It's even been said that Microsoft earns more money from Android than it does its own Windows Mobile operating system
No need to suggest it: Microsoft stopped charging for the licences leaving it with the costs of development, documentation and distribution and no revenue.
My guess is that any of the relevant patents, FAT springs to mind, only have a few years of life left and Google easily has enough cash to run things through all the courts, so continuing the battle promises diminishing returns. Nadella seems to have understood that if you can't beat 'em, you should join 'em and it's easier to get Office installed on phones when you're not trying to sue the manufacturers.