Microsoft European distribution centre leaves Germany

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Uberzealous or what?

If Motorola Mobility and Google get their way, Microsoft will not be able to distribute its Windows 7 operating system within Germany. This has led the Microsoft decision-makers to pull out of Germany while West Rhine-Westphalia will pay the price for an uberzealous legal system.

The decision, to be issued by a Baden-Wurttemburg regional court follows a joint Google/Motorola Mobility litgation on use of a video-compression codec within Windows 7 and the Xbox 360 platform and can potentially bar Microsoft from shipping the products from within Germany altogether. As such, Microsoft will pre-empt a potentially negative ruling by moving its logistics operations a few miles northwest to neighbouring Netherlands, where the legal system seems to be less prone favouring the underdogs.

A Microsoft spokesperson said the move was already taking place and drove home the idea that, ultimately, it will result in loss of jobs for its German logistics partner, arvato: “We have a great relationship with arvato and we are pleased with the quality of their service.  But Motorola’s refusal to live up to its patent promises has left us no choice.  We would have preferred to keep our European distribution center with arvato in Germany as it has been for many years, but unfortunately the risk of disruption from Motorola’s patent litigation is simply too high.”

A move to the Netherlands may impact business in emerging Central and Eastern European markets, though, where piracy runs rampant and Microsoft is investing heavily in anti-piracy policy. While the company has made the decision it seems it is reluctantly following through as the courts have not been able to come to a satisfactory decision. A potential ban on Windows 7 is possible, but a revision of the OS, similar to the Windows  7 N edition, sans the infringing codec is likely.

Florian Mueller, a patent expert said, “Microsoft doesn’t have a choice: it wouldn’t be responsible to keep large quantities of products in a country in which sales bans or even orders to destroy deemed-infringing material come down so easily. Moreover, a company like this can’t have its European distribution centre based in such a country, given that court orders in that country could disrupt business all across the continent.”

Germany has been given to quasi-whimsical technicality-based court judgements with harsh consequences such as banning or destruction of goods, which have recently landed Samsung and Apple in hot water.

The country is, in fact, gaining a reputation for this, and in the future it could impact investment in the country. “Unless Germany overhauls its patent law and German judges apply more of a common business sense to the implications of standard-essential patents than they did in recent years, the German economy will lose a lot more business, and a lot more jobs”, added Mueller.

German courts seem almost cavalier in their approach to patent abuse, and sometimes that is not the best way to foster a good business environment.  “Intellectual property enforcement is a good thing only if it is balanced. Germany needs to redress the balance because currently its legal framework is totally lopsided in favour of patent abusers”, said the patent expert.

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