“Patent lawsuit filed against Android” has become a distressingly familiar headline for Google and its hardware partners. With Microsoft signing license agreements covering more than 50 percent of Android phones, Apple working the courts to block sales of HTC and Samsung devices, and various lawsuits launched by rivals from Oracle to BT, the Android mobile operating system is stumbling through a legal minefield.
It’s fair to complain that the patent system itself is broken, as we’ve done on numerous occasions. Google has publicly bemoaned what it calls “a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents.” But expecting the patent system to change overnight is a “pipe dream,” says Michael Carrier, an antitrust scholar at Rutgers-Camden.
There is basically no way to build a smartphone that doesn’t infringe on someone else’s patents, either knowingly or unknowingly, because there are simply too many of them, intellectual property experts say. What a company must do is prevent any obvious infringements in areas that are essential to the platform’s functionality, and amass a patent portfolio so large that lawsuits can be met with something more than empty words. “Basically it’s all-out war and you come to the war with your stacks of patents, and Google didn’t have as much as the other companies. That’s why it’s being hurt today,” Carrier said.
With Android becoming mainstream before Google amassed enough patents to protect it, the company tried to solve the problem by waving money at it. Google’s attempts to buy the patent portfolio from bankrupt Nortel failed, with a consortium including Apple, Microsoft, and RIM putting together the winning package of $4.5 billion. Stymied, Google decided to buy Motorola Mobility and its portfolio of 17,000 patents worldwide, for a premium price of $12.5 billion.
Mutually assured destruction: the patent Cold War
If Google had prepared for the coming patent storm, “they could have bought themselves a patent portfolio for much less than they paid Motorola,” said New York Law School Professor James Grimmelmann, who wrote “Owning the stack: the legal war to control the smartphone platform” for Ars. The Motorola price tag was “the opposite of a fire sale price,” he said. “It’s the fire extinguisher in the middle of a blazing inferno price.”
The acquisition is still pending regulatory approval in the US and Europe. Assuming it is completed, we’ll find out if it’s enough to help Google fend off Android’s many rivals. While one fantastic patent could theoretically do the trick if it is infringed upon by all of your competitors, it’s much safer to have a well-rounded portfolio that covers all the product’s core functionality, said IP attorney Patrick Patras of Hinshaw & Culbertson LLP in Chicago, who has represented Hitachi and others in patent lawsuits. The Motorola portfolio has at least 18 key patents for Google, covering location services, antenna designs, e-mail transmission, touchscreen motions, application management, and 3G wireless, Bloomberg reported at the time of the Motorola announcement, quoting patent lawyer David Mixon.
“You always hear these analogies about the Cold War and stockpiling all your nuclear weapons,” Patras said. “A lot of times just the sheer volume of patents [is] sufficient to deter someone from filing suit against you. When you have the potential to get a court order that will exclude a competitor’s product from the marketplace, that is a very powerful thing. Apple and Microsoft both had lots of patents that could potentially do that with respect to the Android products. And unless and until Google is in a position where they have patents to raise those same threats, there’s no reason for Apple and Microsoft to back off. They’re either going to get the products excluded or they’re going to get damages and/or royalties going forward.”
Certainly, much of this has already happened, with Google’s hardware partners bearing most of the burden. Microsoft has boasted signing license agreements with the manufacturers of more than half of Android devices by revenue and unit share, including Samsung and HTC. These types of deals, reported to cost manufacturers anywhere from $5 to $15 per device in licensing fees, could drive up the price consumers pay for Android phones. Barnes & Noble claims Microsoft is demanding licensing fees for the Nook tablet that are equal or greater to the cost of the entire Windows Phone operating system.
Rulings go against Android
Even more threatening, perhaps, is the specter of rulings preventing Android phones and tablets from either being sold or using certain types of functionality. Just this week the International Trade Commission gave Microsoft a partial victory in claims that Motorola Android devices infringe on Microsoft patents. In a separate case the ITC ruled that several HTC smartphones infringe on an Apple patent and could be subject to an import ban starting in April 2012, although HTC can work around the ban by removing the feature, which turns phone numbers and addresses into clickable links that can either dial a number or perform a Maps search.
The HTC ruling is actually a positive one for Android, giving phone makers room to adjust software in ways preventing them from infringing on Apple claims, Ron Cass, a former vice-chairman of the ITC, said according to the Financial Times. “If I’m HTC—and particularly if I’m Google—I’m feeling a lot better today than if I’m Apple,” Cass said.
But there are other threats. Oracle is pushing for a January trial in its case against Google, which has dredged up an old e-mail written by Google mobile chief Andy Rubin seemingly acknowledging patent problems related to Android’s use of Java. And British Telecom launched a new lawsuit on Monday of this week claiming Android and numerous other Google services infringe six of its patents. Another indirect threat from Apple involves the iPhone maker transferring patents to a company called Digitude Innovations, an alleged patent troll, which used them to sue various Android phone makers as well as Research in Motion.
Late to the patent game, Google strikes back
Google has gone on the offensive, handing patents over to HTC to help it in cases against Apple. But the key will likely be in Motorola’s patent portfolio, when and if Google officially takes ownership of the company. “None of this will be positive for Android,” Carrier said. “If enough of these lawsuits get through in which Android is found to infringe some of these patents, the question is what could Android do. If they could not design around the patents that could be a problem. My bet is Google is hoping that they can design around all these patents, but certainly the infringement cases are a concern.”
In contrast to Google, Apple came to the smartphone market prepared for the patent war. After introducing the iPhone and its multitouch technology in 2007, the late Apple CEO Steve Jobs said, “And boy, have we patented it.” Apple and Microsoft share a similar approach in patenting technology quickly and frequently, a more common strategy for commercial software than for open source software such as Android, Carrier notes.
But the use of open source software and a smart, defensive patent strategy are not mutually exclusive. Red Hat, in the enterprise server market, has shown that an open source company can publicly oppose the software patent system while building up a portfolio of its own, offering customers indemnification against lawsuits, settling with patent trolls when a fight wouldn’t be worthwhile, and battling aggressively in other lawsuits when core issues are at stake.
The experts we spoke with agreed Google could have taken a page out of Red Hat’s book. But Grimmelman thinks Google’s rush into the smartphone market as an outsider “seeking to get to the front ranks” very quickly afforded it little time to build a defensive portfolio or negotiate cross-licensing deals to head off lawsuits. “In some ways it was kind of inevitable they would have to find a way to deal with the enormous patent space out there,” he said.
17,000 patents may be enough, but damage is already being done
Patras believes the Motorola portfolio will put Google in good stead going forward, even if damage has been done to the Android ecosystem already. As long as Android lacks proper patent protection, Microsoft can demand licensing fees from hardware vendors. With a stronger patent portfolio, Google and partners could negotiate cross-licensing deals that don’t require payments.
“In terms of sheer volume I think it’s enough,” Patras said. “There [are] 17,000 patents, one would think Google ought to be able to find a few in there that would cause Apple and Microsoft some pain. It’s more a question of are they covering all the right areas, are there certain areas that are lacking. They should be in a pretty good place to get a cross-license deal with someone like Microsoft if that’s what they chose to do.”
Smartphones are relatively new, but will likely follow the path of more mature electronics industries, in which “you typically see large cross-licensing agreements between the big players because they’ve all got lots of patents the others are infringing,” Patras said. “They could all sue one another, they could all get injunctions against one another, and then you end up with products that have technology that’s 20 years old, and that’s not in anyone’s best interest.”
Carrier is less certain Google will be able to avoid long-term harm to Android, even with the Motorola portfolio.
“The point of these lawsuits is to raise the price of Android so that it is no longer able to compete,” he said. If Google and partners have to pay licensing fees, or change functionality due to infringement findings, “then all of a sudden Android is not as strong a competitor.”
Carrier has one more scary thought on the litigation front, namely that “it’s just getting started.”
Android plush toy taking a bite out of Apple laihiu/Flickr