Google calls foul over patent acquisition deal

Yesterday David Drummond, Senior Vice President and Chief Legal Officer posted his thoughts regarding the recent Nortel patent deal via the official Google blog claiming that the practice of the other companies was anti competitive. A few weeks ago, the Nortel company which was bankrupt and making a sale of its patent portfolio, a little over 6000 patents, was supposed to be in Google’s pockets. This sale was to help Google out of its ever increasing patent issues that it faces with companies like Microsoft and Apple. Unfortunately as Google went bidding in strange amounts which turned out to be equivalent to the pi value, a consortium of bidders which consisted of Microsoft, Apple, Sony, Erricson, EMC and RIM were pooling their resources to make a much larger bid of 4.5 Billion USD for the same portfolio. A week after Google lost this bidding war they immediately stepped back up to the plate requesting that the purchase be blocked as it was an unfair move against them which would lead to antitrust issues.

Emphasizing these points in his blog post was Drummond who claimed that as Android activations grew up to 550,000 devices a day their competition was no longer planning on competing with its growth by innovating through device and OS functionality but instead banding together to strangle it through litigation. Some might wonder about the validity in Drummond’s post since to most bystanders it may simply look like Google lost because it didn’t bid high enough. The law is a little more complex than that where if companies make purchases of patents with no intention of using it to create their own intellectual property but instead to stifle competition growth they are liable to come under antitrust accusations.

More concerns about this patent bid have come about since Google’s original estimate was just 900 Million USD. As Drummond rightly points out, overvaluing patents is destructive to competition growth since any licensing charges will also increase substantially. Drummond even points out that Android devices are now being charged $15 extra as patent fees to Microsoft (although this number is unconfirmed) which reminds all of us how Microsoft did warn that Android has hidden costs in potential patent lawsuits as opposed to their well protected Windows Phone 7.

Most interestingly however was this tweet that came out from Microsoft’s General Counsel Brad Smith that says “Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us”. Although the Novell and Nortel bids were separate this may go to show that there’s more than what meets the eye in the case of this legal battle.