Microsoft Signs Patent Deal with Consumer Electronics Giant LG

Published: June 13, 2007

by Alex Woodie

LG Electronics, the South Korean consumer electronics giant, has entered into a patent cross-licensing agreement with Microsoft that should help the consumer electronics businesses of both companies.

The deal, announced last week, will enable LG to include Microsoft technology in its products, some of which run the Linux operating system. LG is one of the world's largest manufacturers of mobile phones, and the agreement should extend patent protection to users of LG products.

Meanwhile, Microsoft also gets something, namely access to patents developed by LG but owned by MicroConnect Group, a U.S. software company, that could find their way into the Xbox game console.

Both companies will be making payments to each other as part of the patent licensing scheme. However, Microsoft will end up making "net balancing payments," which means that Microsoft will be paying LG more than LG will be paying Microsoft.

The deal caps four years of negotiations between the companies, an LG spokeswoman was quoted as saying by The Wall Street Journal. Exact terms of the agreement were not disclosed.

Microsoft has announced a slew of cross-licensing patent deals over the last 12 months, the most controversial being the one formed in November with Novell, which caused an uproar in the Linux community. Linux users were furious--and still are--that the deal made it look like Novell was admitting that its software infringed on Microsoft's patents. Microsoft executives have said as much, but the rocky deal continues.

Microsoft maintains that open source software violates hundreds of its patents--Linux by itself violates 42--and that's the primary force driving Microsoft to form these patent deals.

Other software companies and computer and electronics manufacturers with whom Microsoft has formed patent deals include: Fuji Xerox, NEC, Nortel Networks, Samsung, Seiko Epson, and Xandros, which signed a deal with Microsoft last week.

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