Google, Android Makers Sued By Apple “Rockstar” Consortium Over Search, AdWords

Google legalRoughly two years ago Google and a consortium of companies competitively bid for the vast patent portfolio of bankrupt Canadian Company Nortel Networks. Google initiated the bidding with $900 million but ultimately was outbid by the Rockstar consortium, consisting of Microsoft, Apple, Blackberry, Ericsson and Sony.

Google’s final bid was $4.4 billion. Rockstar won the patents for $4.5 billion. Now Google has been sued by Rockstar and two subsidiaries over several of the patents in the former Nortel portfolio: US Patents 6,098,065; 7,236,969; 7,469,245; 7,672,970; 7,895,178; 7,895,183; and 7,933,883.

These patents have broad search and paid-search advertising implications. For example, patent 6,098,065 (filed in February 1997) covers “a system for providing advertisements to a user searching for desired information within a data network.”

At the time of the Nortel patent auction Google’s General Counsel Kent Walker said the following about Google’s motivations for bidding:

[O]ne of a company’s best defenses against [patent] litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services. Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories.

So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the “stalking-horse bid,” which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community—which is integrally involved in projects like Android and Chrome—continue to innovate. In the absence of meaningful reform, we believe it’s the best long-term solution for Google, our users and our partners.

Google’s failure to win the Nortel auction led directly to its acquisition of Motorola Mobility for more than $12 billion. Most of the patents in that portfolio have arguably been neutered through a consent decree with the US FTC as part of its antitrust settlement with the US. However Google may be able to use some of them defensively in this action.

The complaint, filed in the patent plaintiff-friendly US District Court, Eastern District of Texas, is embedded below. It’s difficult to tell much from reading the complaint other than Google and others are allegedly infringing the identified patents. This and related lawsuits include members of Android collective: Samsung, LG, HTC, Huawei, ZTE and ASSUTeK.

Presumably Rockstar sought to negotiate licenses from Google, et al and those negotiations failed. There’s no information about any licensing negotiations that I was able to find.

Google may try to argue that “prior art” invalidates or warrants reconsideration of some or all of the patents in question. For example, OpenText sold search ads in 1996, before the filing of the Nortel patents in question. And, as mentioned, there may be something in the Motorola portfolio that Google can use as a shield.

You may recall that Google was sued over AdWords by Overture (acquired by Yahoo) and ultimately settled the case for under $300 million prior to going public. In retrospect that looks like pocket change. There will likely be some sort of settlement here as well. However the litigation could drag on for years.

At one point in the past Microsoft CEO Steve Ballmer stated that Android wasn’t really “free” because it was and would be subject to licensing fees:

Android has a patent fee. It’s not like Android’s free. You do have to license patents. HTC’s signed a license with us and you’re going to see license fees clearly for Android as well as for Windows.

This lawsuit may be an extension of that strategy.

Related Topics: Channel: Industry | Google: Android | Google: Critics | Google: Legal | Legal: Patents | Top News

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • http://www.v2interactive.net/ Josh Zehtabchi

    Good. A stolen concept and OS from a former Apple board member. Irony? Nah, even more innovation. Not really. I hope Android gets exposed for the ripped off and botchy software it is.

  • gdoan

    This suit strikes at the core of Google’s business, they get over 90% of their profits from adwords and that is what’s being challenged.

  • Evan Parker

    I think the irony is you accusing Google of stolen concepts when Microsoft and Apple were built off of technologies developed by Xerox PARC. You’re certainly entitled to your opinion that Android is botchy, but the fact that the majority of smartphones in the world run Android is, in my mind, a bit more compelling than some random commentator’s opinion.

  • http://www.v2interactive.net/ Josh Zehtabchi

    Of course. I do not want to spark a phone debate, so I will leave it with one more comment: there’s 1 phone provider for the iPhone (Apple). On the contrary, there are over a dozen for Android, HTC, Samsung, etc. Just something to keep in mind with phone statistics.

  • Hugo Pena

    Is it necessary for every comment you post only talk about Google advertising as the core business?

  • Ted_T

    Is he wrong? It is certainly very relevant in this context.

    I have a feeling that the fair settlement here would be dropping the search/advertising claims against Google in exchange for a per device royalty for Android to be paid by Google and the hardware OEMs.

  • ILL TROOPER

    “Microsoft and Apple were built off of technologies developed by Xerox PARC.”

    You’re leaving out that Apple LICENSED that tech from Xerox and developed it into what became the Lisa/Macintosh OS. And Xerox had stopped development of it because they didn’t see a future in it.

  • Robert Mark

    So what?

  • http://www.taurbar.com/ taurbarcom

    Isn’t it true that Google was offered the opportunity to become a part of the Rockstar group during the bidding and they refused?

  • spuy767

    So, comparing Apple’s offerings with the offerings of dozens of Manufacturers as if they are one, is just as irrelevant as comparing its CPU sales to all Manufacturers who use Windows as their OS as if they are one single company. They are not. Compare a single phone to any other single phone, or any manufacturer to any other single manufacturer, and Apple wins the phone wars hands down. This is, of course, despite the fact that Apple doesn’t bother selling no margin phones for the sake of sales. If you compare it to only top tier phones, it decimates the competition.

  • The Cappy

    Seems to me that if that’s 90% of Google’s profits, then it’s their core business. It’s why they give other things away, to expand their core business (it’s why they give other company’s IP away, if you want to be uncharitable about it).

  • SockRolid

    Actually, about 96% of Google’s revenue comes from ads.

  • SockRolid

    Embarrassing, isn’t it. You are Google’s product.
    They’re selling your eyeballs on ads.
    Get. Over. It.

  • Walt French

    The comparison here is about the Intellectual Property that all those many Android manufacturers share in common. The Rockstar suits against OEMs, as I’ve seen reported, are essentially identical.

  • Walt French

    Good luck to Google defending itself against patents that it (apparently) infringed voluntarily, by counter-offensive threats to withhold patents that it pledged to license to any and all on reasonable terms.

    Ditto the OEMs who facilitate the money flow that gives them the OS and the ecosystem without which they’d be toast.

    The suit against Google has yet to be proved. If they’re found to be infringing a patent that predates their existence, it’ll be hard to say that they don’t owe the consortium something equivalent to the value that they would’ve paid for that same bundle of patents — alas, without the rights of enforcing them against others, as they’ve so ineffectually tried with Motorola’s flaccid portfolio.

  • http://www.unitedworx.com Paris Paraskeva

    Free is always more “compelling”

    A company making zero money of a product with 80% market share is a product with a future full of problems

    A company making tons of money of a product with 20% market share is a healthy product with bright future and opportunities to advance technology like crazy!

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