Google And BT: The Global Patent War Is Unwinnable

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Includes: AAPL, BT, GOOG
by: Dana Blankenhorn

British Telecom (BT) has entered into the global war over patents by suing Google (GOOG) with claims that would put the whole company out of business.

The suits are aimed not just at Android, Google's mobile phone design based on Linux, but on the company's advertising, social networking and even its main search product.

Most of the patents date from the late 1990s, when Google was being born. And it's interesting to consider the implications if all BT's claims were upheld. The company has been flailing, and failing, in online markets since the 1970s. So nothing that worked is legal, and only the failures are legitimate?

But while my German friend Florian Mueller has won himself a second career covering these suits, and thousands of lawyers are gainfully employed litigating them all around the world, it's most likely this will all come to nothing.

Most corporate lawsuits of big company vs. big company do that. There is either a settlement or a vague decision. And there is delay, constant delay. Time costs money, justice delayed is justice denied. Novell, for instance, just had its $1.2 billion antitrust against Microsoft over actions dating back to the mid-1990s hung by one juror refusing to go along.

That's all it takes.

The patent mess really started with the late Apple (AAPL) CEO Steve Jobs' contention that Android was a rip-off of the iPhone. This resulted in counter-suits by Android OEMs which eventually involved actions against mobile industry standards. And if mobile industry standards are going to be litigated, why not throw in your whole patent hand, as BT has done, and see if you can't make a score?

Trouble is even the fastest venue involved here, the International Trade Commission, can be subject to repeated delays. Any U.S. patent suit winds up locked-up by a shortage of judges to hear the case, victims of political gridlock. In this case gridlock is a good thing, because the alternative result would be a welter of contradictory decisions that would generate no clarity on the underlying issue.

Which is that there's a difference between running to the patent office, claiming you invented hyperlinks (as BT has actually done) and creating something real or valuable in the market. Technology doesn't proceed from invention, but from investment. Having just a vision's no solution, everything depends on execution, as Sondheim said.

This war can be fought in 10,000 venues but at the end of the day it's lawyers who will be the only winners. No clear decision is possible that contradicts what the market has already ruled. No jury is going to hand Google to BT, or render competition to the iPhone illegitimate. At worst sums of money will change hands, and cross-licenses will be arranged.

All of which users will pay for in the form of higher prices for gadgets and services whose real cost of production is nominal.

Disclosure: I am long GOOG.