Understanding Patent Lawsuits: Why Google Bid $900m On Nortel's Carrion

Posted: Apr 4 2011, 2:59pm CDT | by , Updated: Apr 4 2011, 3:15pm CDT, in News | Technology News

Understanding Patent Lawsuits: Why Google Bid $900 on Nortel's Carrion

Sometimes selling out makes sense.

Today, Google announced their bid of $900 million on the remaining patent portfolio of the dying Nortel Networks. If the deal goes through, Google will find themselves armed with an additional 6,000 patents.

What the Hell is a Patent?

The grand high arbitor of truth, Wikipedia, defines a patent as "a set of exclusive rights" granted to an inventor for a "limited period of time". In practice, patents are granted to corporations for vague ideas about product features, forever. Patent lawsuits represent a sort of international trade language, a way for major corporations to work out their disagreements.

In theory, a patent must both NOVEL and NON-OBVIOUS. What those two terms mean is largely dependent upon the skill of one's lawyers.

A Fun Example:

H-W Technology recently sued Apple, Google, Motorola and pretty much every other tech company in the world for violating US Patent 7,525,955. Said patent involves an "Internet protocol (IP) phone with search and advertising capability." (a smartphone) that allows users to "receive information and offers from merchants and to complete a transaction with one of said merchants without having to generate a voice call." (that lets you order things from the Internet).

If that sounds obvious to you...you probably don't work as a patent clerk. The application was filed in 2005 and granted in 2009. Why H-W waited the additional two years to sue is anyone's guess.

Why Google is Pissed:

"Wildcard" suits like the one above involve one small, greedy company poking at fat wealth-sacks and hoping for a quick settlement. Things get more serious when a huge, greedy company decides to lawyer down. Open Source products are particularly vulnerable to IP Vampires. At least 38 Android patent lawsuits have been filed since March 2010. Microsoft recently alleged that Linux violates some 200 patents. They claim that the high quality of open source applications hinges largely on intellectual property theft.

Since Android operates on the Linux kernel, this puts them at risk for some very expensive lawsuits. We're talking Billions, with emphasis on that capital B. While Microsoft has been so far content to poke Google partners, like Barnes & Noble, a future legal clash seems inevitable. Even if Microsoft takes their sweet time, Google will still have the Oracle suit to deal with.

Oracle currently claims that Google violated seven patents in the making and distribution of Android.

Nortel is selling an Arsenal:

As noted in their blog entry, Google is a young company. They haven't had decades to build up a gigantic stockpile of defensive (and offensive) patents. This Nortel acquisition represents their best chance to avoid potentially billions in losses. It's hard to blame Google for taking an action so clearly in their best interest. But it's also hard to see how this move will do anything but perpetuate the madness of our current patent system. It's hard to see how the current legal climate does anything but stifle innovation.

James Gosling, considered by some to be the father of Java is even on record as saying, "There was even an unofficial competition to see who could get the goofiest patent through the system." during his time at Sun. The actual legitimacy of the patent doesn't matter, so much as the fact that it exists and that the company in question has enough money to defend it.

Is Google a Sell-Out or a Survivalist?

While Google has been a long-time supporter of the stalled Patent Reform Bill, their recent behavior can't help but reinforce the status quo. Google will be one more company with a major investment in keeping patent laws where they are. Google had this to say about Microsoft's recent Barnes & Noble lawsuit:

"Sweeping software patent claims...threaten innovation".

They see this $900 million bid as a move to protect their own innovations from IP vampires. If Google sticks to their guns and refuses to file any "sweeping" claims, we can consider them true to their words. But if they counter-sue, well...at least we'll have ringside seats for one hell of a legal fracas.

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The Author

<a href="/latest_stories/all/all/5" rel="author">Robert Evans</a>
The excitement about new smartphones, tablets and anything mobile drive Robert to unearth the latest rumors and developments in this fast moving space. He adopted 4G as soon as it become available and knows where the mobile market is going.
Robert can be contacted directly at robert@i4u.com.




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