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This is what Steve Jobs meant when he threatened to go nuclear against Android.
Yesterday, on Halloween, a consortium of companies including Microsoft, Apple, Sony, Ericsson, and BlackBerry filed lawsuits again Android manufacturers such as Samsung, HTC, LG, Huawei, Asustek, and ZTE, as well as other Android manufacturers. All the lawsuits target Google as well, if only indirectly, and one mentions the company by name, saying its core money-maker, Adwords, violates a 1998 patent.
Yesterday, the latest smartphone marketshare reports showed that Google’s Android mobile operating system has attained a record 81 percent share, and that Google’s app store, Google Play, now drives 25 percent more downloads than Apple’s, and is catching up in revenue.
Essentially, having failed to compete in the marketplace, Apple and Microsoft are choosing to compete in the courts.
Apparently, they haven’t learned anything from the recent past, in which Apple won a billion-dollar judgment against Samsung that has since been whittled down, reduced, appealed, and essentially stuck in legal limbo. One tremendous accomplishment of that lawsuit, however, has been that many lawyers have gotten much richer.
The lawsuit stems from over 6,000 patents acquired by Apple, Microsoft, and others from the bankrupt early mobile innovator, Nortel, for $4.5 billion in 2011, and amassed in a holding company that the companies’ executives, in an adolescent fit of testosterone overdosing, dubbed Rockstar Bidco. Google was also bidding for the patent portfolio — it was the first bidder, at $900 million — but lost that battle.
At the time of that bidding war, there were already 45 patent lawsuits against Android in various shapes and forms. Today, there are many more. And Google, probably, knew at that moment that this day was coming.
The Google lawsuit cites United States Patent No. 6,098,065, won by Nortel originally, for “matching search terms with relevant advertising.” In other words, this is not just a fight against Android. Rockstar Bidco — and by extension Apple and Microsoft — are firing directly at the very basis of Google’s existence, its very lifeblood, and the source of all the revenue that enables it to build and give away the world’s best or second-best mobile operating system essentially for free: advertising.
It’s genius, really. Why attack your enemy’s toes when you can go straight for the heart?
And the companies say that by bidding on the Nortel patents, Google was essentially admitting that it was infringing them:
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.
That’s really going too far — the patent portfolio includes many mobile-relevant patents that any company in the space would love to have — but it may play well in court. The Adwords-relevant patent was issued in December, 1998. Google was founded in September of that year, and currently earns $50 billion-plus annually based on technology that, on the surface, appears to infringe the patent.
(Of course, the patent may also be obvious — at least, it is in retrospect.)
The Samsung lawsuit cites seven patents that Rockstar Bidco, and by extension, Apple, Microsoft, Sony, and Ericsson, say Samsung infringes. They include U.S. Patent No. 6,765,591, on virtual private network technology, a user interface patent, and a seemingly impossibly broad U.S. Patent No. 5,838,551, which covers an “Electronic Package Carrying an Electronic Component and Assembly of Mother Board and Electronic Package.”
The lawsuit is extremely comprehensive, citing no fewer than 118 claims of infringement on Samsung’s part, and no fewer than 21 “prayers for relief,” in the somewhat archaic language of the court. Those prayers, which Apple has been offering up fervently for years now, include that Samsung be found guilty of infringement, be forced to pay damages — including triple damages for willful infringement — and either a permanent injunction or a “compulsory ongoing licensing fee.”
Products cited include the Galaxy S III, the Galaxy family of tablets, and others.
In other words, this is likely to be the definitive battle that shapes Android and the future of mobile technology in the U.S. and abroad. Google will likely strike back — every large enterprise has patents that just about every company could be conceivably infringing — and we’ll likely enter a long, protracted, messing, and boring sideshow of legal shenanigans that advance the world of technology not a single bit, but continue to enrich lawyers.
And may, eventually, result in licensing fees on Android that will make the free operating system slightly less free.
Here’s the Google lawsuit:
Here’s the Samsung lawsuit: