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A Brief Explanation of Microsoft's Anti-Google Patent FUD ~ by pj
Friday, August 05 2011 @ 09:36 PM EDT

The trouble with FUD is at first it sounds correct, or at least plausible. So when Google complained about the Apple-Microsoft partnership and the deliberate patent policy against Google, Microsoft's first response sounded like a killer blow. It said it had asked Google to join them. But… let's take a little bit closer look, because in doing so, it let slip a fact that we did not know until now -- that Google tried to get the 800 or so Novell patents that CPTN, an entity Microsoft set up with Oracle, Apple and EMC, eventually won.

That revelation tells us the most fundamental fact about patent law in the US today -- namely that even if you have as much money as Google, you can't freely innovate and provide fabulous products because the patent thicket is so dense already and the Proprietary Patent Club is joining hands to keep any newcomer out of the competition. And that's exactly why articles about Google "whining" or viewing this as just a verbal war are missing the point Google was making, namely pointing out that it can be *illegal* to use patents for an anticompetitive purpose. There's a line, and Google is indicating that it thinks that line has been crossed.

As we saw in the Novell patent scenario, the Department of Justice agreed that the deal was not acceptable, intervening to protect the Open Source community, so it understood the danger and altered what Microsoft in particular was allowed to do with the patents it arranged to buy.

So Google isn't dreaming. This is antitrust reality and that may be why Microsoft took Google's initial complaint seriously enough to respond.

This isn't about patents. It's about antitrust.

Some Details

Notice what Google's initial complaint was:

But Android’s success has yielded something else: a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents.

They’re doing this by banding together to acquire Novell’s old patents (the “CPTN” group including Microsoft and Apple) and Nortel’s old patents (the “Rockstar” group including Microsoft and Apple), to make sure Google didn’t get them; seeking $15 licensing fees for every Android device; attempting to make it more expensive for phone manufacturers to license Android (which we provide free of charge) than Windows Phone 7; and even suing Barnes & Noble, HTC, Motorola, and Samsung. Patents were meant to encourage innovation, but lately they are being used as a weapon to stop it.

So the issue Google was highlighting was a joining together of the big boys with the goal of making Android cost more, so people would be less inclined to get one. Is that what patents are for? I mean, legally, is that the purpose of patents? As examples, it cited two events, the CPTN buy of Novell's patents and the Rockstar purchase of the Nortel patents. Both CPTN and Rockstar are nyms for the group of proprietary big boys, led by Microsoft and Apple.

Google's complaint is that this is illegal conduct, not that it's unfair or mean, although it likely would say it's all of the above:

This anti-competitive strategy is also escalating the cost of patents way beyond what they’re really worth. The winning $4.5 billion for Nortel’s patent portfolio was nearly five times larger than the pre-auction estimate of $1 billion. Fortunately, the law frowns on the accumulation of dubious patents for anti-competitive means — which means these deals are likely to draw regulatory scrutiny, and this patent bubble will pop.
Patents are not granted for the purpose of anticompetitive strategies. A patent bubble is not the purpose of patent law either, since it works against customers, not just Google and the market in general. It's an artificial bubble, created not by intellectual property valuation of the patents but what the patents are worth to companies desperately trying to block Google's success in the market.

I think one could even make an argument that the patent bullies are showing unpatriotic conduct, in that making things artificially more costly in the current economy is definitely not helpful.

Brad Smith, Microsoft's general counsel, then responded on Twitter:

In response, Brad Smith, Microsoft’s general counsel tweeted, “Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no.” A follow-up tweet from Frank Shaw, Microsoft head of communications, added: “Free advice for David Drummond – next time check with Kent Walker before you blog ”
Here's his tweet. Shaw's is here, and he included an email, dated October 28, 2010, from Google to Microsoft that read like this:
Brad –

Sorry for the delay in getting back to you — I came down with a 24-hour bug on the way back from San Antonio. After talking with people here, it sounds as though for various reasons a joint bid wouldn’t be advisable for us on this one. But I appreciate your flagging it, and we’re open to discussing other similar opportunities in the future.

I hope the rest of your travels go well, and I look forward to seeing you again soon.

– Kent

This is one lawyer politely rejecting another lawyer's offer. I will let Google translate it for you, in their update to the first blog complaint:
It's not surprising that Microsoft would want to divert attention by pushing a false "gotcha!" while failing to address the substance of the issues we raised. If you think about it, it's obvious why we turned down Microsoft’s offer. Microsoft's objective has been to keep from Google and Android device-makers any patents that might be used to defend against their attacks. A joint acquisition of the Novell patents that gave all parties a license would have eliminated any protection these patents could offer to Android against attacks from Microsoft and its bidding partners. Making sure that we would be unable to assert these patents to defend Android — and having us pay for the privilege — must have seemed like an ingenious strategy to them. We didn't fall for it.

Ultimately, the U.S. Department of Justice intervened, forcing Microsoft to sell the patents it bought and demanding that the winning group (Microsoft, Oracle, Apple, EMC) give a license to the open-source community, changes the DoJ said were “necessary to protect competition and innovation in the open source software community.” This only reaffirms our point: Our competitors are waging a patent war on Android and working together to keep us from getting patents that would help balance the scales.

Again, Google is pointing to the main issue, not that Microsoft and its satellite helpers are meanies, but that what they are doing is *illegal*. They are attacking the open source community, with patents as the weapon and not just as individual companies but as an artificial group designed to "strangle" Android. And if you look at the mobile litigation going on as we speak, ask yourself: who is suing and who is being sued? Does it look coordinated to you?

It does to me. It's always the same direction. Android gets sued. Sometimes it's the vendors. Sometimes it's Google. Does that mean Google is casual with patents? Ask any engineer or any lawyer in the tech space whether it's possible to make any software product today without violating someone's patents, and they'll say no. It's no longer possible, and in fact, it's so complex and stupid now in the US patent law space, it's not even possible to know in advance if you are doing so. Look at the Lodsys patents. Could any rational person have anticipated getting sued by Lodsys using those patents? Hardly. They don't describe what Apple and Android apps developers do.

But it happened. How about the Paul Allen patents? They seem to be falling like dominoes currently, on reexamination, so people are being accused of infringing what it turns out are likely not even valid patents. Same with Oracle's patents asserted against Google. Most of them on reexamination are now declared invalid.

How do you protect yourself from that? Google's blog post pointed out that a smartphone is such complicated technology that it could result in as many as 250,000 patent claims, most of them "questionable". Now do you understand why Google used the word "strangle" when saying that is what competitors were trying to do to Android? What company in the world could withstand that much litigation? That is already happening, of course, as we see Android vendors and Google being sued over patents that don't stand up to reexamination.

So if people are willing to assert invalid patents in litigation, how do you prepare for that?

You can't. No matter how diligent you are to avoid stepping on anyone's toes, someone will sue you, because the twisted patent system lets them. It's your burden to prove the patents invalid, on your dime. All you can do is react. You can file for reexamination, showing prior art, which is what has been happening. And one traditional way to defend yourself when prior art won't work is to counterclaim with patents of your own, so that at least you can get a decent settlement instead of paying over millions or even billions. It creates a better environment for settlement. And that is what Google was looking for, some patents of its own to use for defense. Had it signed on with Microsoft, it would have meant it could no longer do that. It was, as Google pointed out, a trap. Does that not clarify why Google would try to buy up these patents, even if they thought they were bogus? Obviously, they are trying to minimize how many stupid patents are used as weapons against them and their partners. Is it not ridiculous to have to come up with a way to avoid being sued over bogus patents?

And how cynical for Mr. Shaw to tweet that Google wanted to buy the patents to sue people:

Why? BECAUSE they wanted to buy something that they could use to assert against someone else.
Hardly. Who is Google suing for patent infringement? Got a list? Anyone? Bueller?

Journalists missed that. But Carlo Piana, the lawyer who successfully represented Samba and FSFE in the antitrust litigation against Microsoft before the EU Commission, tweeted, in part:

So msft, appl et al tried to have goog pay a share of Nortel patents goog needed for counter-warfare, just to neutralize them in a cross license, and wonder why it refused? Is Brad an amateur or does he think we are all stupid?
Well. He's not an amateur. The lawyers get it. It was a trap, but looking at media accounts of the dispute and how almost everyone has missed the point that this is about antitrust law, not patent law, I would guess, if I have to choose one or the other, it's the latter, that he thinks we are all stupid.

The New Information:

Because Microsoft was willing to publish a private Google email, without permission, and not in litigation, which I find disturbing, we learn that Google evidently also tried to buy the 800 Novell patents. I didn't know that. I'm glad to know that someone not on the Dark Side tried to get them.

How do we know it was Novell's patents? The Microsoft FUDsters wrote both, Novell and Nortel, but I checked, and it has to be the Novell patents in the email. Here's why I think so. The date of the offer by Microsoft was October 2010, judging by the email, or perhaps September. The announcement that Nortel would sell its 6,000 patents didn't happen until April 4, 2011, so the offer has to be to share the Novell patents. They were on the market in the October 2010 time period, as you can see in the Novell SEC filing you can find here, and sold in December.

But that is disturbing also. If Google doesn't have enough money to buy up patents, who does? Twice it has tried and been outbid, not by a single competitor but by a group of them joining together. In fact, that's where, to me, the real antitrust issue surfaces, that by joining together to squeeze Google out of two auctions, Google's competitors appear to have been plotting against it in ways that really must invite scrutiny, which, by all reports is now happening again.

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