist.

More recently, Onkyo signed a similar deal, as did Wistron, for smartphones, tablets, and other devices.

Why are these companies agreeing to pay up? Timothy Lee in his blog on Forbes, lays out the most logical and compelling reasons I've yet heard.

Lee notes that Microsoft has been stockpiling patents for many years, and that it currently has about 18,000 patents in its portfolio. Google, by way of contrast, has been granted only 700. This isn't because Microsoft is more innovative than Google, he argues. It's because Microsoft has instilled the idea of trying to grab any patent it can, no matter how far-fetched, into its culture. Google hasn't done the same.

What does this have to do with Android device makers agreeing to pay for Microsoft patents? Plenty. Lee says that Android has approximately 10 million lines of code in it, and then says:

Auditing 10 million lines of code for compliance with 18,000 patents is an impossible task—especially because the meaning of a patent's claims are often not clear until after they have been litigated. Most Silicon Valley companies don't even try to avoid infringing patents. They just ignore them and hope they'll be able to afford good lawyers when the inevitable lawsuits arrive.

Microsoft has a substantial budget for its legal staff, and can easily afford to sue as many manufacturers as it wants. Those manufacturers, though, typically don't have big legal warchests. They simply find it easier and less expensive to pay Microsoft for the patents, even if they don't believe they are infringing.

Is this good business for Microsoft? It certainly is. It appears that Microsoft now makes far more money from patent fees for the use of Android than it does from Windows Phone 7.

Is it good for innovation? Certainly not. Companies with the best engineers and the most innovative products should be rewarded --- not companies who have learned to game the patent system.

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