OK, there is one other option. Instead of using a standard file system such as FAT32, devices could use their own proprietary formats on a flash drive. Ha ha, they've avoided licensing the patents; take that, Microsoft. Oh, there is just one little complication: Since Windows doesn't understand how to read the format, users will need to install special drivers or applications to read it. That is so incredibly cumbersome as to be unworkable, so the only reasonable choice is to use FAT32.
If the operating system market was shared among half a dozen smaller players, you can bet that there would be an open, royalty-free standard file system format for interchanging files among them. Microsoft's near-monopoly on PC operating systems means that non-PC devices must use FAT32 not because it's best, but because it's ubiquitous. Allowing Microsoft to control the FAT32 patent this way is allowing it to leverage its monopoly status.