How dominant can Google's Android operating system become? Dominant enough for almost an entire industry of rivals to play a $4.5 billion game of patent keep away. Now it's time to rev up the lawsuits.
Last week, a consortium that included Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony won 6,000 Nortel patents for a cool $4.5 billion. Google had started the bidding with a $900 million stalking horse bid, reportedly got cute with Pi-related offers and lost its best chance to defend Android in the courtroom. Nortel's patents are one swell swan song for the bankrupt telecom equipment provider that has already been split up and sold in chunks.
Few parties involved in the consortium are talking, but Android must be a real pain for Apple, Microsoft and RIM to all team up against Google. RIM chipped in $770 million and Ericsson added another $340 million to the winning patent bid. The remaining splits are unknown, but Robert X Cringely reported that Apple put up $2 billion for Long Term Evolution (LTE) 4G patents with Microsoft and Sony added $1 billion. Microsoft is staying mum about its role.
The odd thing here is that Google initially said it was bidding on Nortel's patents to defend against lawsuits. Apparently, Google thinks it can get better returns on $4.5 billion by paying lawyers to defend Android.
So what's next? Lawsuits. Lots of them.
As previously noted, Citigroup analyst Walter Pritchard reckons that Google has little intellectual property to defend Android. He said:
Google appears to have very little IP to defend itself with. The general protocol when a defendant is faced with an IP infringement accusation is to “retaliate” with infringement counterclaims and ultimately force some sort of cross licensing or other détente instead of entering a prolonged and costly legal proceeding that may result in a costly or disruptive settlement. Without significant IP of its own, Google is not likely to be able to deploy this defense…
Cringely said that it's likely that Google will file lawsuits over the $4.5 billion winning bid with an antitrust and restraint of trade complaint. The search giant will juggle any upcoming suit with its ongoing battle with Oracle over Android.
But the real battle royale will come as the consortium moves to sue Google over Android. If Oracle vs. Google is notable just wait until Apple sues over Android. For its part, Microsoft is already busy collecting royalties over Android. Florian Mueller recaps Microsoft's licensing deals with Android device makers.
Google wasn't going to cure all of its Android IP problems with Nortel's patents, but it would have acquired one nice line of defense. Losing Nortel's patents---even at the ridiculous $4.5 billion price tag---may come back to haunt Google and Android.