NTP, a patent holding firm that is really just a bunch of lawyers with incredibly broad and questionable patents, is at it again. As you probably know, NTP was locked in a long and contentious patent fight with RIM over NTP's claimed patents covering the concept of mobile email. Even as the US Patent Office was telling the world that NTP's patents almost certainly weren't valid, pressure from investors (and the judge in the case who refused to wait for the Patent Office's final rejection of the patents) resulted in RIM settling the case for $612.5 million. For RIM, it became something of a no brainer. Even though its legal position was strong, its investors were killing the company over the uncertainty (there were threats that the judge could issue an injunction shutting down the entire Blackberry network). Settling the case helped RIM's stock price jump up (increasing its market cap more than the cost of the settlement).

But, from a legal perspective, the lawsuit and the end result became the centerpiece of attention for efforts at patent reform. While I still think that the patent reform process in Congress has been misguided and the end result probably a lot more damaging than helpful, many of the politicians involved will point to the RIM-NTP case as evidence of the problems with the patent system. You might think, then, that NTP's investors might sit back and enjoy the spoils of the RIM settlement, but the company quickly went back out and sued all the major mobile operators in the US for violating its patents. However, judges in those other suits said (unlike the judge in the RIM case) that those trials should wait until the Patent Office has made a final decision on the validity of NTP's ridiculously overbroad patents.

However, NTP is not waiting around. It's now suing again. This time, rather than the mobile operators, it's going after device makers and platform vendors, suing Apple, Google, Microsoft, HTC, LG and Motorola. Basically, it appears that NTP has decided that if anyone does email on a phone, they have to pay NTP.

There might not be a better example of how incredibly screwed up the patent system is than this. NTP was involved in an attempt to do mobile email ages ago (and it wasn't the first actually... but NTP paid off some folks who had prior art). The idea itself wasn't new or all that innovative, and the timing was off, so NTP failed. In a functioning free market, that's a good thing. If a company can't execute, it should fail. Unfortunately, thanks to a ridiculously overbroad patent award, NTP has been able to live on as a bunch of lawyers suing any company that does figure out how to execute.

Perhaps the only good thing coming out of this is that it may help draw more attention to just how broken the patent system is.

Ah, the patent games Microsoft plays. For years, it's spread FUD, claiming that open source operating systems, such as Linux, violate its patents -- though it has never detailed what patents or really sued anyone directly over those patents (though some have argued that it has done so with a couple patents tangentially). Now it appears that Microsoft is also claiming that Google's Android violates its patents. Of course, it's not doing so by going after Google. Instead, it's part of what came out in an announcement concerning Microsoft licensing certain patents to HTC specifically to allow HTC to run Android.

Seems a bit strange, right? Why should Microsoft have any say in whether or not HTC can put Google's Android operating system on its phones. The whole thing seems even odder when you realize that HTC was, for a long time, one of the major makers of smartphones running Windows Mobile operating system. But, the complicating factor here might be Apple. Apple, of course, famously went on the patent offensive and sued HTC over its Android phones a couple months ago. So now, with Microsoft doing this deal, it seems to very publicly be entering the patent fight between Apple and Google, which for bizarre reasons is playing out with HTC as the pawn getting bounced around between them all.

Of course, Microsoft's press announcement on this particular deal is hilarious in how disingenuous it is:

The licensing agreement with HTC underscores the important role IP plays in ensuring a healthy and vibrant IT ecosystem.

Uh, no. It underscores the exact opposite. It underscores just how totally screwed up the smartphone market is because of the absolutely ridiculous patent thicket that's been built up around pretty much everything that goes into a smartphone. This deal doesn't show "the important role IP plays." It shows how a big company that has nothing whatsoever to do with a particular fight can suddenly throw its weight around on the topic in an attempt to cause confusion in the marketplace and potentially scare off competitors. It's the exact opposite of what the patent system is supposed to do.

I bought the very first Danger smartphone the day it came out (rare for me -- I'm not so much of an early adopter on mobile phones). One of the features I liked the best was the fact that all of the data on the phone was immediately and automatically backed up to Danger's servers. Since then, I've always been amazed that other providers didn't make similar features standard. Danger never fully lived up to its hype, and eventually sold out to Microsoft. It was never entirely clear why Microsoft would want Danger, but at the very least you would think that it would make sure that the servers were pretty safe and redundant. Or so you would think. Apparently Danger had a massive server failure and is warning people that their data may be completely lost. The company is telling people not to turn off their devices, as the only way to keep the data alive is to keep the phone going.

It's difficult to think of a system failure that makes a company look quite this bad. Tons of people have Sidekick phones and rely on server backup to keep their data. Not having a working redundant backup is a stunning sort of failure for Microsoft, and should remind people of the inherent dangers in relying on a cloud based service. While there are lots of cloud-based solutions that are quite useful, people are definitely going to need to be able to have alternative local and remote backups to make sure that, in this kind of situation, they're not totally relying on a company who should do things right, but perhaps did not.

Josh W points us to an article about Microsoft new mobile phone software that contains an odd quote from Steve Ballmer, responding to a question concerning Microsoft's plans to compete with Google's free Android mobile operating system:

"Free is not a business model," he said. "We are a commercial company, we will look to gain revenue and profit from our activities. You'll have to ask our competitors if they'll make money on free things."

Internet explorer. Bing. Microsoft's new security software. All free. All offered by Microsoft. Is Steve Ballmer admitting that he doesn't know about any of these things... or is he just expecting that the reporter and the readers of the article are flat-out stupid? Clearly, Microsoft seems to recognize that free is a part of lots of smart business models, so why is its CEO apparently acting clueless on this front? As clearly anyone who thought this through knows, free by itself is not a business model, but free, in combination with a larger business model often makes a lot of sense. That's what Google is doing, and it's what Microsoft is doing as well. So why is Steve Ballmer pretending otherwise?

theodp points us to a new patent application from Microsoft for the concept of "virtual graffiti" that someone could leave for mobile devices connected to a real geographic area. As theodp notes: "Here's what passes for inventive these days in Redmond: 'Mary, while at Tom's house, may create graffiti on her cell FVG-enabled phone that says, 'Party Here Friday Night!' and make the graffiti available to all her friends. Then any of Mary's friends (with their FVG-enabled devices) passing by Tom's house would become aware of the graffiti associated with the house and be able to view it, thus becoming aware of the planned party.' Microsoft proudly boasts that the technology can also be used to shout 'Subscriber!' to newspaper boys as they pass customers' houses and exclaim 'Great lunch joint!' to those passing by a restaurant."

If that doesn't sound particularly new or non-obvious that's because it's not. We wrote about nearly an identical system that was already in use at Cornell University in August of 2003, more than three years before this Microsoft patent application was filed. Even in writing about that story, we noted that there were a few similar systems already out there and that "people have been talking about such things for ages"). How this could possibly be considered new or non-obvious seems like a reasonable question. Hopefully the patent examiner agrees and rejects this application.

If there's one thing companies should understand by now, it's the idea that restricting people from doing stuff that they want to do tends to backfire, badly. Just look at every attempt to create "DRM." Well, apparently Microsoft is trying to create a different sort of digital restrictions policy: one based on hard-coded "manners." A few folks sent in notice that Microsoft has applied for a patent on a system for "device manner policy" (DMP). Basically, such a DMP system would restrict the use of certain features in certain locations. So, for example, a mobile phone that has the DMP technology might not be able to ring in a movie theater, but would instead shift to vibrate. Or a digital camera or cameraphone would automatically disable the ability to take photos in a museum. Really, this is just another form of DRM, restricting what people can do with the technology they own. While it's nice to think that technology could somehow block out rude uses of devices, the opportunity for problems and abuse seems quite high. Wouldn't we be better off focusing on social norms to get people to learn when it is and is not appropriate to use certain technologies?

A bunch of tech firms are asking the FCC to allow them to make use of valuable spectrum that is unused, but controlled by television broadcasters (who don't want to give it up). The FCC has been open to such an idea for many years. Broadcasters own a ridiculously large portion of spectrum, with large parts of it totally unused. The "white space" was designed to prevent interference by not letting anything work on spectrum anywhere near broadcast spectrum. However, many are pointing out that with today's technology, that spectrum could be put to use without any interference. Microsoft and Google have both been big proponents of opening up that white space for use. In order to help show that the interference bogeyman wasn't a real issue, they've sent prototype devices to the FCC to test. Unfortunately, they seem to have trouble keeping those devices in operation. Back in August the FCC noted that the device didn't work, and now a new device from Microsoft has also stopped working.

Now, to be totally clear, the problems with these devices have nothing to do with causing interference. The devices haven't been shown to cause interference -- just to have trouble working. But, of course, the National Association of Broadcasters (NAB) quickly used these failures to slam the idea of freeing up the whitespace, even though there's still no evidence of interference. With the way the NAB has acted around this issue and the recent XM-Sirius merger debate, you have to conclude that the NAB thinks everyone out there is just completely stupid, and will believe any false or misleading statement it makes. Otherwise it makes no sense for the NAB to make the types of claims it makes on a regular basis. These devices are prototypes, and production devices will be totally different. Either way, the point is not whether the prototypes can keep working, but whether there's interference. That said, it would probably make sense for Microsoft to test these devices a bit more before tossing them over the wall to the FCC.

It would appear that Microsoft's M&A team isn't solely focused on Yahoo these days. Back in December, we noted that Danger, makers of the Sidekick mobile phone device, was planning to IPO, despite not having a track record worth an IPO. As we noted at the time, it seemed like the company was going to IPO because that was its only option. The truth is probably that the company was desperately looking for a buyout, and now Microsoft has come through. It will be worth watching to see what Microsoft does with Danger, as Danger does not use Microsoft's operating system, and its model is not based on licensing software, but in taking a toll from service fees. It would take quite a bit of effort to pull out Danger's OS, which was very carefully designed for the device itself, and replace it with Windows Mobile (and it also might lead Sidekick fans to flee to other devices). All in all, it's an odd sort of acquisition for Microsoft. One would hope that the company actually has more specific plans on what to do with Danger, because the obvious fit isn't apparent. From Danger's perspective, though, an acquisition by anyone at this point has to be viewed as a better option than trying to IPO, which almost definitely would have been a disaster.

It really was just last week, right, that Microsoft was last seen totally screwing over all those partners who had signed up to use its misnamed "PlaysForSure" DRM? Apparently, bygones are bygones and other companies have no problem stepping right up into Microsoft's embrace on a new DRM solution -- this time in the mobile space. Nokia is apparently agreeing to use Microsoft's mobile DRM offering dubbed "PlayReady" on a variety of Nokia devices. You would have thought that after the PlaysForSure debacle, Microsoft would avoid dubbing its DRM anything similar. Give it a few years and perhaps Microsoft will support some totally different DRM on its own phones (like it did with the Zune) and then we can ask again what Nokia was thinking.

It's almost become a cliche to note the decline of Microsoft as a competitive force in the software industry. True, it's still a large and profitable company, but it's been consistently unsuccessful in its attempts to dominate new markets the way it did in the 1990s. The XBox and Zune are fine products, but they're not market leaders. Neither are its software offerings. Microsoft's mobile OS is getting clobbered by Symbian and faces more stiff competition from Blackberries, iPhones, and soon Google phones. Its online offerings often run in third place behind Google and Yahoo. Internet Explorer is still the leading browser, but competition from Firefox and Safari have brought its market share down from 95 percent in 2004 to 82 percent today. This sure looks to me like a vigorously competitive market.

However, in recent filings, ten states and the District of Columbia argued that Microsoft is still a monopoly facing no serious competition from Google, Mozilla, or other firms. They're seeking to have federal monitoring of Microsoft's business practices under antitrust law extended until 2012. To make their case, they've stuck to the narrow definition of the relevant market they adopted in the 1990s, arguing that Microsoft has a monopoly for "Intel-compatible PC operating systems." I'm not sure that definition made sense in the 1990s, but it certainly doesn't make sense now. Microsoft's smartest competitors haven't attempted to launch a frontal assault on the company's operating system business. Instead, they've focused on beating Microsoft in related markets, including search engines, mobile phones, music players, and consoles. Companies like Apple and Google now enjoy commanding market shares in those markets, and their dominant position in those markets gives them considerable leverage and customer loyalty. If Microsoft forced its customers to choose between Windows or iTunes, or between Windows or Google, a lot of them would choose the latter. There's no longer any serious reason to worry that Microsoft's large Windows market share will allow it to squelch innovation in the technology industry, because Microsoft now faces a lot more competition on a lot more fronts than it did in 1998. The rise of web-based applications has made it far easier for companies to get their products into consumers hands, and the rapidly-growing mobile market gives companies some new platforms to target that aren't controlled by Microsoft. Most of this competition is outside of the "Intel-compatible PC operating system" market, but that definition of the market was always somewhat arbitrary, and it looks ludicrously narrow now.