Google and Android Partners Sued by Apple and Microsoft-Led Patent Troll

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The tech patent wars flared up again yesterday, with Google ( GOOG ) and its proxies getting sued by basically everyone else with a hand in mobile devices.

The Android army of Google, Samsung (KRX:005930), Asus (TPE:2357), HTC (TPE:2498), Huawei (SHE:002502) and four other original equipment manufacturers (OEMs) were sued by a consortium called Rockstar Bidco.

If you have been following the Android vs. universe patent war for the past several years, you could probably guess who is actually behind Rockstar. Apple ( AAPL ), Microsoft ( MSFT ), BlackBerry ( BBRY ), Sony ( SNE ), and Ericsson (ERIC) are using their stockpile of patents that they acquired for $4.5 billion from Nortel, the Canadian telecom that went bankrupt in 2009, to sue their rivals.

After the Nortel bankruptcy, Google bid for the patents in 2011, but lost. Its first bid was for $900 million, eventually going up to $4.4 before losing to Apple and company. Protecting Android from patent attacks was one of the main reasons for the $12.5 billion Motorola Mobility acquisition.

"Despite losing in its attempt to acquire the patents-in-suit at auction, Google has infringed and continues to infringe," Rockstar said in the lawsuit.

One look at Rockstar's website instantly gives it away as a "patent troll." Patent trolls are companies that do nothing at all besides buy up patents and see who they can sue with them. A 2011 episode of This American Life introduced the non-tech world to the abuses peculiar to this business model. They often find patents that are general, vague, or essential to normal operations of any business. In one case, a troll essentially looked through a newspaper ranking of successful local small and medium businesses and demanded $1,000 per employee for using scanners to email documents.

Trolls try to extract just a bit less than the cost of fighting them in court, and many small businesses just deal with it to avoid a costly legal fight. According to Colleen Chien of Santa Clara University, 55% of the companies that are targeted by patent trolls have less than $10 million in annual revenue . When companies do fight, they usually win, as NewEgg, an online electronics store, did with a troll that claimed ownership over the notion of a "shopping cart" on the Internet .

In this case, the Nortel patents cover a wide range of wireless technology such as LTE and 3G. Some of them are as general as the shopping cart example, including one that gives Rockstar a monopoly over navigating graphical user interfaces. The Department of Justice even looked into the Apple-led consortium, suspecting that the patents would be used to stifle competition, but the tech firms behind Rockstar promised to license the essential intellectual property for a reasonable price.

"Pretty much anybody out there is infringing," Rockstar CEO John Veschi told Wired last year . "It would be hard for me to envision that there are high-tech companies out there that don't use some of the patents in our portfolio."

Google is probably going to fight the suit. The Motorola acquisition gives it some patents that could probably throw some of the offenses out. It also has a history of not tolerating intellectual property attacks. Google went toe-to-toe with Oracle (ORCL) and won to save Android just last year.

The case will go down in the Eastern District of Texas in the town of Marshall, which, as the This American Life episode made clear, is pretty much ground zero for patent trolling, and home to patent-friendly juries and numerous offices of shell companies that make nothing besides lawsuits.

Twitter: @vincent_trivett



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Technology

Referenced Stocks: AAPL , BBRY , GOOG , MSFT , SNE

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