Microsoft Exec: Linux Patent Licensing Becoming 'Less Relevant' As We Embrace Open Source Partnerships

Microsoft says it loves Linux, but it still makes a big chunk of annual revenue from enforcing its shadowy trove of Linux patents -- often by getting Android device makers to sign licensing agreements.

Mark Hill, Microsoft's senior vice president of open source sales and marketing, told CRN in a recent interview that these patent licensing efforts are growing "less and less relevant as we become more integrated in working with the open source community."

Microsoft has long claimed that Linux infringes on its patents, and it mounted a campaign in 2010 to get Android and Chrome OS device makers to license its technology in order to avoid litigation.

More than 20 vendors have inked agreements with Microsoft since then, including Samsung, LG, HTC, Acer and Asus. In March, Taiwan-based Wistron and Tokyo-based Rakuten became the two latest Android patent licensees.

Although Microsoft intends to seek additional licensing agreements with Android vendors, Hill suggested that these deals will be more about forming lasting relationships than enforcing intellectual property rights.

’We have a broad array of patents, and how we act on them depends on the business we’re doing," Hill told CRN. "Building partnerships is an important use of our patents, as it focuses our joint efforts on delivering increased customer value." Hill said these include partnerships with Android device makers and other vendors, but he declined to elaborate further.

Microsoft is believed to make between $5 and $15 in royalties on each Android device sold. In 2013, Wall Street analyst Risk Sherlund estimated this was generating a $2 billion annual revenue stream, while other estimates have ranged as high as $6 billion.

However, Redmond, Wash.-based Microsoft's patent licensing revenue has dropped for three straight quarters, including a 26 percent year-over-year decline in its recently concluded fiscal third quarter. Some industry watchers attribute the decline to the rise of low-cost Android device makers in India and China, which haven't signed licensing agreements.

Some Microsoft partners are expecting the software giant to step up its patent enforcement efforts in response to this trend. Jeff Middleton, president of IT Pro Experts, a Microsoft partner in Metairie, La., doesn't expect Microsoft to tread lightly in going after potential Android licensing revenue.

"Microsoft could lower enforcement by waiving penalties or lower damage requests, but I don’t know how you could run a publicly traded company and suggest you are going to disenfranchise yourself from your patents by not enforcing them," Middleton said.