Tuesday, November 16, 2010

Next Android patent suit: Vertical Computer Systems v. Samsung and LG

"The freebie operating system is proving to be quite a little suit magnet", wrote Maureen O'Gara after digital security company Gemalto announced its patent infringement suit against Google, Samsung, Motorola and HTC over Android's application platform and development tools. Meanwhile, Apple sued Motorola, and here's the next one:

Yesterday, Vertical Computer Systems, a provider of Internet technologies, filed a complaint (click to access the document) with the United States District Court for the Eastern District of Texas against Samsung Electronics, LG Electronics, and Interwoven, an Internet infrastructure software company. Samsung and LG allegedly infringe two of Vertical's patents with certain Android-based products, including but not limited to the LG Ally phone and five different Samsung Galaxy products (four smartphones and a tablet computer).

Vertical claims that all three defendants infringe the same two patents. Both patents-in-suit -- US Patent No. 6,826,744 and US Patent No. 7,716,629 -- read on a "system and method for generating websites in an arbitrary object framework." The latter is a continuation patent extending the former. It was granted this year and, according to a Vertical press release, increased "the scope of the original patent by adding 32 new claims on top of the original 53 claims".

In 2007, Vertical filed a suit against Microsoft over the '744 patent (the original one) -- with the same court in which yesterday's suit against Samsung, LG and Interwoven was filed. An SEC filing dated 28 July 2008 indicates that the case was settled with a license deal:

"Pursuant to the confidential settlement agreement, [Vertical] has granted to Microsoft a non-exclusive, fully paid-up license under the patent which was the subject of the legal proceeding."

Later, a financial report shed some light on the terms of the settlement:

"[...] the impact of the one-time Microsoft settlement that provided $1,533,000 of operating income for the year ended December 31, 2008 [...]"

Thereafter, Vertical was waiting for the continuation patent it received this year in order to enforce its rights more aggressively. This is another quote from that same SEC filing:

"We are waiting for the issuance of the Continuation Patent for U.S. Patent No. 6,826,744 (which SiteFlash™ is based upon) before we engage with new licensees because we believe the Continuation Patent provides better protection for this intellectual property asset."

Now they have that continuation patent. They will try to charge higher royalties than in the past, and they will point other companies to the fact that Microsoft deemed it commercially prudent to settle a litigation with a license deal. Maybe some others have already paid, but Samsung and LG apparently refused to and now they find themselves in court.

What should Google do? I can't think of any other company that would have exposed its partners -- the makers of Android-based devices -- to so many patent problems. Six weeks ago I wrote about the crossfire of patents in which Android is caught. That was shortly after Microsoft's complaint against Motorola, prior to which there were Apple's suit against HTC and Oracle's against Google, and in the six weeks since that "crossfire" blog posting, three more such suits have been filed (Gemalto, Apple vs. Motorola, and now Vertical vs. Samsung and LG).

I just commented yesterday that Google makes a really weak showing against Oracle by failing to launch an infringement countersuit in order to get some leverage.

The Android patent situation is completely out of control and there are no signs of improvement. On the contrary, Android's serious patent problem continues to exacerbate.

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