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Google calls foul over patent acquisition deal

Google calls foul over patent acquisition deal

August 4, 2011  10:20 am

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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.

That may be the news side, but what of the real claims? Firstly, Google themselves may have started the bid at only $900 Million but moved upwards and their final bid was in fact $3.14159 Billion. Given this, Google’s claim of $4.5 Billion being an over valuation is instantly brought to a much weaker position. Drummond also stated the war against Android was in fact a war waged with “bogus” patents. If the patents are bogus and not worth their merit then it doesn’t explain why Google feels that this move is to be taken so seriously unless they are claiming that by acquiring these patents, Microsoft and Apple have fallen to the patent troll level. This would be true if none of these patents are actually used by Apple or Microsoft in their devices but if this were to be proven otherwise the patents wouldn’t be as bogus as Google claims them to be.


While Google’s supporters claim that Google was to use these patents defensively as opposed to their competitors’ intent to use them offensively it is hard to say which way this case can go. We still don’t really know what intention Google had for these patents or whether they themselves would be able to claim that the majority of these patents were applicable to their OS but given the ambiguity and questionable status of the patents themselves it shouldn’t be hard for any party to claim the patents as being infringed on. For now what will matter right now will be whether or not Microsoft and Apple can in fact prove that their intentions were to use the patent portfolio for defensive purposes and to further innovate.


To learn more about Adnan Issadeen you can follow him on @area51research or find out more via http://identyme.com/adnanissadeen. To keep up with the latest discussions, questions and sneak peeks join the Techrumble page on Facebook @ http://www.facebook.com/techrumble 

Sources –

http://business.financialpost.com/2011/07/05/googles-strage-bids-for-nortel-patents/

http://googleblog.blogspot.com/2011/08/when-patents-attack-android.html

http://twitter.com/#!/BradSmi/status/98902130412355585

http://online.wsj.com/article/SB10001424053111903635604576476430510833852.html

 

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