Last Thursday, Google (NASDAQ:GOOG) filed a claim in Europe saying that Nokia (NYSE:NOK) and Microsoft (NASDAQ:MSFT) are attacking Google in interesting ways using a proxy company named Mosaid Technologies according to The Wall Street Journal. According to Google's claims, Nokia and Microsoft transferred close to 2,000 patents to this company so that it can sue Android makers. Mosaid Technologies is a patent company that specializes in collecting royalties from other companies in order to generate revenue. According to Google, Nokia and Microsoft's plan is to motivate Mosaid Technologies to sue all the Android makers in the market, gaining royalties and making it more expensive to produce Android phones. This would help Nokia in the competition. Another important point to make is that all the patents transferred to Mosaid Technologies are crucial patents for building a mobile phone.
Mosaid hasn't sued anyone over the patents yet, however Google thinks it eventually will and it wants to make sure Mosaid won't be able to go through with the plan by acting preemptively. So far there isn't much information on the topic, Nokia and Microsoft didn't make any announcements and we don't know where Google's intelligence comes from; however we know that Google wouldn't just act on suspicions and it must have some evidence at hand to blame the two companies. The question is how Nokia and Microsoft will respond to these claims, and the even bigger question is whether it will start a war between the partnership of Nokia/Microsoft and Google.
Google never mentioned the name of Mosaid Technologies, but it's easy to assume that this is the company under Google's radar as it signed partnership with Nokia last September and this partnership involved the 1,200 of the 2,000 patents mentioned above. Also, we don't know if Google's complaint will have any legal ramifications and what Google expects to get out of this. One issue is that when a company pursues its patents and licenses them, it can't be discriminatory. For example, if Mosaid Technologies goes after Android phone makers for violating its patent portfolio but chooses not to go after Windows phone makers who may violate the exact same patents, this will not go well with the European Union commission. Google might try to play the discrimination card.
EU is currently investigating whether Motorola and Samsung violated a number of patent agreements in their products. This may be one of the main motivators of Google as the company doesn't want any casualties amongst its partners. By making it too expensive to produce Android phones, Microsoft may be motivating Android phone makers to join ranks of Microsoft. Google also informed US Justice Department and Federal Trade Commission about the incident and it's only a matter of time before Google moves the case to the USA.
At the end of the day, this is all showing how heated the patent war is getting. Desperate for cash and market share, companies are resorting to their patent portfolios. As companies file complaints and sue each other, things will get out of control sooner or later. We will have to wait for announcements from Microsoft, Nokia and Mosaid Technologies to gain better insight about the issue. Nokia already collects royalties from Apple and it may collect royalties from other companies in the future. If the patent wars continue to get complex, we may see every company collecting royalties from every company. Motorola might pay to Apple and Nokia while Nokia pays to Apple and Motorola, while Apple pays to Samsung and Nokia. At the end, each company might just get even with all the royalties going around.
One thing we can tell is that the companies will not be shy about pointing fingers and asking for royalties where they might be due. Competition is getting fierce and companies are holding onto anything they can. In the next few years, things will be very interesting.
I still think more than one company can survive in this market. I don't believe that certain companies have to go bankrupt for other companies to be successful. I believe Google will be successful, Nokia/Microsoft partnership will be successful, and there is no doubt that Apple will be successful.
Update: Microsoft and Nokia denied the claims saying that Google is acting out of desperation.