Android's ascent hinges on patents

Peter Burrows and Dina Bass
BusinessWeek
Android, the mobile operating system from Google, has been on a tear over the past two years. Its share of the smartphone market rocketed from less than 3 percent to 48 percent during that time, according to research firm Canalys. Some analysts even think Android could one day be as dominant in mobile as Microsoft was on desktops in the 1990s.
 
Yet there’s one thing that may stop, or at least slow, Android’s ascent: patent fights. Google and HTC, Motorola, and Samsung, the three largest manufacturers of Android handsets, have each been hit with lawsuits claiming their mobile software violates others’ patents. To some extent, this is normal. Silicon Valley powerhouses have long wielded their patent portfolios to extract concessions from rivals. But Google, with fewer patents of its own and lots of enemies, is in a uniquely poor position. “This is an arms race,” says Christopher Marlett, chief executive of investment bank MDB Capital Group. “Other companies have more bombs than Google—and they’re not afraid to use them.”
 
An abbreviated list of the ongoing litigation: Oracle is demanding the search giant pay $6 billion for using its Java mobile software. Apple has sued Taiwan-based HTC for violating its patents, and on July 15 a judge found in favor of the iPhone maker, which could result in a American import ban on certain HTC phones. In a similar suit in Australia, Samsung agreed on Aug. 1 not to import a version of its iPad-like Galaxy Tab. In a company blog post on Aug. 3, David Drummond, Google’s chief legal officer, called these suits “a hostile, organized campaign against Android … waged through bogus patents.”
 
Patent lawsuits are often predictable. Company A sues Company B for copying an invention or proprietary technology. Company B digs through its own patent hoard, finds one it can accuse Company A of violating, and countersues. The two parties end up signing cross-licensing agreements that give the companies the rights to each other’s patents.
 
Google, a relative tech newcomer, has had less time to stockpile patents—especially in the mobile world, which it didn’t enter until 2008. And experts say that Google has historically treated patents and royalties as an afterthought. Like many young companies, “they have an attitude of, ‘Let’s generate revenue first and ask questions later,’ ” says Joseph Siino, chief IP officer for patent consulting firm Pendrell. According to MDB, Google has applied for or received a total of 307 mobile-related patents, compared with 3,134 for Research In Motion, 2,655 for Nokia, and 2,594 for Microsoft.

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