Microsoft’s seemingly political stance in the battle between Apple and HTC could turn out to carry some implications as the company readies its next generation mobile operating system. In response to the lawsuit that Apple filed against the Windows Mobile, Windows Phone, and Android maker, Microsoft says that Apple’s lawsuit is a good thing. According to company lawyers, who refuse to take a side on the issue at this point, “the fact that there’s litigation in this area is not necessarily a bad thing.” Microsoft is hoping that the Apple suit can set precedent for some of the patents on the market today and how those hardware and software patents are handled by the market and the legal system: “But as I mentioned, the fact that there are efforts to sort out these issues are on balance a positive development for the market because they typically take an important role in sorting this kind of issue out.” However, in an era where consumers and partners are looking positively towards Windows Phone 7 Series, Microsoft’s legal team is treading into dangerous waters, especially since those same manufacturing partners will enjoy less freedom to customize and create a branded user experience given Microsoft’s tight hardware control and specs for Windows Phone 7. The non-commital stance to back a hardware OEM can send some fear to other OEMs, like LG, Samsung, Sony Ericsson, Dell, and others who have committed to Windows Phone 7 Series, especially after an era of protecting OEMs from the wrath of intellectual property claims.

Microsoft’s latest statement is in stark contrast with the company’s position a few years ago with the maturing Windows Mobile platform. In 2006, Microsoft had pledged support for legal fees and to help OEMs fight patent lawsuits if they are a licensee of Windows CE or Windows Mobile, which also uses the Windows CE architecture. According to the first paragraph of the press release back then, “Microsoft Corp. (Nasdaq: MSFT) today announced it will strengthen and broaden intellectual property (IP) protection for original equipment manufacturers (OEMs) and distributors that build and sell devices powered by Microsoft(R) Windows(R) Embedded and Windows Mobile(R) software. With this expansion, the more than 4,000 OEMs and distributors of Windows Embedded and Windows Mobile will receive comparable IP protection to that already offered for other Microsoft flagship products.” Specifically, Microsoft was extending the following protection to OEM partners:

– The defense of OEMs and distributors against IP claims in every

country in which Microsoft distributes or markets its Windows Mobile

and Windows Embedded products

– Protection of patent, copyright, trademark and trade secret claims

based on Windows Mobile and Windows Embedded software

– Removal of the monetary cap related to defense costs

We’re uncertain whether those same guaranties made by the company had expired after 2006, but it seems that Microsoft is making a political dance around Apple, Google, and OEM partners–HTC specifically in this case as the lawsuit is aimed squarely at them. There are speculations that Microsoft wants to play the role of Switzerland in this instance to avoid the wrath of Apple and possibly trying to secure a Bing search placement on Apple products and dethrone Google among Apple’s loyal consumers.

There’s also the issue of Google. Though the lawsuit is aimed primarily at Android, bits of them can be applicable to Windows Mobile as well. For instance, using large icons in the Start Menu or Programs Menu can be affected with Patent No. 5,455,599: “Object-Oriented Graphic System.” Additionally, Windows Mobile 6.5 also supports gestures to unlock the handset–with or without HTC Sense or TouchFLO 3D–as detailed by Patent No. 7,657,849: “Unlocking A Device By Performing Gestures On An Unlock Image.” Since most of the technologies in dispute are pointed at Google Android, Microsoft probably doesn’t want to involve itself just yet, but a non-involvement can create bigger market confusion in the future as well. However, to be fair, many of the patent disputes arise from Android and HTC, and Microsoft was not a specific defendant in many. But the fact remains that the broad translation and enforcement of patents, if a ruling was favorable to Apple, could affect Windows Mobile and Windows Phone moving forward as we have seen in the two of a few examples stated above. And since Windows phone 7 Series will support multitouch and is required to have accelerometer support, Patent No. 7,469,381: “List Scrolling And Document Translation, Scaling, And Rotation On A Touch-Screen Display” can also affect Microsoft to add a third example.

We’re not quite sure how Microsoft’s lack of allegiance to OEM partners will play out in the long-term, and perhaps it could be seen as karma as HTC–once accounting for 80% of Windows Mobile sales–had moved to diversify and commited 50% of its phone portfolio to Android. Given Google openly supporting HTC on the matter and Microsoft not issuing any love at all, it could make it easier for HTC to switch sides. Given Microsoft’s efforts in years past to protect OEM partners against lawsuits, it seems Redmond, Washington is betting that innovations with Windows Phone 7 Series will keep OEMs happy rather than the allure of fringe benefits like IP protection against legal claims.

As Microsoft moves Windows Phone 7 Series to target the consumer demographics, the company is really leveraging the mobile experience created by its smartphone OS in its favor. In the past, HTC, Samsung, LG and others created the mobile experience by commoditizing Windows Mobile and adding Sense UI, TouchWiz, or the S-Class experience and created a diverse mix of hardware. Tighter control moving forward on Windows Phone 7 means that Microsoft is taking back control and it will be a Windows Phone 7 Series experience first and foremost, commoditizing on hardware. With that strategy, fueled by renewed consumer and industry interest in the platform, Microsoft is seemingly playing hardball: take it or leave it with what we give you–or not, as in this case, legal defense.

If you’re curious about the 2006 Microsoft press release, it is re-posted below:

Microsoft Corp. (Nasdaq: MSFT) today announced it will strengthen and

broaden intellectual property (IP) protection for original equipment manufacturers (OEMs) and distributors that build and sell devices powered by Microsoft(R) Windows(R) Embedded and Windows Mobile(R) software. With this expansion, the more than 4,000 OEMs and distributors of Windows Embedded and Windows Mobile will receive comparable IP protection to that already offered for other Microsoft flagship products.

– The defense of OEMs and distributors against IP claims in every

country in which Microsoft distributes or markets its Windows Mobile

and Windows Embedded products

– Protection of patent, copyright, trademark and trade secret claims

based on Windows Mobile and Windows Embedded software

– Removal of the monetary cap related to defense costs

“Microsoft is providing us with yet another tool to speed up the

deployment of our latest enterprise mobility solutions and provide our customers with technologies that increase their competitiveness in their respective markets,” said Boris Metlitsky, senior vice president of product strategy and development at Symbol Technologies Inc. “By extending IP protection to the embedded and mobile device manufacturing space, Microsoft is helping ensure the integrity of our offerings and is allowing us to focus on the next wave of innovations.”

Industry and Partner Support for More IP Protection

OEMs and distributors currently use Windows Embedded and Windows Mobile

software to build innovative devices such as Smartphones, Portable Media Centers, automated teller machines, retail point-of-sale systems, Global Positioning System-based devices, industrial robots and thin clients. Several high-profile IP disputes have raised the importance embedded device-makers and distributors attach to careful IP risk management, and IP indemnification is increasingly seen as a key reason to build devices using commercial software offerings such as Windows Embedded and Windows Mobile.

“This program enables our OEM and distributor partners to select Windows Embedded and Windows Mobile with even more confidence than ever,” said Suzan DelBene, corporate vice president of the Mobile and Embedded Devices Division at Microsoft. “We stand behind our software and partners, and this protection is the best assurance for device-makers using Windows Embedded or Windows Mobile to build amazing devices people won’t want to live without.”

By extending stronger IP protection for its mobile and embedded partners, Microsoft continues to deliver on the model of shared success that reduces the barriers to entry found in traditional device development. Unlike open source software, Windows Embedded and Windows Mobile provide a mature and complete technology portfolio to help device-makers bring their next-generation devices to market faster while minimizing their total cost of development.

“Intellectual property litigation has been increasing steadily for the last several years. As a result, indemnification against this litigation not only has become a requirement for any technology purchase, it strongly pushes companies toward the buy side of the build-versus-buy decision,” said Rob Enderle, principal analyst for the Enderle Group. “Microsoft’s indemnification stands as one of the most comprehensive in the market, setting a high bar for competing platforms.”

Evolution of Strong IP Protection to Customers and Partners

Microsoft continues to build out its industry-leading IP protection across markets in response to the changing legal landscape and feedback from its customers and partners indicating that they need to feel secure using Microsoft technology. In 2003, Microsoft removed monetary caps for volume licensees after learning that this was a top concern. In November 2004, Microsoft extended its IP protection for customers by taking coverage previously available only to volume licensees and making it available to non-volume-license end users. In June 2005, Microsoft strengthened indemnification for its $18 billion partner channel,

including removal of the monetary cap for legal defense fees. The strengthened indemnification benefited PC manufacturers, including OEMs, system builder partners, OEM distributors and independent software vendor (ISV) royalty partners.

Microsoft’s ability to offer strong protection is bolstered by a commitment to managing the IP rights in its software. This commitment includes development process controls, inbound licensing of necessary third-party rights, cross-licensing agreements with other industry leaders, and protection of Microsoft innovations through filings for patents and copyrights.