Google has Zero Success for Spending $12.5 Billion
I invest in many companies and sit on boards of directors. I also talk with many entrepreneurs in which my fund does not invest and mentor them. I constantly give the advice that companies are strongest in the long run when they compete fairly in the marketplace rather than using courts as a means to undercut better competitive products. I also advise companies to innovate on their own (rather than simply stealing another company’s good ideas).
Most of all, I tell companies that they should allocate their resources where they get the most return.
Android has been a horribly expensive business for Google. The give the operating system away (no revenues) in hopes that more users of Android devices will result in more sales of mobile ads, but installing adblock is easy on Android, undercutting the whole strategy. Further, three years ago, Google paid $12.5 billion to acquire Motorola Mobility and all of its mobile phone patents. Today, after three years of court battles and untold amounts of legal fees, Foss Patents reports on Google’s lack of success:
Google wasted a ton of money on Motorola’s patents. As of today, it has zero — I repeat, zero — enforceable patent injunctions in place against Apple and Microsoft, after almost three years of litigation. By contrast, Apple and Microsoft have scored a number of real wins against Motorola Mobility.
Remember that advice I give? Companies should allocate their resources where they get the most return. Google allocated $12.5 billion plus all those legal fees for zero return.
Here is the full article in Foss Patents [Link].
TUESDAY, SEPTEMBER 3, 2013
German appeals court lifts Google’s bogus patent injunction over push email against Apple’s iCloud
Google wasted a ton of money on Motorola’s patents. As of today, it haszero — I repeat, zero — enforceable patent injunctions in place against Apple and Microsoft, after almost three years of litigation. By contrast, Apple and Microsoft have scored a number of real wins against Motorola Mobility.
I already mentioned in my previous post (on the Microsoft-Nokia deal)that a spokesman for a German appeals court has confirmed to me that Motorola’s push notification injunction — the only patent injunction Motorola has recently been enforcing against Apple — has been stayed. Shortly before finishing the previous post, I called a spokesman for the Oberlandesgericht Karlsruhe (Karlsruhe Higher Regional Court), who was able to confirm to me officially that this appeals court granted an Apple motion stay the enforcement of the Mannheim Regional Court’s February 2012 injunction.
As soon as Apple posts a bond (a requirement meant to secure Motorola’s ability to collect infringement damages should it, against all odds, prevail at the end of this litigation and, equally unlikely, Apple go bankrupt in the meantime), it can give the push email feature back to all Germany-based iCloud users. No email got lost as a result of Motorola’s enforcement, but as soon as users accessed the iCloud’s email service from within the borders of Germany, the push notifications informing a client device of the arrival of a new message were automaticaly deactivated in order to comply with the injunction. The workaround solution was to configure the email client to periodically check for new email.
In practical terms, this means that German iCloud email users get push notifications back in what I believe is just a matter of days (just a small amount of paperwork). And when all is said and done, the most likely outcome (by far and away) is not going to be that Motorola collects infringement damages from Apple: instead, Apple will (if it prevails on the merits) be able to collect damages from Google’s Motorola for enforcement of an injunction that shouldn’t have been granted in the first place. Google can file this under “Motorola Mobility acquisition costs”.
I wrote in July that “[i]t’s time for Google to stop its trollish enforcement of a bogus patent against Apple in Germany”, considering that the patent had been considered invalid by three different courts. But Google kept on trolling Apple and pointlessly inconveniencing its users regardless of the crystal clear illegitimacy of continued enforcement. Given that Google has publicly complained about “bogus patents”, it should have recognized its error and ceased enforcement. It kept on trolling regardless, but yesterday the Karlsruhe-based appeals court put an end to it. Finally! I got asked all the time (mostly via Twitter) by German Apple users who wanted their push email notifications back.
Motorola had been enforcing this injunction for more than 18 months. Apple was saying from the beginning that Motorola’s push notification patent is invalid, which is also the preliminary position of the Federal Patent Court of Germany. I really respect the Mannheim Regional Court because of its in-depth understanding of patent cases, but when Iattended the related trial in November 2011, I strongly disagreed with the court: I considered this one a very clear case of a patent that is either invalid (if interpreted as broadly as Motorola did) or not infringed. When I heard the presiding judge describe this ridiculous patent, I thought Mannheim was the Eastern District of Texas on steroids. Then the injunction came down because under Germany’s bifurcation regimethere is no such thing as a full invalidity defense in an infringement case, enforcement began in late February 2012, and the following month the Karlsruhe-based appeals court denied a first Apple motion to stay enforcement. It’s relatively difficult to get a German patent injunction stayed by an appeals court (unless the underlying facts change, such as if a new FRAND licensing offer is made, which applies only to standard-essential patents, not this one).
In April, the Karlsruhe court held the appellate hearing (on the merits, not on enforcement), and due to an illness I was unable to attend in person. I heard that the appeals court was inclined to agree with at least one of the four reasons for which a UK court had, further to a declaratory judgment complaint by Microsoft, held the patent invalid, and suggested to Google’s counsel to stipulate to stay, which he initially declined but ultimately felt forced to do. Based on what I heard, Imistakenly thought that push email was going to be reactivated shortly thereafter. I didn’t know that the suggested stipulation to a stay relatedonly to the appellate proceedings, not to the then-ongoingenforcement. I learned that the hurdle is actually lower to get an appeal stayed than to get enforcement stayed — that’s because the German philosophy with respect to injunctive relief is pretty much the opposite of the U.S. approach. In the U.S., the assumption is that the patent holder can usually be made whole through monetary compensation, so if there’s too much doubt, enforcement isn’t allowed. In Germany, the whole idea is that a patent is next to worthless unless you can enforce an injunction, and the victim of premature enforcement of an injunction that isn’t upheld on appeal can always seek damages later. As a result, there’s a higher hurdle (in terms of how convinced a court must be of the likely invalidity of patent-in-suit) for getting the enforcement of an injunction stayed than for getting the appellate proceedings on the merits stayed. I admit that it was a mistake on my part to apply U.S. thinking concerning injunctive relief to a German litigation — well, no one is perfect, and I promise to continue to work hard to provide the most accurate coverage of smartphone patent issues.
Even though Germany’s injunction-friendly rules allowed further enforcement for some time, the right thing for Google to do would have been to cease enforcement under the circumstances. It knew the UK ruling; it knew the Karlsruhe appeals court’s thinking; and shortly after the appellate hearing in the Apple case, the Mannheim court, which had granted the injunction against Apple, stayed a separate Motorola case against Microsoft over doubts concerning the validity of this patent. There was no shortage of guidance that should make a reasonable litigant back down.
The game changer in Apple’s favor was that earlier this summer the Bundespatentgericht (Federal Patent Court of Germany) informed the parties of its preliminary position that this patent is indeed invalid. The Federal Patent Court will hold a nullity (invalidation) hearing in November, and I’m sure that this patent will be declared invalid (which in Germany has retroactive effect). On the basis of the Federal Patent Court’s preliminary position, Apple brought a second motion to stay enforcement, and on Monday (i.e., yesterday) the Karlsruhe Higher Regional Court granted it.
It’s regrettable that Apple even had to bring a motion when everyone knows that this patent is dead in the water. But Google, which speaks out and lobbies against patent trolls all the time, wanted to enforce the only enforceable patent injunction it had. It didn’t want to practice what it preaches.
$12.5 billion is a lot of money to pay for a company acquired primarily for patents when those patents don’t provide its acquirer, at this point, with even a single enforceable injunction anywhere on this planet. Quite clearly, the kind of behavior Google/Motorola showed in connection with the push notifications bogus patent is not the solution to Android’s IP infringement problems. Google needs a better plan than that. And it shouldn’t do things that only cause a hassle to end users. At the end of the day, Apple’s users are also potential (and most of them actual) users of Google’s services.