Nokia’s fourth-quarter earnings report painted a grim picture of the Finnish phone maker’s business last quarter, but amid the red numbers peppered throughout Nokia’s earnings release, the high-level terms of its agreement with Microsoft were revealed. In exchange for royalty payments estimated to reach into the billions over the life of the agreement, Microsoft makes quarterly “platform support payments” of $250 million to Nokia according to the vendor’s earnings report. Read on for more.

“Our broad strategic agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft,” Nokia stated in a press release. “In the fourth quarter 2011, we received the first quarterly platform support payment of USD 250 million (EUR 180 million). We have a competitive software royalty structure, which includes minimum software royalty commitments. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US Dollars.”

The deal should be worth billions on Nokia’s side of the equation, and Microsoft gets a number of things in return for its payments totaling $1 billion per year. As Windows Phone struggles to gain traction while Android and iOS dominate the smartphone market, Nokia represents a huge opportunity to help put the platform in the hands of consumers. Though Nokia’s smartphones shipments are in sharp decline, the vendor still sold almost 20 million units into channels last quarter.

And Nokia’s efforts could pay off big in the U.S., a key market for Microsoft. Nokia and AT&T are preparing an aggressive attack in the U.S. with a sub-$100 flagship smartphone launch. BGR exclusively reported on Wednesday that Nokia’s sleek Lumia 900 smartphone will launch in mid-March for $99.99 on contract — a remarkable price for a brand new flagship 4G LTE phone.

Nokia also contributes development efforts to Microsoft’s mobile platform. While other Windows Phone partners simply license the software as vendors did with Windows Mobile, Nokia’s position involves software development that will help shape the core Windows Phone OS.

Microsoft’s mobile platform in more than a year old now, and its late entrance into the market has made consumer adoption quite slow. Carriers and subscribers are very focused on Android and iOS, and Microsoft had few choices beyond its current arrangement with Nokia. Whether or not the multi-billion dollar deal will pay off remains to be seen, but Nokia confirmed on Thursday that it has already shipped “well over” 1 million Windows Phones to date.

Shipment figures among Microsoft’s other mobile partners remain something of a mystery but in all likelihood, Nokia will have shipped more Windows Phones than all other Microsoft partners combined by some time later this year.

One week after announcing a similar deal with Quanta, Microsoft on Sunday revealed a new licensing arrangement with consumer electronics original design manufacturer Compal Electronics, Inc. The Redmond, Washington-based software company has reached a deal with Compal whereby it will receive royalty payments on sales of Compal’s tablets, cell phones, eReaders and other devices powered by Google’s Android or Chrome platforms. With this new deal in place, Microsoft also now holds licensing agreements with more than half of the worlds Android and Chrome ODMs. ”We are pleased to have reached this agreement with Compal, one of the leaders in the original design manufacturing, or ODM, industry,” Microsoft’s deputy general counsel Horacio Gutierrez said in a statement. ”Together with the license agreements signed in the past few months with Wistron and Quanta Computer, today’s agreement with Compal means more than half of the world’s ODM industry for Android and Chrome devices is now under license to Microsoft’s patent portfolio. We are proud of the continued success of our licensing program in resolving IP issues surrounding Android and Chrome.” Microsoft’s full statement follows below.

Microsoft and Compal Electronics Sign Patent Agreement Covering Android and Chrome Based Devices

Agreement provides broad coverage under Microsoft’s patent portfolio.

REDMOND, Wash. — Oct. 23, 2011 — Microsoft Corp. and Compal Electronics, Inc. have signed a patent agreement that provides broad coverage under Microsoft’s patent portfolio for Compal’s tablets, mobile phones, e-readers and other consumer devices running the Android or Chrome Platform.  Although the contents of the agreement have not been disclosed, the parties indicate that Microsoft will receive royalties from Compal under the agreement.

“We are pleased to have reached this agreement with Compal, one of the leaders in the original design manufacturing, or ODM, industry.  Together with the license agreements signed in the past few months with Wistron and Quanta Computer, today’s agreement with Compal means more than half of the world’s ODM industry for Android and Chrome devices is now under license to Microsoft’s patent portfolio,” said Horacio Gutierrez, corporate vice president and deputy general counsel, Intellectual Property Group at Microsoft.  “We are proud of the continued success of our licensing program in resolving IP issues surrounding Android and Chrome.”

Microsoft’s Commitment to Licensing Intellectual Property

The patent agreement is another example of the important role IP plays in ensuring a healthy and vibrant IT ecosystem. Since Microsoft launched its IP licensing program in December 2003, the company has entered into more than 700 licensing agreements and continues to develop programs that make it possible for customers, partners and competitors to access its IP portfolio. The program was developed to open access to Microsoft’s significant R&D investments and its growing, broad patent and IP portfolio.

More information about Microsoft’s licensing programs is available at http://www.microsoft.com/iplicensing/.

Microsoft mobile revenue continues to grow, though for the time being it seems as though the bulk of it is coming from Android. Goldman Sachs analysts on Thursday estimated that the software company will pull in approximately $444 million in fiscal 2012 from licensing deals made with various Android vendors such as HTC and Samsung, based on royalties of $3-$6 per Android device sold. Asymco’s Horace Dediu estimated in August that Microsoft took in approximately $21 million in revenue from Windows Phone licenses in the second quarter, and he believes the company earned roughly $60 million from Android royalties over the same period from HTC alone. With Samsung now paying Microsoft royalties along with HTC, Acer and other Android device vendors, Goldman Sachs’ estimate certainly seems feasible.

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Google issued an irate response to Microsoft’s cross-licensing agreement with Samsung, announced early Wednesday, in which Samsung will pay royalties to Microsoft for each Android smartphone sold. “This is the same tactic we’ve seen time and again from Microsoft,” Google said in a statement to TechCrunch. “Failing to succeed in the smartphone market, they are resorting to legal measures to extort profit from others’ achievements and hinder the pace of innovation. We remain focused on building new technology and supporting Android partners.” Microsoft has similar agreements in place with ViewSonic, HTC and Acer and analysts estimate Android pulls in three to five times the revenue that Windows Phone does for Microsoft. Read on for more.

The Redmond-based company issued a public response to Google on its blog on Wednesday afternoon. “We recognize that some businesses and commentators – Google chief among them – have complained about the potential impact of patents on Android and software innovation,” Microsoft’s general counsel Brad Smith and deputy general counsel Horacio Gutierrez wrote in the post. “To them, we say this: look at today’s announcement. If industry leaders such as Samsung and HTC can enter into these agreements, doesn’t this provide a clear path forward?”

Microsoft also explained that HTC and Samsung were responsible for more than half of all Android phones sold in 2011 in the United States and Microsoft admitted that, while there will be more drama, perhaps this is “the end of the beginning” for an “industry-wide assortment” of legal issues.

[Via TechCrunch]

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Microsoft announced on Wednesday that it has signed a cross-licensing agreement with Samsung. As a result, will pay Microsoft royalties for its Android-powered smartphones and tablets. Additionally, Microsoft said the two firms will continue to cooperate on the Windows Phone operating system. “Through the cross-licensing of our respective patent portfolios, Samsung and Microsoft can continue to bring the latest innovations to the mobile industry,” executive vice president of global product strategy at Samsung’s mobile communication division Dr. Won-Pyo Hong said. “We are pleased to build upon our long history of working together to open a new chapter of collaboration beginning with our Windows Phone “Mango” launch this fall.” Microsoft has similar agreements with HTC, Acer and ViewSonic, and it is estimated the company’s revenue from Android is three to five times greater than the revenue it receives from its own Windows Phone operating system. Read on for the full press release from Microsoft.

Microsoft and Samsung Broaden Smartphone Partnership

REDMOND, Wash — Sept. 28, 2011 — Microsoft announced today that it has signed a definitive agreement with Samsung Electronics Co. Ltd., to cross-license the patent portfolios of both companies, providing broad coverage for each company’s products. Under the terms of the agreement, Microsoft will receive royalties for Samsung’s mobile phones and tablets running the Android mobile platform. In addition, the companies agreed to cooperate in the development and marketing of Windows Phone.

“Microsoft and Samsung see the opportunity for dramatic growth in Windows Phone and we’re investing to make that a reality,” said Andy Lees, president, Windows Phone Division, Microsoft. “Microsoft believes in a model where all our partners can grow and profit based on our platform.”

“Through the cross-licensing of our respective patent portfolios, Samsung and Microsoft can continue to bring the latest innovations to the mobile industry,” said Dr. Won-Pyo Hong, executive vice president of global product strategy at Samsung’s mobile communication division. “We are pleased to build upon our long history of working together to open a new chapter of collaboration beginning with our Windows Phone “Mango” launch this fall.”

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

 

While sales of Microsoft’s burgeoning Windows Phone platform lag, the company continues to find significant revenue streams elsewhere in the mobile industry. Specifically, Google’s Android partners have proven to be an invaluable asset for the Redmond-based tech giant. Microsoft’s revenue from royalties HTC is forced to pay on each Android phone it sells is estimated to be between three and five times the company’s Windows Phone revenue, which could help explain why Microsoft has been so quiet to date when it comes to marketing its new mobile OS. Now, Microsoft has announced new agreements with ViewSonic and Acer that will bring in cash from two more Android vendors. Read on for more.

Microsoft on Thursday confirmed that it has reached licensing agreements with California-based ViewSonic and Taiwan-based Acer. Though the specific terms of the agreements were not disclosed, the deals will see ViewSonic and Acer pay Microsoft royalties on sales of their Android-powered smartphones and tablets. The deal also covers any forthcoming devices powered by Google’s Chrome OS.

“We are pleased that ViewSonic is taking advantage of our industrywide licensing program established to help companies address Android’s IP issues,” reads a statement from Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft. “This agreement is an example of how industry leaders can reach commercially reasonable arrangements that address intellectual property.” Pleased indeed. An identical statement was also issued regarding the Acer agreement.

The deals may in fact grant these vendors’ some level of protection against potential patent attacks from the likes of Apple, but the clearer advantage for the companies is that they will provide protection from Microsoft. As smaller companies look to Android as a popular open source option on which they might base their efforts to enter the smartphone and tablet markets, margin-chopping deals like these will do little to encourage their potential ventures. And in the end, of course, consumers lose again.

The International Trade Commission on Thursday reversed an earlier decision in a patent case that could cost camera maker Kodak hundreds of millions of dollars from Apple and RIM. Kodak had filed suit against both firms, claiming that their mobile devices infringed on multiple patents owned by the Rochester, NY-based company. An initial ruling in favor of Kodak was under ITC review, and the commission on Thursday reversed parts of the decision that had previously been ruled in Kodak’s favor. Other parts of the original ruling were sent to be examined by a judge of administrative law, and a final ruling is scheduled to be made on August 30th.

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Deutsche Bank analyst Kai Korschelt on Tuesday estimated that Nokia stands to make a pretty penny off of royalty payments from Apple moving forward. Nokia announced early on Tuesday that it had reached an agreement with Apple regarding a series of patent disputes filed by each company over the past few years. Based on recent settlements tied to similar cases in the industry, Korschelt estimates that Apple will give Nokia a $608 million lump-sum payment up front. Following that initial payment, Apple will like pay Nokia a 1% royalty on all iPhones sold each quarter as a licensing fee. At Apple’s current pace — which has increased steadily rapidly since the iPhone first launched — that works out to approximately $138 million each quarter, or more than $550 million annually.

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A firm named iCloud Communications has filed a lawsuit against Apple over its “iCloud” trademark. Apple announced the new cloud storage and sync service dubbed iCloud during its WWDC keynote last week, and iCloud Communications now wants the Cupertino-based tech giant to get rid of “all labels, signs, prints, insignia, letterhead, brochures, business cards, invoices and any other written or recorded material or advertisements” referring to the service. The company argues that Apple’s iCloud service is closely related to iCloud Communications’ business:

The goods and services with which Apple intends to use the “iCloud” mark are identical to or closely related to the goods and services that have been offered by iCloud Communications under the iCloud Marks since its formation in 2005.  However, due to the worldwide media coverage given to and generated by Apple’s announcement of its “iCloud” services and the ensuing saturation advertising campaign pursued by Apple, the media and the general public have quickly come to associate the mark “iCloud” with Apple, rather than iCloud Communications.

iCloud Communications said that Apple consistently uses trademarks owned by others, and references other legal battles over trademarks for the iPhone, iAd, Mighty Mouse, iPad, and even the name Apple itself. The company is asking for “all monetary damages sustained and to be sustained … including lost profits and reasonable royalties,” as well as “all profits, gains and advantages obtained from Apple’s unlawful conduct,” in damages.

[Via Engadget]

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The International Trade Commission is set to determine at 5:00 p.m. EDT today whether or not it will review the decision in a patent infringement suit filed against Apple and RIM by Kodak last year. A federal judge ruled in January that Apple’s iPhone and RIM’s BlackBerry smartphones did not infringe on Kodak patents, as the company alleged. Today, that case may be reopened if the ITC finds cause to do so. Kodak previously scored big against both Samsung and LG in similar patent disputes it filed in 2008. Both companies settled ahead of an ITC ruling in those cases, and Kodak made out with $550 million from Samsung and $414 million from LG. A win against Apple and RIM would likely yield similar gains according to Kodak CEO Antonio Perez. Kodak “deserves to win,” Perez proclaimed in an interview with Bloomberg.

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First and foremost, Internet radio lovers have some serious cause for celebration as Pandora announces a somewhat workable resolution to the ongoing royalty dispute that nearly drove the company into the ground. By somewhat workable, we mean it’ll keep them in business but it’s still paying the highest royalty rate in radio. What does this mean for Pandora users? Well it means they can keep using Pandora of course, and 90 percent of users will experience no changes whatsoever. For the other 10 percent though — users who don’t pay for Pandora One but stream more than 40 hours of music per month — the free ride is over to an extent. Any non-subscriber who goes over 40 hours in a month will have to cough up $0.99 in order to continue streaming during that month. $0.99, as in less than a dollar… We’d say that’s pretty fair. In all seriousness though, if you’re listening to 480+ hours of Pandora per year and not supporting the company by forking over $36 for a year of Pandora One, well, you should definitely consider it. So congratulations to Pandora on ending a 2-year fiasco. It might not have been the best possible outcome but hey, if it keeps the company afloat it’s not all bad.

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Talk about great reads. Muxtape founder Justin Ouellette finally let the cat out of the bag today and published a lengthy report of his recent trials and tribulations. For outsiders looking in, reading about dealings with the unmitigated disaster that is the music industry is like a guilty pleasure. Rage seems to build with each passing paragraph and one can’t help but think, “are they really this stupid?” Ouellette’s recount of his experiences in recent history fits the mold perfectly. The behind the scenes plan for Muxtape was anything but ill-intentioned; Ouelette had some pretty big ideas and spent a great deal of time reaching out to labels in an effort to move music consumption forward in a very symbiotic manner. In fact in the midst of an extended series of meetings with major labels that seemed to be progressing, albeit slowly, the RIAA struck without warning and dropped an axe that would force Muxtape to go offline. It registered a complaint with Amazon Web Services, Muxtape’s host, that required Muxtape to dump a launrdy list of content within one business day or risk having his data deleted and servers shut down. The rest, as they say, is history.

Ouelette has plans to relaunch as a service geared exclusively toward bands:

The new Muxtape will allow bands to upload their own music and offer an embeddable player that works anywhere on the web, in addition to the original muxtape format. Bands will be able to assemble an attractive profile with simple modules that enable optional functionality such as a calendar, photos, comments, downloads and sales, or anything else they need.

This is a far cry from the original Muxtape model and it will likely have a much more difficult climb in terms of being widely adopted. Here at BGR, we’ll certainly be keeping an eye out for the relaunch and we wish Ouellette all the success in the world. As for the RIAA and music industry in general, it is becoming increasingly difficult to support any means of music distribution that puts money in their pockets. The dilemma of course is in order to financially support the bands you enjoy, you are also feeding the hand that bites. Talk about a catch 22. Whatever, music industry. Keep doing things your way because it seems to really be working out well for you. We’re sure people will be lining up in droves to buy music on microSD cards. You know, just like how we all went running out to get their hands on Ringles. That went over really well.

Do yourself a favor and hit the read link.

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It looks like the big guys aren’t the only ones feeling the wrath of the RIAA these days, and it’s only bound to get worse. Muxtape, a service that allows users to upload music from their personal libraries to create an online mixtape, currently services less than 90,000 unique visitors per month according to Compete. That won’t keep it under the RIAA’s radar it would appear, as the service went down yesterday with the note “Muxtape will be unavailable for a brief period while we sort out a problem with the RIAA” on its homepage. A post on the Muxtape blog provides the following message:

No artists or labels have complained. The site is not closed indefinitely. Stay tuned.

It’s funny; rather than embrace this newer wave of online music providers, it appears that labels and the RIAA are intent on destroying these emerging technologies and completely eliminating new revenue streams that have the potential to become massive. By putting a fair royalty scheme in place, the RIAA stands to pull in hundreds of millions of dollars in the short-term and this figure would only increase as internet radio stations and other online music sites continue to gain momentum. Instead, the RIAA is trying to run these sites into the ground in order to maintain the current power structure – even if that means losing out on all of this new money. Users of sites like Muxtape aren’t going to replace their “free” listening habits with purchases, they’re going to find other off-shore sites with similar functionality. Apparently for the RIAA,  “nothing” is better than “something” when that “something” helps illustrate just how useless the current record label model is these days.

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As traffic to Pandora continues to climb at an impressive rate, far more steep than that of competitor Last.fm as seen in the chart above, the popular custom internet radio provider may be a breath away from closing its doors. Why, you might ask? The answer is not very far from being obvious these days. Wherever there is an emerging revolution in the realm of music consumption, loved by many yet still on the brink of defeat; the RIAA is never far from the scene. Pandora’s current woes fit the mold precisely. Pandora usage is at all all-time high and usage increased by almost two million visits per month from June to July alone, yet elevated royalty rates are making it nearly impossible for the company to stay afloat. After last year’s decision that internet radio provider per-song royalty rates would double there has been an ongoing battle between providers and SoundExchange, an unincorporated division of the RIAA tasked with collecting royalties from digital providers such as satellite and internet radio. The decision determined that the rate would increase incrementally from .08¢ per song per listener in 2006 to .19¢ per song per listener by 2010. While tiny fractions of a penny seem insignificant, they add up quickly. Pandora projects that it will pay out about $17 million this year, or a staggering 70% of its revenue, in royalties. Long story short, it is losing money. The problem is even worse for smaller internet radio providers, where increased royalty rates are expected to amount to between 100% and 300% of annual revenues. Translation: By way of SoundExchange and lawmaker support, the RIAA would rather wipe internet radio off the map with outrageous royalty rates than find a fair way to make some money for its clients (labels and, theoretically, musicians). Why is that? There is no way for us to say but as per-song performance royalties are positioned to wipe internet radio off the map, it should be noted that terrestrial radio pays no such fees.

Tim Westergren, Founder of Pandora, had this to say to the Washington Post:

We’re funded by venture capital. They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like its headed towards a solution, we’re done.

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