Besieged by patent claims, Google is arming to defend itself, and perhaps to enter new markets.
Google cultivates the image of an unconventional company, but the vigor with which it continues to push the envelope of intellectual property law appears to be waning. Its copyright policy of seeking forgiveness rather than asking for permission, exemplified by its book scanning effort, was recently dealt a setback by a New York judge. And having lobbied for years without success for patent law changes, Google is now pursuing a conventional patent strategy: The search giant wants to buy Nortel's patent portfolio in a bankruptcy auction to strengthen its defense against patent infringement claims.
Google on Monday said that Nortel had selected its offer as the "stalking-horse bid," which represents the baseline offer for Nortel's patent assets. Nortel disclosed the amount of the bid: $900 million.
"The patent system should reward those who create the most useful innovations for society, not those who stake bogus claims or file dubious lawsuits," said Google SVP and general counsel Kent Walker in a blog post. "But as things stand today, 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."
If Google possessed such assets, it might have an easier time defending itself against Oracle, which believes Android infringes its Java patents, and might be able to better support its Android partners against the saber-rattling of competitors like Microsoft, which recently sued Barnes & Noble for alleged Android-related patent infringement.
Robert Kunstadt, managing partner of intellectual property law firm R. Kunstadt PC and an opponent of Google's book scanning project, sees Google's bid as a smart way to improve its defense against patent litigation. "If Google can purchase a portfolio covering areas where they haven't been active, it gives them the potential for counter-claims," he said in an interview.
Telephone and wireless technology, Kunstadt said, are areas with significant conflict. The stakes are particularly high, he suggested, because many claims seek to block infringing products from importation through the U.S. International Trade Commission.
As Walker observes in his post, Google is a relatively young company and has not built up a patent portfolio comparable to other tech industry leaders. Patent portfolios offer some degree of protection against patent infringement claims because they provide both a protected path for innovation and litigation deterrence in the form of a potential counter-suit.
IBM is the poster child for armoring itself with patents. In January, IBM said that it had received 5,896 U.S. patents in 2010, the most of any company for the 18th consecutive year. The enterprise computing giant also noted that its patent total was larger than the combined number of patents awarded to EMC, Google, Hewlett-Packard, Microsoft, and Oracle.
Google does not even appear on IFI Patent Intelligence's 2010 list of the top 50 U.S. patent assignees.
As a point of comparison, Apple received 563 patents in 2010, a 94% jump from 2009. Apple's evidently heightened interest in patents highlights the intensity of the patent warfare presently raging in the mobile computing arena.
Nortel's portfolio consists of about 6,000 patents and patent applications covering wireless and wired communication technologies. Whether Google sees Nortel's patents as a way to enter new markets remains to be seen, but the telecom company's portfolio could prove useful with the development of software-defined networking (SDN), which Google is promoting through its participation in the Open Networking Foundation, or with the development of white spaces networking, among other projects. Google says that if its bid is successful, Nortel's patents will help it and the open source community with projects like Android and Chrome.
If Google wins the June 2011 auction and courts in the U.S. and Canada approve, the deal will rank as one of Google's biggest, behind only its purchases of DoubleClick and YouTube, and its 2005 search deal with AOL.
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