Google (NASDAQ:GOOG) at the Heart of another Patent Battle

Google (NASDAQ:GOOG) at the Heart of another Patent Battle

Google GOOG at the Heart of another Patent Battle Google (NASDAQ:GOOG) at the Heart of another Patent BattleNEW YORK – In 2011, it seemed as if every major software company had become entangled in a legal battle over who would control the patents to the smartphone technology.  At that time Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL) to name a few were all targeting Google (NASDAQ:GOOG) claiming the company’s Android operating system had infringed on the patents of the companies.


At that time, Google had bid $ 900 million for a selection of Nortel (OTC:NRTLQ) patents in a bid to create a disincentive for others to sue Google and according to the company, ‘our partners in the open source community which is integrally involved in projects like Android and Chrome.’  However, Google lost that auction to a consortium of companies led by Apple, Rockstar Bidco, who bit $ 4.5 billion.

The setback pushed Google to launch an even stronger lobbying campaign by Google.  In the past year it looked like the struggle had been settled but in the past week Rockstar Bidco made their first serious overtures against Google, Samsung (KS:005930), HTC (TW:2498), LG (KS:066570), Huawei (SZ:002502), and ZTE (HK:763) by filing a patent infringement case in U.S. District Court in Texas.

Google, in particular, is accused of infringing seven patents covering technology that helps match internet search terms with relevant advertising – if successful this could be a big hit to the company’s search business.  The other companies named in the suit all manufacture phones that operate on Google’s Android operating system.

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While it is unclear the amount of damages that Rockstar Bidco seeks against Google, it would appear that any adverse ruling could directly alter the landscape of online search and mobile operating systems.  This biggest winner in this could be Microsoft who has seen their online search and mobile operating system largely marginalized.

However, the case is expected to drag on for years as both sides have deep pockets.  Shares in Google closed at $ 1,027.04 on Friday and year-to-date have client more than 46 percent.  The message to investors is clear; Google is a great company with healthy cash reserves.  While the lawsuit could have a negative affect their business, it is more likely that the company try to delay the outcome in an effort to reengineer their product offerings to reduce the risk of the court ruling against the company.