patent wars

In Google Patent Case, F.T.C. Set Rules of Engagement for Battles

Yet even as Google made only a few voluntary promises on search, it agreed to a legal settlement on patents that Jon Leibowitz, the commission chairman, called a “landmark enforcement action” that applies to huge high-tech markets like smartphones and tablet computers.

The commission action by no means spells the end of the smartphone patent wars, a global conflict in which major corporations including Apple, Samsung and Google have spent billions amassing patent portfolios and then suing and countersuing one another in courts around the world. But legal experts say Google’s settlement with the F.T.C. signals progress in clarifying the rules of engagement in high-tech patent battles, and thus could ease them.

“The agreement represents a significant stride forward in reducing the confusion and uncertainty that currently surrounds how these patents can be used,” said Colleen Chien, a patent expert at the Santa Clara University School of Law.

The commission’s settlement with Google, announced on Thursday, focused on patents covering communications and data transmission technologies that are crucial for the basic operation of smartphones and tablets — what are known as standard-essential patents. (There are many other patents in mobile devices, covering physical design and software features.) The legal gamesmanship of the epic smartphone patent battles, according to economists and technology experts, consumes time and investment that could be better used to develop new products. In his comments on Thursday, Mr. Leibowitz pointed to those concerns. “Today’s commission action,” he said, “will also relieve companies of some of the costly and inefficient burden of hoarding patents for purely defensive purposes, savings that we hope can be invested in job-creating research and development.”

Under the settlement, Google agreed to license its standard-essential patents to other companies on “fair and reasonable” terms. It also agreed not to seek court injunctions to halt the shipment of smartphones, tablets and other devices that use its standard patents.

The issue arose from Google’s $12.5 billion purchase of Motorola Mobility, announced in 2011 and completed last year. Google acquired Motorola partly to defend itself and the smartphone makers that use its Android software after rivals had already loaded up on patents.

With the acquisition, Google picked up 17,000 patents, including many relating to wireless devices that Motorola, a pioneer in the wireless phone business, had pledged to license on reasonable terms. Those commitments were made to technology standards organizations, intended to assure that basic technical innovations are widely available, stimulating growth in the industry.

Over the years, according to Mr. Leibowitz, companies took Motorola at its word and developed products assuming they could routinely license Motorola’s patents. But Motorola later refused to license its standard-essential patents and sought court injunctions to stop shipment of rival products.

“After Google purchased Motorola,” Mr. Leibowitz said, “it continued these same abusive practices.”

In recent months, the F.T.C. has issued position papers and filed friend-of-the-court briefs, opposing the motions for injunctions using standard patents. The Justice Department and European regulators have echoed the commission’s stance.

“Regulators around the world have become increasingly sensitive to just how important technical standards and standards-setting bodies are to the modern system of economic innovation,” said Josh Lerner, an economist at Harvard Business School.

The threat of court injunctions to stop shipment of products, economists say, is the factor that drives up the cost of patent wars. Because an injunction could be devastating, companies will pay dearly to remove that risk, settling with a plaintiff or spending on patents to build a defensive arsenal.

Some courts have recently resisted granting injunctions based on standard patents. Google’s settlement with the F.T.C., said Carl Shapiro, a former chief economist in the Justice Department’s antitrust division, “helps solidify the move to stop injunctions in standard-essential patent cases, which is great.”

Dr. Shapiro, a professor at the University of California, Berkeley, said that courts had also been more hesitant recently to grant injunctions in cases that did not involve standard patents. In suits involving smartphones and tablets — amalgams of hardware, software and telecommunications technologies covered by many thousands of patents — judges are sometimes less likely to halt the shipment of a device based on a few infringing patents.

Last month, for example, Lucy Koh, a Federal District Court judge in San Jose, Calif., denied Apple’s motion for an injunction against Samsung products. In August, a jury in that court found that Samsung products infringed on a handful of Apple design and software patents, and awarded Apple $1.05 billion in damages.

Judge Koh declined to grant Apple’s motion for injunction, essentially saying that Apple’s claim was outweighed by the public interest in keeping Samsung shipments flowing. Apple is appealing the ruling.

“The courts seem to be moving toward taking a dimmer view of injunctions generally,” Dr. Shapiro said. “That’s a big deal.”

Article source: http://www.nytimes.com/2013/01/05/technology/in-google-patent-case-ftc-set-rules-of-engagement-for-battles.html?partner=rss&emc=rss

Google Bids $900 Million for Nortel Patent Assets

The bid, which could grow even larger in Nortel’s bankruptcy auction, would be the third-largest purchase by Google, smaller only than its payments for YouTube and DoubleClick.

The amount of money involved signals how fierce the patent wars have become, particularly in Silicon Valley, where even the largest and most powerful companies like Google are besieged by dozens of patent infringement suits. It also underscores Google’s frustration with the state of the patent reform legislation in Congress.

Though Google could potentially use some of the technology in the Nortel patents in future research, the company said it wanted to buy them to defend against patent litigation. By building a large portfolio of patents, Google keeps them out of competitors’ hands. It also hopes to dissuade other companies from suing it, either because Google holds similar patents to the ones they might sue over or as deterrence — if you sue me, I will sue you.

“The only reason Google’s spending $900 million is because they feel the risk of those patents being in the hands of someone else — a competitor like Apple or a nonpracticing entity — is much greater than $900 million,” said Daniel B. Ravicher, executive director of the Benjamin N. Cardozo School of Law Public Patent Foundation, which advocates patent reform.

Kent Walker, a senior vice president and general counsel at Google, wrote in a company blog post, that “One of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services.”

Google’s bid also highlights the growing importance of its mobile business. Many of the prominent patent suits in the technology industry involve mobile devices, including Android phones. Nortel’s patents are in wireless and telecommunications technologies, as well as other areas important to Google like Internet search and social networking.

“Google is basically buying legitimacy and buying a foothold in one part of the cellphone market,” said Robert P. Merges, director of the Berkeley Center for Law and Technology at the University of California, Berkeley.

After a confidential bidding process, Nortel chose Google’s offer as the starting point for the auction of 6,000 patents, 2,600 of which are in the United States. Nortel said it expected to hold the auction in June.

The dozens of patent lawsuits that Google is fighting include one from Oracle, which has sued Google for patent infringement related to Java software used on the Android mobile device platform, and another from Paul G. Allen, the Microsoft co-founder, who has sued Google and 10 other companies for infringement. Microsoft and Apple have taken aim at Google’s partners developing Android phones. Microsoft has sued Motorola, Apple has sued HTC, and Motorola and Apple have sued each other, to name only a few of the industry patent suits.

Google also faces lawsuits from aggressive collectors of patents like NTP Inc., which are derisively called patent trolls and sue in the hope of forcing a settlement from a large company but generally do not build products themselves.

Mr. Walker said that the motive behind many of the lawsuits was “a desire to block competing products or profit from the success of a rival’s new technology.”

Google, which has never sued for patent infringement, also said it was at a disadvantage compared with competitors with longer histories and bigger patent portfolios. Google has about 630 patents, according to the United States Patent and Trademark Office, while Apple has around 3,830. Microsoft said it has about 18,000.

Google could also use the Nortel patents to protect its partners, like cellphone manufacturers and developers using open-source Android and Chrome software.

Though Google, which declined to comment beyond its blog post, said that it would continue to push for patent reform, the Nortel bid also indicates that it is unhappy with the state of current patent reform legislation.

Congress has tried to reform the nation’s patent system in the hopes of stemming the tide of lawsuits that technology companies say are clogging the courts. The Senate overwhelming passed a patent overhaul bill last month, and the House is beginning action on a similar bill.

However, some technology companies, including Google, opposed the Senate bill after initially signaling some support. The Coalition for Patent Fairness, a trade group whose members include Google, Apple, Cisco, Dell and others, said that the bill did not do enough to limit damages in patent lawsuits or to address other aspects of patent litigation.

The coalition is hoping that those issues will be addressed in a bill under consideration in the House Judiciary Committee.

By publicly announcing its patent bid, Google indicated that in the meantime, the only logical business decision was to buy patents defensively, said Josh Lerner, a professor at Harvard Business School who covers patent policy in the tech industry.

“The healthy thing to do would be real patent reform, both in terms of the way patents are granted and the way patents are litigated,” he said. “But given that seems to be an impossible dream, I would describe this as second-best.”

Edward Wyatt contributed reporting from Washington.

Article source: http://feeds.nytimes.com/click.phdo?i=4895f912d133ce8566cee31d347d72f5

In Google Patent Case, F.T.C. Set Rules of Engagement for Battles

Google Bids $900 Million for Nortel Patent Assets

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