Apple and Microsoft Expand Patent Trolling, Sue TWC, Cisco via Subsidiary

With veteran Finnish phonemaker Nokia Oyj.’s (HEX:NOK1V) out of the smartphone market (for now), but still looking to squeeze large licensing fees from Android OEMs, there’s little money to spare.  Apple, Inc. (AAPL) and Microsoft Corp. (MSFT) already have looked to pile on with licensing fees of their own.
I. A Fourth Android Tax?
Now they’re looking to tack on a fourth “Android tax” onto every device sold, with the help of the patents they bought from bankrupt Canadian telecommunications firm Nortel.
The goal of the so-called “Rockstar Consortium” — the patent holding company owned by Microsoft, Apple, and a handful of others including near-dead OEM BlackBerry Ltd. (TSE:BB) — appears to be to finish the process of bleeding OEMs that use Google Inc.’s (GOOG) Android OS dry, forcing them to flee to Windows Phone or exit the market.
Whereas Microsoft’s and Apple’s respective ongoing litigation against various Android OEMs could be viewed as patent bullying, Rockstar’s actions arguably are bona fide trolling, as Rockstar Consortium does not directly produce any phones. 

Further evidence that Microsoft and Apple have bred a specialist troll can be found in Rockstar’s choice of venue.  It’s filed suit against Samsung Electronics Comp., Ltd. (KSC:005930) (#1 Android OEM in U.S. sales), LG Electronics, Inc. (KSC:066570) (#2), ZTE Corp. (SHE:000063) (#4), Huawei Technologies Comp. (SHE:002502) (#6), and HTC Corp. (TPE:2498) (#7) in the U.S. District Court for the Eastern District of Texas — a favorite jurisdiction among trolls given its pro-plaintiff bench.

Now the Mountain View, Calif.-based Google is taking aim at this “troll”, filing a countersuit in its own neck of the woods — the U.S. District Court for the Northern District of California in Santa Clara.  The suit contends:
Rockstar’s litigation campaign has placed a cloud on Google’s Android platform; threatened Google’s business and relationship with its customers and partners, as well as its sales of Nexus-branded Android devices…

Google says it will fight the attempt to troll Android. [Image Source: Google Portland]
It adds:
Rockstar produces no products and practices no patents. Instead, Rockstar employs a staff of engineers in Ontario, Canada, who examine other companies’ successful products to find anything that Rockstar might use to demand and extract licenses to its patents under threat of litigation.

Google Dec Action vs Rockstar

The Google suit targets Rockstar, as well as a shell-company subsidiary MobileStar Technologies.  Microsoft and Apple founded MobileStar the same day they filed litigation against various Android OEMs, transfering patents from Rockstart to MobileStar, to allow for new suits.

II. Does Android Infringe on Rockstar’s Patents?  We May Find Out

In its filing, Google asks the court to examine whether Android smartphones — namely, the Nexus 5, 7, and 10 — infringe on seven patents former Nortel patents, now owned by Microsoft and Apple via Rockstar/MobileStar.  These patents form the basis of the lawsuit against Android OEMs in Texas court.

One of the patents appears to cover nearly all smartphone SoCs. [Image Source: Google Patents]

  • U.S. Patent No. 5,838,551
    • “Electronic package carrying an electronic component and assembly of mother board and electronic package”
    • An ambiguous patent covering systems on a chip for mobile devices
    • Filed: Aug. 1996
    • Granted: Nov. 1998
  • U.S. Patent No. 6,037,937
    • “Navigation tool for graphical user interface”
    • Seemingly ubiquitous patent on scrolling in mobile device UIs
    • Filed: Dec. 1997
    • Granted: Mar. 2000
  • U.S. Patent No. 6,128,298
    • “Internet protocol filter”
    • Use of standard selective port-based internet communications
    • Filed: April. 1997
    • Granted: Oct. 2000
  • U.S. Patent No. 6,333,973
    • “Integrated message center”
    • A patent covering contacts lists in mobile devices
    • Filed: Apr. 1997
    • Granted: Dec. 2001
  • U.S. Patent No. 6,463,131
    • “System and method for notifying a user of an incoming communication event”
    • Claims “invention” of sound, vibration, or visual notification events when receiving an email or other message
    • Filed: Dec. 1997
    • Granted: Oct. 2002
  • U.S. Patent No. 6,765,591
    • “Managing a virtual private network”
    • Describes mobile interfaces for accessing VPNs.
    • Filed: Apr. 1999
    • Granted: Jul. 2004
  • U.S. Patent No. 6,937,572
    • “Call trace on a packet switched network”
    • Support for networking messaging paths for phone calls.
    • Filed: Dec. 2000
    • Granted: Aug. 2005

Many of these patents appear to be representative of the controversial practice of repatenting existing, ubiquitous hardware and software technologies in a mobile context.  As the patents are worded vaguely and ambiguously, these 90s-era filings still sound pertinent today.

The new suit looks at the legal status of the Nexus 5, 7, and 10.
The case has been automatically assigned to Judge Paul S. Grewal.  Rockstar is expected to petition the federal judge, to reassign the case to Eastern Texas, where it would likely be dismissed. Google, meanwhile, will fight in preliminary hearings to allow its case to be heard in the somewhat more favorable jurisdiction.
III. As Rockstar’s Trolling Grows Bolder, Google Takes Action
Google’s filing marks a bold new legal tactic — where Google itself is looking to leverage its brand, influence, and legal prowess to directly attack attempts to harass its Android OEM partners.
Previously Google had only fought Microsoft and Apple at a distance, via its subsidiary Motorola Mobility (who, incidentally was purchased for $12.5B USD in Aug. 2011 following Google’s failed counterbid for the Nortel portfolio).  But as Microsoft and Apple look to distance themselves from the smartphone legal battlefield via the use of trollish shell companies, Google is looking to enter the fray directly for the first time.

[Image Source: Shutter Stock]
The new filing represents a proactive and unusual technique — Google is asking the court to declare whether its product infringes.

Currently that tactic appears to be on weak footing, legally.  An appeal to a similar filing by Cisco in the case Cisco Systems, Inc. v. Alberta Telecom ended in an Aug. 2013 ruling by the U.S. Circuit Appeals Court for the Federal Circuit (CAFC). 

Apple and Microsoft are trying to plunder Google.
The ruling asserted that a company (like Google) could not try to challenge a suit against its customers with a suit of its own.  The key thing here is that Cisco Systems, Inc.’s (CSCO) strategy was nearly identical to Google’s, and, more crucially, was filed in the same jurisdiction.
So why are Google’s lawyers even trying with this filing?  Well, there’s reason to believe that precedent could soon be broken by legislation.
There’s a key upcoming change in IP law, under the Innovation Act of 2013.  Passed resoundingly by the U.S. House of Representatives, the law would allow a company like Google, whose product (Android) is used by business partners (OEMs, e.g. Samsung) to take on some of those business partners’ lawsuits.  Specifically if a suit against a partner (e.g. Samsung) targets the seller’s product (e.g. Android), the seller can assume responsibility for the suit.  This is meant to prevent multiple identical suits against “end users” of software — a popular trolling tactic.
While the current Senate equivalent — the Patent Transparency and Improvements Act of 2013 (S. 1720) [PDF] — is widely viewed as substantially watered down, it does include a somewhat weakened version of this vital provision.
Once the House and Senate come to some sort of conclusion regarded patent reform, Google may be able to use the new provisions of the law to further advance its bid to slay the Rockstar troll directly.
IV. Trolling Campaign Expands
Meanwhile Rockstar has filed a second suit in U.S. District Court for the District of Delaware (another popular jurisdiction among trolls) under the name “Bockstar”.  This time the suit accuses Cisco of violating Nortel patents on routers and switches.

Microsoft and Apple are also trolling Cisco via Rockstar.
But wait — there’s more — back in Texas, Rockstar has filed a third suit, this time against Time Warner Cable Inc. (TWC).  The third suit uses US Patent No. 6,128,649, a multi-screen video conferencing patent filed in 1997 along with five other 90s-era Nortel patents.  It is filed on behalf of “Constellation Technologies LLC” — another Rockstar-owned shell company.

Rockstar v TWC

In short, Microsoft and Apple appear no longer content to simply troll the mobile space, they want to troll all manner of connected technology.  It remains to be seen whether this approach backfires.

The increased aggression comes amidst a separate report by Bloomberg that Microsoft and Apple may look to sell off some of Rockstar’s patents, amidst difficulty in court.  Of course this could simply be an extension of the misdirection campaign Microsoft and Apple are already employing, using shell companies to avoid the appearance of trolling.

In addition to Microsoft, Apple, and BlackBerry, other minority owners of Rockstar include Japan’s Sony Corp. (TYO:6758), Sweden’s Ericsson AB (STO:ERIC.A, ERIC.B), and the Mass.-based EMC Corp. (EMC). 

Sony, in particular, is notable, in that it’s a minor Android OEM.  If somehow Microsoft and Apple are able to troll other Android OEMs to death, Sony could see gains in market share, as the only OEM who doesn’t have to pay direct licensing fees to Microsoft/Apple (Sony also notably has preexisting licensing deals with Microsoft and Apple).

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