Microsoft and Apple can't stop Google's Android juggernaut with their mobile devices, so they're teaming up to try and kill it instead with a slew of big-time patent suits. Are the suits on-target, or is this one more example of the legal system gone awry?
The suits are being brought by a consortium called Rockstar, which was formed by Microsoft, Apple, Blackberry, Ericsson and Sony to buy Nortel patents during Nortel's bankruptcy auction. Google, clearly knowing what was at stake during the auction, tried to buy the patents as well, but Rockstar outbid it, paying $4.5 billion to Google's $4.4 billion offer.
The lawsuits (download the complaint here) make a number of patent infringement charges against Google and big Android device makers, including Samsung, Huawei, HTC, and others. Several of the most dangerous charges, from Google's point of view, are at the core of Google's mobile business: Claims that Google infringes patents by matching search terms to relevant advertising on mobile devices. Google gives away Android for free in order to make money via advertising, so this could kill Android if Google loses, or at least force Google and Android device makers to pay very sizable licensing fees.
Ironically, the lawsuits use the fact that Google bid on the patents against Google. The suits charge:
Google was aware of the patents-in-suit at the time of the auction.
Google placed an initial bid of $900,000,000 for the patents-in-suit and the rest of the Nortel portfolio. Google subsequently increased its bid multiple times, ultimately bidding as high as $4.4 billion. That price was insufficient to win the auction, as a group led by the current shareholders of Rockstar purchased the portfolio for $4.5 billion.
Despite losing in its attempt to acquire the patents-in-suit at auction, Google has infringed and continues to infringe the patents-in-suit.
Google clearly knew this suit was in the cards. Back in August 2011 after Google lost out to Rockstar for the patents, Google Senior Vice President and Chief Legal Officer David Drummond said in the Official Google Blog that
"Android's success has yielded something else: a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents...They’re doing this by banding together to acquire Novell’s old patents (the “CPTN” group including Microsoft and Apple) and Nortel’s old patents (the “Rockstar” group including Microsoft and Apple), to make sure Google didn’t get them."
Android device makers already pay hundreds of millions of dollars annually to Microsoft in licensing fees due to patent claims. Horacio Gutierrez Microsoft Corporate Vice President & Deputy General Counsel, Legal & Corporate Affairs, said in a Microsoft blog that:
"...we have successfully entered into license agreements with nearly all companies on the list of the world's largest Android smartphone vendors and their manufacturers. In fact, 80 percent of Android smartphones sold in the U.S. and a majority of those sold worldwide are covered under agreements with Microsoft."
Microsoft isn't saying how much money they're getting from those licenses, but one report says that the company received $792 million in patent royalties from Samsung and HTC in just one quarter.
There's no doubt that the use of patents to kill competition is out of control, and doing great harm to the tech world. In some ways, lawyers, not engineers, are becoming some of the most valuable tech employees.
Rockstar, from its inception, seems to have been formed as what might be interpreted as a predatory company. Last year Wired published a lengthy look at the company, and it's eye-opening, disturbing reading. The article says that:
The 32-person outfit has a single-minded mission: It examines successful products, like routers and smartphones, and it tries to find proof that these products infringe on a portfolio of over 4,000 technology patents once owned by one of the world’s largest telecommunications companies.
It quotes John Veschi, Rockstar’s CEO as saying:
"Pretty much anybody out there is infringing. It would be hard for me to envision that there are high-tech companies out there that don’t use some of the patents in our portfolio."
The article also notes:
Rockstar is a special kind of company. Because it doesn’t actually make anything, it can't be countersued in patent cases. That wouldn’t be the case with Apple or Microsoft if they had kept the patents for themselves.
Not being a lawyer, I can't say that I know enough about patent law to say whether Rockstar's charges against Google and Android are on target. But the existence of a company like Rockstar, and these suits, are two more examples of how twisted patent law and technology have become. To a great extent, patent law hurts innovation, the global economy, and everyone's use of technology.