This looks a little more serious than the standard everyone making a smartphone sues everyone else making a smartphone patent cases. While there are indeed smartphone patents flying around in this latest spat the really important part of it looks to me to be that Google is being sued over patents that link search results to the advertising that will be shown up on them. That is, of course, something that is at the heart of the entirety of Google’s money making abilities. It thus strikes to hte heart of what the company is about, not just at something that can be engineered around.
The basics of the case are here:
Rockstar, the consortium that bought the Nortel patents for $4.5 billion, sued Samsung Electronics Co Ltd, HTC Corp, Huawei and four other companies for patent infringement in U.S. District Court in Texas. Rockstar is jointly owned by Apple, Microsoft, Blackberry, Ericsson and Sony.
Google is accused of infringing seven patents. The patents cover technology that helps match Internet search terms with relevant advertising, the lawsuit said, which is the core of Google’s search business.
There’s a little misunderstanding here:
That transaction cleared the DOJ as the team agreed to license the tech on “fair, reasonable and non-discriminatory terms, as well as their commitments not to seek injunctions in disputes involving SEPs.
No, that’s not quite was said. The DOJ actually said that the companies had agreed that those patents which were SEPs would continue to be licenced on FRAND terms. But obviously, those that were not standards essential did not need to be. And yes it is very much true that Google is now being sued over non-SEPs and thus cannot rely upon any insistence upon FRAND terms.
Florian Mueller has the background documents here and has helpfully listed the patents themselves:
Patents-in-suit against Google
U.S. Patent No. 6,098,065 on an “associative search engine”
U.S. Patent No. 7,236,969 on an “associative search engine”
U.S. Patent No. 7,469,245 on an “associative search engine”
U.S. Patent No. 7,672,970 on an “associative search engine”
U.S. Patent No. 7,895,178 on an “associative search engine”
U.S. Patent No. 7,895,183 on an “associative search engine”
U.S. Patent No. 7,933,883 on an “associative search engine”
There is one innovative argument being used in the case:
The complaint tries to use the fact that Google bid for the patents as an extra point against the search giant. “Google subsequently increased its bid multiple times, ultimately bidding as high as $4.4 billion,” write Rockstar’s lawyers. “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 cannot say that the patents are not valuable since they tried to bid for them themselves: ergo, they must be worth to Google at least what Google was willing to offer for them. Myself, if I were defending against this idea, I’d say that sure, but they also cannot be more valuable than what we were willing to pay for them either: and nor can they be more valuable than what was actually paid for them (this idea is being asserted in another patent suit right now: a patent cannot be worth more than Intellectual Ventures actually paid for it).
At least that argument would limit possible licence costs to the $4.4 billion or so figure. Yes, it’s a large sum but as against Google’s revenues it’s pretty small. Especially when you realise that that’s the maximum possible value of the patents over their 20 year life.
Now, obviously no one knows what’s going to happen next. Whether the patents will be upheld, whether Google is indeed violating them. This is conceptually different still from most of the other patent cases that are roaming around. If the patents are valid and Google is breaching them then there’s no real workaround possible: they’re too basic to what is at the heart of what Google does. Quite what happens next I’m not sure, as I say, but this could become expensive quite quickly for Google.
It’s a much more serious case than most of the other patent spats floating around.