Wednesday, November 5, 2014

Android partners Google and LG Electronics announce patent cross-license agreement

A press release just appeared on the LG Electronics website to announce a long-term patent cross-licensing agreement between the Korean company, which is one of the more significant Android device makers, and Google.

The announcement doesn't state a specific term. It says "[t]he agreement covers the two companies' existing patents as well as those filed over the next 10 years," which actually suggests that the term is well over 10 years (probably at least 12 years) since any patent filings made 10 years from now would not immediately result in an issued patent at the time.

While the agreement is described as covering "a broad range of products and technologies" and appears to be (without saying so) a zero-zero cross-license for the most part, it's hard to imagine that there would be no exclusions or restrictions. For example, Google won't have allowed LG to build a search engine that makes use of any of Google's related inventions, and LG would probably still want to collect royalties on Blu-ray Disc devices should Google ever build any (Blu-ray is a context in which LG has done some patent enforcement in recent years). But apart from specific areas, this agreement is certainly designed to ensure lasting patent peace between these two Android partners.

Between the lines, both companies' official quotes on the deal criticize those who have a greater focus on patent monetization or even try/tried to use patents for exclusionary purposes. Google and LG stress the focus on products and the related consumer benefits. It's like, "Make stuff, not war."

At the beginning of the year, Google announced similar deals with Samsung and Cisco. Samsung is the world's leading Android device maker. Cisco's interest was presumably more political. All of those four companies -- Google, Samsung, Cisco, LG -- have to defend themselves against patent assertions by the Rockstar consortium. Rockstar's owners include Apple, BlackBerry, Ericsson, Microsoft, and Sony; while Apple contributed most of the money to the 2011 purchase of former Nortel patents, it may not be responsible for Rockstar's lawsuits in any (other) way because of its limited voting rights.

Not only do those companies have a problem with Rockstar but those of them involved with Android (Samsung, LG, and Google, but not Cisco) also had or have issues with some of Rockstar's owners. Samsung and Ericsson settled last year, and Ericsson holds patents in fields relevant to Cisco's business (Ericsson's strategy is to collect royalties from device makers rather than chipset makers). Apple never sued LG and probably never will (at least not over the kinds of patents it unsuccessfully asserted against Samsung, HTC and Motorola in the past), but if it had been more successful against others, it might have done so at some point. Based on reports in the Korean press, LG is similarly unhappy about the Android-related patent license fees it pays to Microsoft as Samsung is. Last week Samsung asked a U.S. court to declare that it may terminate its Android/Chrome patent license agreement with Microsoft.

All of those companies have something to sort out with Nokia as well. Nokia is not a Rockstar shareholder but, with a view to patent assertions, it's clearly in the same camp.

I criticized Google's previous announcements of such long-term, presumably zero-zero (except in presumably some areas) patent cross-license deals as PR stunts. Today's announcement is part of the same campaign, but I have to adjust my position on this type of deal in light of the pathetic results of smartphone patent enforcement efforts by all of the major litigants (only about 9% had merit; only about half of the cases in which liability was established resulted in lasting injunctive relief based on interim results; and even where lasting injunctive relief was obtained, it didn't really matter commercially). Against the background of those results it's very difficult to recommend to any major industry player to accept license deals with massive balancing payments. Everyone should think hard and long before agreeing to make a huge balancing payment to someone who has not yet established in court, or may even have failed miserably to establish in court, their ownership of valid patents that can't be worked around at a rather low cost without serious impact on the market potential of a product line. I'm convinced that many or even most of the smartphone-related patent license deals that are currently in force would never have been made if companies had known a few years ago just how negligible the commercial impact of all those smartphone patent assertions by major players was ultimately going to be (I was very surprised, too).

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: