Microsoft Inks Patent Deal With ZTE, A Week After Reaching A Similar Agreement With Foxconn

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Microsoft has signed a patent deal with ZTE that covers all Android and Chrome devices manufactured by the Chinese firm. This latest agreement comes a week after Microsoft scored a major coup by striking a similar patent licensing deal with Taiwanese smartphone maker Hon Hai, which owns Foxconn.

Microsoft did not disclose the terms of its deal with ZTE, but said that they are similar to the agreement it made with Hon Hai. Hon Hai, which is now Microsoft’s largest patent licensee, agreed to pay a flat fee for each Android and Chrome-based device that Foxconn manufactures–which will add up to an impressive amount, since the ODM’s Chinese factories make 40 percent of the world’s phones, including Android devices for clients like Acer and Amazon.

While not as large as Foxconn, ZTE is still one of the top five manufacturers of Android smartphones in the world and in the fourth quarter of 2012 shipped 9.5 million units, according to IDC data. Its new deal with Microsoft gives ZTE access to Microsoft’s smartphone and tablet patents, including those for operating systems, browsing, data synchronization, and audio and video transfer.

Microsoft says its deal with ZTE, which marks its first patent licensing deal with a leading Chinese company and is the latest move in its longstanding efforts to get as much licensing revenue out of smartphone manufacturers as possible, was negotiated over two years. The Redmond, Washington-based software giant has been estimated to make more from patent royalties paid by other smartphone makers than its own devices. In addition to ZTE and Foxconn, Microsoft also has similar licensing agreements with Quanta and Pegatron.

“Experience has taught us that respect for intellectual property rights is a two-way street and we have always been prepared to respect the rights of others just as we seek respect for our rights,” said Microsoft general counsel Horacio Gutierrez in a statement.”

Microsoft may hope that its new deals with ZTE and Foxconn will persuade other manufacturers like Huawei and, eventually, Google to step in line. Microsoft’s tactic of going after Android device manufacturers has been described as a proxy war against Google, but it’s unlikely Google will cave in: in the past it has referred to Microsoft’s cross-licensing agreement with manufacturers like Samsung as “extortion,” a charge Microsoft brushed off.