Update of the Oracle vs. Google's Android operating system patent infringement dispute

The Oracle vs. Google patent infringement dispute has been in the news a lot this year, however this week's testimonies in court are creating quite the buzz.

If you haven’t heard about the patent licensing dispute here’s the disagreement in a nutshell: Google is being sued by Oracle for copyright violation and patent infringement. Oracle-owned Java, an open-source programming language, is used in the Google-owned Android mobile operating system. 

Android’s founder, Andy Rubin, appeared in the witness stand today to address the alleged patent infringement. 

Below is an article by Karen Gullo of the Washington Post April 24, 2012.

Google’s Schmidt testifies in Oracle intellectual property suit

April 24 (Bloomberg) -- Google Inc. Chairman Eric Schmidt testified that his company developed the Android operating system using the Java programming language after partnership talks with Sun Microsystems Inc. fell through and Sun made no demand for a license to use Java.

Sun sought $30 million to $50 million and tight control over Java’s use for Android, Schmidt told jurors today in federal court in San Francisco during Oracle Corp.’s trial against Google. When deal negotiations fell through in 2006, Google built the Android software for mobile devices without infringing on Sun’s intellectual property, he said.

Schmidt said that based on his understanding of Sun’s licensing requirements for Java, Google’s use of the programming language in Android without a license was “permissible” and “legally correct.” He said Sun Chief Executive Officer Jonathan Schwartz never asked the search engine operator to take a license.

Oracle acquired Java as part of its 2010 takeover of Sun. Yesterday, Oracle showed e-mails to the jury to bolster claims that Google executives knew the company needed a license to use the language to develop Android.

Schmidt is a former chief technical officer at Sun and was the primary executive in charge of Java.

The copyright phase of the trial, which began last week, is coming to a close, lawyers for both sides said yesterday. The next phases of the eight-week trial will be patent claims and damage claims.

The case is Oracle America Inc. v. Google Inc., 10-03561, U.S. District Court, Northern District of California (San Francisco).

Patent Litigation Risk Drives Microsoft to Move European Distribution Center

The patent litigation war between Motorola and Microsoft has not only been widely publicized, but become global. Microsoft is being sued in Germany by Motorola Mobility (a company Google is in the process of acquiring for $12.5 billion) over patents that are allegedly essential to the ubiquitous H.264 video codec standard. Below is an article published by PC World written by Loek Essers 4/2/12. 

Microsoft is moving its European distribution center from Germany to the Netherlands due to ongoing patent litigation, a company 

 spokesman confirmed Monday. 

The move is prompted by a lawsuit filed by Motorola against Microsoft over the H.264 video standard. “The problem is that Motorola isn’t living up to its promises about its patents,” Microsoft spokesman Thomas Baumgarter said. 

Microsoft uses the H.264 standard in Windows 7 and the Xbox, among other products. A ruling favorable to Motorola by the court in Mannheim, Germany, on April 17 could mean injunctions against Microsoft products in Germany, effectively excluding the company from that market.

That is the main reason for the move, which the company decided to undertake more than a month ago, according to Baumgärtner. "I would call it a prudent move," he said.

Baumgärtner said he did not know where the Dutch distribution center will be located.

Motorola recently refused a $300 million bond offer from Microsoft to postpone enforcement of potential German injunctions. That is why Microsoft asked the U.S. District Court for the Western District of Washington for a temporary restraining order and a preliminary injunction preventing Motorola from enforcing any legal victory in its case, which is being heard in Mannheim, until a U.S. lawsuit over the same patent is decided.

Both court cases involve standard-essential patents, which must be licensed under so-called fair, reasonable, and nondiscriminatory (FRAND) terms. To compete in the market, technology companies have to use standardized technologies such as the H.264 codec. And if they do, they automatically infringe on those patents. That is why the FRAND system exits. Holders of standard-essential patents are required by the standard-setting organizations that adopt their patented technologies to license those technologies to other companies for a reasonable price. In its recent court filing, Microsoft called Motorola's proposal "the antithesis of reasonable."

According to patent expert Florian Mueller, the German legal system lends itself to abuse of standard-essential patents. Germany's statutory law grants injunctions to any patent holder that wins a court case, he said in a blog post. He also said that patent plaintiffs benefit from what is known as the Orange Book Standard, "which allows the owners of such patents to make even extortionate demands because an injunction is denied only if the implementer of a standard makes an offer that is so lucrative that its refusal constitutes an antitrust violation," Mueller wrote.

Microsoft's Baumgärtner praised its long-term partnership with Arvato, a Bertelsmann subsidiary that was operating Microsoft's distribution business in Europe. According to Microsoft the decision to move the distribution center was due entirely to patent litigation in Germany. Arvato declined to comment.

Apple Inc, the biggest U.S. company by market value, told it can't pursue bankrupt Kodak

Eastman Kodak Co., was once the photography giant of its time, but now it is facing bankruptcy. A judge recently told Apple Inc., it couldn't pursue patent infringement litigation against Kodak at this time. Apple, who is the computer giant of its time, fears the patent in litigation might be sold during Kodak's bankruptcy before an ownership dispute is resolved.

Below is an article posted by Reuters 3/8/12 by Nick Brown.

U.S. Bankruptcy Judge Allan Gropper, who oversees Kodak's Chapter 11 case, said at a Thursday hearing it would be an "inappropriate way forward" to allow Apple to continue pursuing claims against Kodak while the company is in bankruptcy. The infringement claims center on a Kodak patent that lets consumers preview digital photographs on LCD screens.

Judge Gropper also denied Apple's request to file a new patent infringement lawsuit against Kodak over printer and digital camera patents.

A Kodak spokeswoman said the company was "pleased" with the judge's ruling.

Apple in February had asked the court for permission to lift a stay freezing a patent lawsuit pending in a federal court in Kodak's hometown of Rochester, New York. Apple had hoped to move the case to Manhattan for a jury trial.

But while Gropper denied that request, he agreed that the case needs to be resolved sooner rather than later, and in a way that does not interfere with Kodak's ongoing plans to sell its patent portfolio and emerge from bankruptcy.

"I would request that the parties report to me on their efforts to come up with a procedure that truly works," he said.

Kodak had accused Apple of trying to slow the patent sale process, which it must undertake by the end of June under the terms of a $950 million loan keeping it afloat through bankruptcy.

Apple had also sought to bring new patent infringement claims against Kodak, but Gropper nixed that effort under a federal rule designed to shield bankrupt entities from litigation that might constitute "creditor harassment."

Apple had argued that patent litigation has been a major part of Kodak's strategy.

"I'm sure they have no problem moving ahead with the lawsuits where they're the complainants," Apple lawyer David Seligman told the judge.

The bankruptcy case is In re: Eastman Kodak Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.

‘Do Not Track’ button — what it will and won’t do

This weeks big intellectual property news is the announcement that a coalition of Internet giants including Google, Apple and Microsoft have agreed to support a do-not-track button to be embedded in most Web browsers. The White House is calling for Congress to pass a "privacy bill of rights," in an effort to give people greater control over what personal data is collected about them. Below is an article by The Washington Post with Bloomberg Business by Hayley Tsukayama 2/23/2012. 

Alongside the news that the White House will announce voluntary privacy guidelines for Web companies comes the announcement from major online advertisers that they will implement “do not track” technology into Web browsers.

But “do not track” buttons have been a mixed bag in the past because while they have let advertisers know that users don’t want to be followed across the Web, not all advertisers had agreed to abide by the request. The new agreement from online advertisers appears to give consumer requests a little more oomph.

According to The Wall Street Journal, the 400 companies in the Digital Advertising Alliance have agreed not to use data from consumers who don’t want to be tracked to customize ads or to use the data for certain purposes such as employment, health care or insurance. They will, however, still use information from these consumers for market research. 

In a blog post, Consumer Reports pointed out that the “do not track” technology won’t protect consumers when, for example, they are signed into Google services if they have not opted out of having Google track their Web history. The same is true for social networks such as Facebook, if signed-in users choose to tell the service that they “Like” a product or use their Facebook log-in to connect to another site.

The settings that allow consumers to tell advertisers that they do not want to be tracked are already in Mozilla’s Firefox browser and Microsoft’s Internet Explorer browser. Apple has said that it’s working on incorporating the technology into its next build of Safari. Thursday’s announcement confirms that Google will put the button into its Chrome browser.

Google Chrome is currently the fastest-growing browser on the market and has overtaken Mozilla’s Firefox browser in global market share while eating away at Internet Explorer’s leading position.

Kellogg to buy snack maker Pringles for $2.7bn

   Kellogg Co. agreed to swallow Pringles potato chips for $2.7 billion in a cash deal that makes the cereal company second only to PepsiCo Inc in the global snack food market.

   Adding Pringles will nearly triple the size of Kellogg's international snack business, pushing snacks to a point where they will account for as much of total revenue as Kellogg's well-known cereal business -- the world's largest, with brands like Special K and Rice Krispies.  

According to a Time Business article by the Associated Press 2/15/2012  

NEW YORK — Kellogg has popped up to buy the Pringles chip brand from Procter & Gamble for $2.7 billion after a similar deal with Diamond Foods was derailed by accounting problems and an executive shakeup at Diamond.
     The addition will help Kellogg with its goal of becoming as big globally in snacks as it is in cereal. The Pringles business will add to Kellogg’s stable of snack brands that include Keebler, Cheez-It and Special K Cracker Chips.

     Troubled snack food company Diamond Foods and P&G on Wednesday said they called off their $1.5 billion deal for the brand.

     “Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company,” Kellogg President and CEO John Bryant said in a statement.

     Kellogg’s stock added $1.70, or 3.4 percent, to $52 in premarket trading. Diamond’s shares gained 88cents, or 3.9 percent, to $23.18, while Procter & Gamble Co.’s stock climbed 8 cents to $64.56.

     Kellogg was able to swoop in and make the Pringles deal happen because Diamond Foods Inc., which makes Emerald Nuts and Pop Secret popcorn, and Procter & Gamble have mutually agreed to end their proposed deal.

    Kellogg said that its debt is likely to increase by about $2 billion and that it will limit stock buybacks for about two years to allow the company to reduce its debt.

   Procter & Gamble expects an after-tax gain of $1.4 billion to $1.5 billion, or about 47 cents to 50 cents per share, from the deal with Kellogg.

  Speculation had been growing over the past few days that Diamond’s proposed acquisition of Pringles was in trouble, particularly after the San Francisco company announced a week ago that it was replacing its CEO and CFO following an internal investigation that found that the Diamond improperly accounted for payments to walnut growers. The company now needs to restate two years of financial results.

  After those announcements, Diamond’s stock slid, which hurt its ability to finance the Pringles’ deal. 

  Diamond Foods’ proposed buyout of Pringles was worth $1.5 billion when it was announced in April. It would have been the company’s biggest acquisition ever and made it the second-largest snack maker in the nation behind PepsiCo Inc.

  Last week, Cincinnati-based Procter & Gamble said it was evaluating the deal and keeping all options open, even stating that Pringles had “attracted considerable interest from other outside parties.”

  No breakup or other fees will be paid tied to the Diamond deal. Industry experts had believed that Diamond would possibly have to pay a $60 million breakup fee to Procter & Gamble and potentially up to $6 million in related costs.

  Kellogg expects to complete the Pringles acquisition during the summer, possibly on June 30. If the deal closes around that time, Kellogg anticipates that the acquisition will add about 8 to 10 cents per share to its 2012 earnings before accounting for the acquisition and one-time costs and changes to its buyback program. 

   One-time costs are expected to be between $160 million and $180 million, with approximately $70 million to $90 million of those costs likely to be recognized in 2012.

   Procter & Gamble said that it now expects fiscal 2012 earnings of $3.30 to $3.43 per share, which excludes the gain from the Pringles sale. If the sale closes in the current fiscal year, the company foresees earnings between $3.77 and $3.93 per share. This includes the one-time gain of 47 cents to 50 cents per share.

   Procter & Gamble said that its previous earnings outlook of $3.85 to $4.08 per share included an estimated 55 cents to 65 cents per share one-time gain from the Diamond Foods deal. Analysts surveyed by FactSet predict earnings of $4.06 per share for the year.

  Pringles generate annual sales of about $1.5bn

 

Will Facebook's IPO Change Social Media?

The world of intellectual property is constantly changing and Facebook is no exception. Facebook, one of the world's most widely anticipated IPOs, or initial public offerings of stock, filed papers this week to raise at least $5 billion and begin to sell stock this spring. 

Analysts said that this offering will change the Internet sector, creating what will be one of the world's most valuable Internet companies. "Will Facebook's IPO be the biggest IPO in American history? Probably not," said David Kirkpatrick, author of "The Facebook Effect." "But it will certainly be, by far, the biggest Internet or technology IPO we've ever seen." 

The intellectual property community is anxiously watching what will happen with Facebook. Mark Zuckerberg, Facebook's CEO, in a letter accompanied the filing said, "There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future."

The big question is, will Facebook's IPO change social media? Below is a Huffington Post article addressing this question written by Daniel Burrus 2/7/12.  

Facebook's IPO may well be the biggest and most hyped IPO ever... and for good reason. Many people would have liked to have bought Google or Apple when they first went public, but they didn't and are now kicking themselves for it. Unfortunately, you can't go back and undo the past.

With Facebook's rapid growth and social media dominance, all the people who regret not making those two moves in the past are going to want to buy Facebook. Additionally, all the people who are excited about social media and see it as a key part of the future are going to want to own part of Facebook too.

Realize, though, that when Facebook or any company goes public, the game automatically changes. Now the company has to be looking at quarterly earnings, managing short-term profitability, and deciding how they can generate new revenue -- all things they didn't have to do before they went public. For Facebook, this means an increasing focus on revenue generation through advertising and 

other means.

The biggest problem is that these changes will interfere with the user interface. As I see it, Facebook has two options:

1) Facebook can change, once again, their privacy policy to allow them to be more intrusive. They've already changed their privacy policy several times to create new revenue streams from their users and their users' behavior. And it has usually resulted in some strong backlash.

2) Facebook could allow more advertising on the site, but that interferes with the experience of being online with your friends and the conversations taking place. Again, the possibility of backlash is real.

Facebook needs to be careful here. While it's true that Facebook is the leading social networking site, let's remember that before Facebook, MySpace was the leader. So does that mean that Facebook, with their millions of users and market dominance, is forever the leader? No. Nothing is guaranteed.

For example, throughout the 1990s, Yahoo! was the leader of search until a couple of young guys founded a company called Google and did some major technology changes regarding search. In fact, history is littered with companies that were the category leader and got displaced, even when they had full and total dominance. So although Facebook is very big and has dominance, its future is not guaranteed. To stay on top, they are going to have to continue to do rapid innovation.

Facebook has done a good job with innovation, but they have some challenges ahead due to massive technological transformation happening over the next five years. Because of processing power, bandwidth, and storage all going through exponential changes, giving us super-computing capabilities on our phones and 3D experiences on our smart devices, we will be transforming how we sell, market, communicate, collaborate, innovate, train, share, and network with each other, in a very short period of time.

That means that for Facebook to stay the leader, it's going to have to rapidly evolve... and in the right direction, because it's always easier to take a wrong turn. So the key for Facebook is to realize that any IPO creates new internal rules, processes, and focuses for a company, but Facebook can't let those things bog them down. There's massive transformation ahead. Facebook must stay ahead of the game to remain the market leader.

Startup Q&A: IP Street looks to bring clarity to patents

Startup Q&A: IP Street looks to bring clarity to patents

TechFlash, Anthony James, January 4, 2012

http://www.techflash.com/seattle/2011/12/startup-qa-ip-street-looks-to-bring.html

In the tech world, 2011 might be remembered as the year of intellectual property. Numerous cases have shown how valuable patents can be, but one Spokane-based startup is looking to bring clarity to IP.

IP Street was launched in August by three co-founders: Spokane attorney Lewis Lee, former Red Lion Hotels CEO Art Coffey and former U.S. Rep. Rick White.

“We saw this large asset class that nobody was talking about and we all had different ideas,” Lee said. “We came at it from three different angles, started talking about it and formed the company.”

IP Street Co-founder and CEO Lewis Lee

IP Street aims to answer questions for inventors, executives, IP attorneys and anyone else interested in intellectual property. Lee said IP Street wants to help answer questions such as, “Is my idea patentable?” “Who may want to buy my patents?” and “Is anyone infringing upon my patents?”

“We initially targeted the high-value firms and legal teams. But with IP Street, we’re trying to analyze complex IP issues,” Lee said. “People who may not be steeped IP experts can come out with valuable information.”

The idea is catching on – early IP Street clients have included Amazon.com, T-Mobile USA and the Washington State University Research Foundation.

Lee compared IP Street to the founding of the Dow Jones Industrial Average by Charles Dow in 1896

“We liken it to the stock market (indices) – early on it was difficult to quantify prices before a system was in place,” he said.

An example of this is Google’s $12.5 billion purchase of Motorola Mobility in August. Lee said Google’s primary interest was in Motorola’s massive patent portfolio.

“Today, corporate leaders and boards are realizing that 90 percent of the value in S&P 500 companies is intangible assets,” Lee said. “Over the past 15 or 20 years, we’ve seen companies move intellectual property to the top of the list.”

IP Street has been funded by angels so far, with some investors being “extremely well heeled,” Lee said.

“We are examining venture funding, but looking at it more in the future,” Lee said. “We’re trying to keep it as non-diluted as possible as well.”

IP Street is Lee’s first tech startup, but he’s been an intellectual property attorney for the past 23 years, specializing in high-level patent portfolios, mainly in the U.S. and China.

“I’ve been privileged to work with some of the greatest IP companies in the world and was able to gain perspective along the way. We’re leveraging that experience in helping IP Street get going,” he added.

What’s the future of intellectual property deals? Lee thinks IP will continue to influence mergers and acquisitions.

“We’re at the very beginning of a very long run for intellectual property as an asset class. It’s been expanding over the past decade or so and I expect it will continue to do so.”

For IP Street, which launched two years ago, Lee said the company will continue to tweak its technology and add features.

“We’ve finally overcome a lot of the technical hurdles we’ve come across, and we’ve been pleased with the progress,” Lee said. “We’d like to continue to bring tools to people working in and managing in intellectual property. In the end, we want people to be able to put a value on intellectual property.”