Oracle wants big cut of Android damages as Google's IP headache gets worse

Oracle wants big cut of Android damages as Google's IP headache gets worse

Summary: Oracle is seeking major damages in its lawsuit against Google over Android in a move that reflects how the search giant's intellectual property headaches may just continue to get worse. Should Google lose this IP battle, Android cuts would go to Oracle and Microsoft.

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Oracle is seeking major damages in its lawsuit against Google over Android in a move that reflects how the search giant's intellectual property headaches may just continue to get worse. Should Google lose this IP battle, Android cuts would go to Oracle and Microsoft.

Florian Mueller highlighted a heavily redacted Google response to a damages argument made by Oracle expert witness Iain Cockburn, a Boston University professor. Cockburn argued that Google would owe unspecified damages if Android was found to infringe on Java.

The actual amount wasn't disclosed, but Google did note that all Android revenue was included in Cockburn's royalty calculation. Oracle also wants Google's ad revenue from Android although Cockburn didn't outline that argument directly. Oracle also argues for a 50 percent royalty rate.

If Oracle wins heavy damages it's likely Google would have to rewrite Android---a big undertaking given the installed base. Mueller wrote:

This lawsuit has the potential to bring about a restructuring of Google's Android business in economic as well as technical terms. Interestingly, Google itself admits that it could have done a license deal with Sun (apparently before it was acquired by Oracle) but rejected its terms. That refusal could now prove one of the worst mistakes in Google's 13-year history as a company.

What are the chances of Oracle squeezing out big damages from Google? The odds are pretty good Oracle will get something out of Google because there will probably be a settlement before a trial. Oracle's lawyers play hardball. Look no farther than the damages Oracle won vs. SAP in the TomorrowNow lawsuit. Few saw $1.3 billion in damages coming. At the moment, Google and Oracle are haggling over how to narrow the scope of the trial.

If we zoom out farther, it's clear why Google is bidding for Nortel's patents. The search giant has little IP defense. Citi analyst Walter Pritchard touched on this point in a big report on Microsoft's tablet chances. He estimated that Microsoft gets $5 for every HTC Android device sold. Other Android OEMs may wind up paying anywhere from $7.50 to $12. If you toss in potential Oracle damages Android will be an operating system that's free in name only.

Key excerpts from Pritchard's report:

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...

Considering that Oracle is not suing to gain competitive advantage in the market for a competing smartphone product, we believe Oracle must believe it has strong chances of winning, otherwise it would not have filed the lawsuit...

Google may indemnify its OEMs and instead decide to fight the other legal action more directly itself, thereby drawing out the proceedings. On the other hand, the OEMs may choose to settle on as favorable of terms as possible, noting that HTC settled for what we believe to be $5 per unit versus what Microsoft is asking of others (we believe $7.50 to $12.50). If the outcome is a significant settlement, it is likely a non-trivial per unit license settlement (like happened with HTC). If this is the case, this per unit settlement comes directly out of the OEM’s profit margin on each device. Our Taiwan-based colleague Kevin Chiang believes the operating margins per Android smartphone is the 10-15% range while the operating margins on Android tablets is 2-3%. The result of a settlement would be significantly inferior economics for the manufacture of Android-based devices.

Pritchard's bottom line was that these Android IP concerns open the door for Windows Phone 7 or other alternatives.

Related: Oracle vs. Google over Java: Android lawsuits may begin to pile up

Public Version of Google Filing Re. Oracle Damages

Topics: Mobile OS, Enterprise Software, Google, Hardware, Legal, Mobility, Oracle, Smartphones

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170 comments
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  • Google not looking so wonderful lately.

    Taking someone's IP is "doing evil". Google has managed to dodge the IP bullet for years, I don't think they will dodge this one.
    NoAxToGrind
    • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

      @NoAxToGrind
      I am so torn. I spent more than a decade decrying MS for their predatory monopoly which stifled innovation.

      Now Google's disruptive approach to software -- basically using the television/radio paradigm instead of the merchant paradigm -- has allowed them to innovate in all kinds of wonderful ways. But they are just so darned evil in that they are, at the end of the day, essentially just a spyware company. I prefer the MS model (let me buy something and then it's mine) to the Google model (I'm not even telling you what this is really gonna cost you, mwah ha ha ha ha). But then there was the stagnation we had under the former...

      Why is it that the profit motive is so darned destructive? Why can't Mozilla get their app store off the ground and release a phone OS as awesome as Firefox? *That* I would use, if only on principal!

      Oh well.
      x I'm tc
      • A phone OS that looks crappy, and has 18,000 questionable plug ins?

        @jdakula And which runs heavier than any other OS there is? Yeah, no thanks on that one.
        Mac_PC_FenceSitter
      • Message has been deleted.

        dhays
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @jdakula Find me any huge company that started out nice and stayed that way. It's called Capitalism and it has some drawbacks for sure! ALL companies are in business to MAKE MONEY....so bad behavior is sadly expected (and even worse - it's tolerated)....and I suspect this gets worse as the company gets bigger (whether by intent or inherent communication issues that arise as the company expands rapidly).
        ColdFusion_z
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @jdakula
        '
        Well put. I trust Google as much as I'd trust a crack addict babysitting my child. Google makes everything look great on the surface but underneath is where the evil lurks.

        I hope Oracle stomps google in court!
        Rob.sharp
      • You may be onto something

        @jdakula

        They have different approaches to the same goal - money.

        But you may have hit on something - Google believing they are so loved and "innovative", that poeple would overlook how they got to where they are.

        Sometimes other companies can have innovative ideas, just not the patents to put them into place, so they don't.

        Google's way around this was the wrong way, it looks like.
        Will Pharaoh
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @jdakula

        "MS model (let me buy something and then it's mine)"

        Actually you didn't buy it, read the licence.
        roaming
      • Follow the money...

        @jdakula
        1.) It takes money to create anything. Even if it's paying a bunch of programmers to write code. Especially if you want it to look GOOD.

        2.) Mozilla, in spite of giving Firefox and Thunderbird away actually DO make money. They're paid by the folks at Google to install Google as the default search engine in every copy of FF.

        Given points 1 and 2, how do you think Google would react if Mozilla would suddenly decide to jump into the phone OS arena with anything credible?

        Where else do you think Mozilla could get funding to build a proper phone OS? Microsoft? Nah. They're having enough problems of their own getting their WP7 off the ground. The last thing they'd need is competition. Apple maybe? Nah. They've got iOS - and they don't need the distraction. Google - same reason as Apple - no dice. Oracle? Eh.. Maybe. But what would Oracle get out of it?
        Wolfie2K3
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @jdakula
        There is an interesting correlation here.
        Oracle = Apple. One in the enterprise one in the consumner market. Both huge, cash rich giants with nothing better to do than sue everyone in sight to either put them out of business or stop the product/innovation or whatever in its tracks. Google may be big & the aruguments over the code will go on for years. Ther only reason it is an issue is because Google is a large enough company to make it worthwhile sueing them. The only losers in all this are the companies and individuals buying the products. What ever the rights and wrongs the there is only one winer with current practive of large companies sueing everyone...... parasitic lawyers.
        markpenny
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @jdakula ... "I prefer the MS model (let me buy something and then it's mine)"
        No, it's definitely NOT yours. All you have is a license to use anything from MS, and a very restrictive one at that unless it happens to be a freebie fix for a bug. You never "own" the software.
        tom@...
      • Buy from Microsoft and ut is YOURS???

        @jdakula You cannot BUY anything from Microsoft --- read the license! Virtually NO software is yours from any vendor, you purchase a License to use. PERIOD!
        bob@...
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @jdakula I don't see Google as evil at all. I think you are MASSIVELY overstating that.
        blueskip
    • Harumph

      @NoAxToGrind Hard to call it evil when Oracle's ancestor jumped up and down promoting Java as both "open" and "open source." To this day, Java is under the GPL. Android is under the Apache license.

      While there is certainly a legal question about their compatibility, there's certainly no moral dimension, and certainly no nonsense about "doing evil" at play.

      Oracle, through its acquisition, open sourced Java. They shouldn't complain that they were taken at their word.
      Mac_PC_FenceSitter
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @rbethell

        Oracle is very evil. The action is complete unethical. This is a company with a legacy of suing American companies out of existence. The phone market in the US is already crippled. The only thing at stake here is whether you'll be able to buy an Android device at AT&T. The entire rest of the world thinks this is reprehensible BS and they're right. If Oracle wins, I guess I'll just have to go back to buying my phones when I pass through Taipei.
        tkejlboom
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @rbethell
        And yet you forget java is both open and close source. Oracle can not do anything about open JDK and that isn't what they're going after . . .
        mgaul
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @rbethell That's exactly right. Everyone posting here and the author of this article are living in the M$ sue happy world of yesterday along with Ellison and Oracle. Oracle will realize soon enough that open source means just that. It's more than high time a company like Google rammed that up their butt. I'm sick to my butt of hearing the whining "they don't have IP defense". What-ever...

        "The entire rest of the world thinks this is reprehensible BS and they're right." I agree.
        blueskip
    • No. Software patents are.

      @NoAxToGrind I don't really think the patents in question should have been granted in the first place... A software patent on the idea of a virtual machine is just inane because it's an obvious idea. <br><br>The fact is Sun and Oracle both had mechanisms to gain license to the patents for 0 royalties which they renegged on in a cash grab. Why wasn't apache granted a license to the testing suite in order to gain license to the patents? Because if a free software organization gains access to that IP (as promised by the license and the terms of joining the Java consortium) it becomes free. The evil thing is the fact that Oracle went back on its word and is essentially taking advantage of the Java community by rescinding agreements it had for communal development when it suits Oracle.
      snoop0x7b
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @snoop0x7b

        Obvious idea, prior art, failure to product, open source development. Oracle FAILS on all points. Oracle is a TROLL.
        tkejlboom
      • RE: Oracle wants big cut of Android damages as Google's IP headache gets worse

        @snoop0x7b And there is prior art back to the late 70's and early 80's
        mrlinux