Microsoft sues InterDigital over licensing practices

Lawsuit takes issue with the company's licensing terms for 3G- and 4G-related patents

Microsoft sued Delaware-based InterDigital on Thursday claiming that the company engages in "abusive licensing practices" for the patents it holds relating to 3G and 4G cellular technology.

In its antitrust complaint, Microsoft alleges that InterDigital manipulated the standard setting process for 3G and 4G to block out competing technologies from being included in the cellular communications standards, and then subsequently used its position to demand exorbitant fees from companies that needed to use them.

The lawsuit, filed in the U.S. District Court for the District of Delaware, also alleges that InterDigital requires companies that want to license its patents to also pay for licensing of non-essential patents. The complaint goes on to claim that InterDigital also tied licensing of its U.S. patents to its foreign patents and required that companies pay royalties on sales they made worldwide.

"InterDigital falsely promised to license its patents on reasonable terms in order to get them accepted as industry standards, then used that status to charge exorbitant license rates," Microsoft said in an emailed statement. "This violates its commitments, and hurts consumers and competition."

The two companies are already involved in a patent lawsuit at the U.S. International Trade Commission that dates back to 2007, prior to Microsoft's purchase of Nokia's devices and services division in 2013. In April, an ITC judge ruled that InterDigital offered a reasonable price for licensing its patents and that judgment is currently under evaluation by the full commission. A decision is expected next week.

If InterDigital wins that lawsuit, Microsoft could be prohibited from importing phones into the U.S. However, InterDigital has said that it's not actually interested in barring Microsoft from importing phones, but rather by using an exclusion order to push for a patent license.

These complaints about licensing terms are somewhat similar to a previous case Microsoft brought against Motorola Mobility around its licensing of standards essential patents. That case, which was recently upheld on appeal, saw a jury rule that Motorola behaved improperly when pursuing a license for its patents, and award Microsoft millions of dollars in damages.

A representative for InterDigital did not immediately respond to a request for comment.

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