Microsoft and Barnes & Noble Become Allies After Patent Fight

By Joseph Mandour on May 9, 2012

microsoft-200x132 Los Angeles – In a surprising twist from an ongoing patent infringement dispute between Microsoft and Barnes & Noble, the two companies have agreed to a new partnership with one another to focus on e-reading and the education market.

The new subsidiary yet to be named will include Barnes & Noble’s digital and college businesses. Microsoft’s Windows 8 program will be included in a Nook e-reading application to be created by the subsidiary.

The largest book retailer in the United States will reportedly own the lion’s share of the subsidiary, with an 82.4 percent stake, while Microsoft will make an initial investment of $300 million at a post-money valuation of $1.7 billion in exchange for a 17.6 percent equity share. The subsidiary will apparently have an ongoing relationship with Barnes & Noble’s retail bookstores, however it is not clear how much of a role the stores will have in promoting it, considering that the subsidiary’s goal is to accelerate the transition from tangible books and publications to e-reading.

The inclusion of its college division in the new subsidiary is said to be a very crucial component of the strategic vision of the partnership. Under the venture, Barnes & Noble’s Nook Study software will offer college students and educators an outstanding technology platform for the distribution and management of digital education materials. The goal of the subsidiary is to revolutionize the way people consume, create, and share digital information.

Back in March 2011, Microsoft sued Barnes & Noble, Foxconn and Inventec (the companies that manufacture the Nook), claiming that the Android-based device infringed several Microsoft patents. Barnes & Noble responded to the patent infringement complaint by counter-suing with the U.S. International Trade Commission.

Neither company has offered much information relating to the settlement details. In the past, Barnes & Noble has been quite stubborn when it comes to paying Microsoft royalties for the patents it allegedly infringed, however it was confirmed that the bookseller will be paying the software giant royalties for every Nook sold as a result of the subsidiary.

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Posted in: Patent Infringement