B&N Sought Microsoft Inquiry

Source: http://online.wsj.com

WASHINGTON—Barnes & Noble Inc. lobbied the Justice Department as recently as this summer to open an antitrust probe of Microsoft Corp., alleging that the software giant was trying to kill off handheld devices like B&N's Nook e-reader with a barrage of "frivolous" patent suits, court documents show.

In a series of letters and presentations to the department's antitrust division, the bookseller's lawyers accused Microsoft of trying to corner the market for handheld operating systems by threatening companies using Google Inc.'s Android software.

"Microsoft's willingness to bully small players with expensive litigation raises a substantial barrier to entry in any market in which it claims dominance," B&N's general counsel, Eugene DeFelice, wrote in a March letter to the department's then-antitrust chief, Christine Varney.

"Microsoft's exorbitant licenses for its patents entrench the dominant players in the relevant markets because those players can afford to take a license, while small players cannot," Mr. DeFelice wrote.

B&N didn't say how much Microsoft was seeking for a licensing deal, but said it was more than the company could afford.

A spokeswoman for B&N declined to comment.

B&N filed the documents at the International Trade Commission, where the company is defending itself against a patent-infringement lawsuit brought by Microsoft. One of the documents shows that B&N gave a presentation to Justice Department lawyers in July in which it called for the government to investigate Microsoft's allegedly anticompetitive behavior.

A spokeswoman for the Justice Department declined to comment.

Microsoft has said Android infringes a number of its patents, and it has struck licensing deals with several makers of Android devices, including Samsung Electronics Co., HTC Corp. and Acer Inc.

"All modern operating systems include many patented technologies," a Microsoft spokesman said Tuesday. "Microsoft has taken licenses to patents for Windows, and we make our patents available on reasonable terms for other operating systems, like Android. We would be pleased to extend a license to Barnes & Noble," he said.

The fight between Microsoft and B&N is a skirmish in a wider battle between manufacturers of smartphones, which draw on a multitude of patented technologies spanning the fields of wireless telephony and personal computing.

Several of the largest manufacturers, including Apple Inc., Samsung and Motorola Mobility Inc., are locked in patent suits in different countries to try to block each other's devices or extract a license fee. In an effort to bolster their own armories of technology patents, many of them also are spending billions of dollars buying up troves of patents from defunct companies or trading them among themselves in alliances.

The Justice Department is taking a keen interest in whether technology companies are abusing patent rights to thwart competition. It is investigating the $4.5 billion purchase of thousands of patents from Nortel Networks Corp., a bankrupt Canadian telecom-gear maker, according to people familiar with the matter. It is also conducting an antitrust review of Google's proposed $12.5 billion acquisition of Motorola Mobility.

Google said it sought the company largely because it needed its collection of patents to help fend off further patent suits by Microsoft, Apple and others against the cellphone makers that use Android.

Google is particularly vulnerable to patent-infringement suits. Its size and wealth give it plenty to lose if anyone were to secure a court injunction against one of its key technologies. But because it is a relatively young company, it has relatively few patents of its ownwith which to deter suits by competitors.

In April, the Justice Department forced a group of companies including Microsoft and Apple to promise it wouldn't use a portfolio of patents it was acquiring from Novell Inc. to unfairly hurt other companies. As part of the deal, Microsoft was forced to give up the patents it was buying and license them instead.

The consent decree that governed Microsoft's behavior following the Justice Department's landmark antitrust case against it expired earlier this year.

B&N lawyers said in the court documents that "Unlike for the past decade, Microsoft's current anticompetitive behavior is unchecked by any government agency."

Source: http://online.wsj.com/article/SB10001424052970204554204577026481717261566.html#ixzz1dCANUwQY