Friday, June 29, 2012

Google's new Nexus 7 tablet apparently infringes Nokia's patents and faces other IP risks

This week Google demoed its new Nexus 7 tablet computer, which is set to compete with the iPad as well as other Android-based devices such as the Kindle Fire. The $199 price appears aggressive, and the jury is out on whether Google will be able to sustain that price or have to raise it once it has cleared all of the necessary patent rights.

The number of small (mostly non-practicing) entities asserting patents against Android is large, but with all that's going on between major industry players, I've even lost track of the "trolls". However, it appears that Google has yet to work out license agreements with at least two of the three largest companies claiming that Android devices infringe their rights:

  • They certainly don't have a license from Apple. Given that Google is using its newly-acquired subsidiary Motorola Mobility to pursue import bans and other forms of injunctive relief against Apple, and considering that Apple requested a preliminary injunction against a device co-developed by Google, the Galaxy Nexus smartphone (Judge Koh's decision could come down anytime now), there's no reason why Apple would have to treat the Nexus 7 differently than, for example, the Galaxy Tab 10.1 (against which it just won a preliminary injunction).

  • At this point I don't know whether the Nexus 7 is licensed by Microsoft. There certainly isn't a direct license agreement between Microsoft and Google -- otherwise there wouldn't be litigation between Microsoft and Google subsidiary Motorola Mobility. But Microsoft has deals with several major ODMs (Original Device Manufacturers) in place, such as Pegatron, whose shareholders include ASUS, Google's partner for the Nexus 7. If Microsoft's license agreement with Pegatron covers the Nexus 7, then we already have the third instance in which Google recognizes the need to pay patent royalties to Microsoft on Android-based devices (the other two instances are the Galaxy Nexus, given that Samsung signed a license agreement with Microsoft, and Motorola's recent PR stunt of a "settlement" proposal). If the Nexus 7 is not licensed through Pegasus or another ODM, then I believe it's in Google's best interest to negotiate a license sooner rather than later.

  • The third major player to assert patents against Android devices in court is Nokia. It's suing HTC and ViewSonic. In a recent reaction to a Google EU antitrust complaint, Nokia said that it "has an active licensing program with more than 40 licensees". Nokia is particularly interesting in the Nexus 7 context because it's known to hold, besides a huge number of other (mostly non-standard-essential) patents, some patents essential to the IEEE 802.11 (WiFi, or WLAN) standard. I know because it's asserting a couple of such patents against ViewSonic in Germany.

    I asked Nokia whether Google or ASUS are licensed and got the following official response from a company spokesman:

    "Neither Asus [n]or Google is licensed under our patent portfolio."

    Through its recent lawsuits against HTC, ViewSonic and RIM, Nokia has shown that it means business when it comes to patent licensing. Nokia is such a large patent holder in this industry that even Apple took a royalty-bearing license. But Google and ASUS are not among the "more than 40 licensees" Nokia referred to in a recent press release.

    I don't know how much Nokia asks for, but since Nokia has so many licensees, there's every indication that its royalty demands are reasonably acceptable. Another thing I don't know is whether Nokia has previously contacted ASUS about patent licensing, but companies with a significant outbound licensing business, such as Nokia, routinely approach significant infringers and propose to negotiate a license agreement. I venture to guess that ASUS is more than large enough to be on Nokia's radar.

It looks like Google and ASUS still have some homework to do.

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