U.S. agency staff says that Microsoft's patent case against the NOOK is off-base

By Preston Gralla

Barnes & Noble received a piece of good news today when a staff attorney at the U.S. trade agency recommended that a judge rule against Microsoft's patent infringement case against the NOOK e-reader and tablet. The trial starts today in Washington.

Microsoft claims that the NOOK, which is based on Android, violates its patents. Microsoft has been extremely aggressive in pursuing makers of Android devices. Many makers of Android devices have reached deals with Microsoft rather than go to court, including Amazon.com, which makes the Kindle competitor to the NOOK.

Microsoft has been reaping substantial financial benefits from those deals. Goldman Sachs estimating that Microsoft will bring in $444 million in 2012 for royalties from makers of Android devices. Goldman Sachs made that calculation based on royalties of between $3 and $6 per device.

The Microsoft-Barnes & Noble suit has a long and complicated past. In March 2011 Microsoft sued Barnes & Noble as well as Foxconn and Inventec, the companies that manufacture the NOOK, over patent infringement. Barnes & Noble countersued, and the U.S. International Trade Commission (ITC) got involved because the NOOK is manufactured in Asia. If the suit goes against Barnes & Noble, the NOOK might not be able to be brought into the U.S. from Asia. The suit is being heard before the ITC.

Bloomberg reports that Jeff Hsu, a staff attorney at the ITC, is recommending to the judge hearing the case that he find that Barnes & Noble didn't violate the patents. The judge doesn't have to follow the staff's recommendation, of course, but it's certainly good news for Barnes & Noble.

If Barnes & Noble loses, it's unlikely that the NOOK won't be able to be distributed. Instead, Microsoft and Barnes & Noble will reach some kind of royalty arrangement, which would mean that Barnes & Noble will have to bear higher costs for producing the NOOK.

This is just one more skirmish in the war between Google and Microsoft over mobile. Google claims that Microsoft targets Android device makers because Microsoft's mobile strategy has failed. Microsoft counters that it's only protecting its intellectual property.

I can't say that I know whose lawyers are right. However, it's just one more example of how badly the patent system is broken, and how it's often used to slow down innovation, not accelerate it.

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