Apple was directed to pay $300 million to Optis for infringing 4G LTE patents while Sonos won a preliminary patent infringement claim against Google. If found guilty after a full review, some Google products such as smart speakers, Chromecast, Pixel phones, etc., could become paperweights.
Apple vs Optis
Over the weekend, iPhone maker Apple was handed a $300 million royalty payment verdict. The company now has to fork out the cash to Optis Wireless, a group of companies consisting of PanOptis Patent Management and Optis Cellular and Unwired Planet. The payout is significantly less than the original payout order of $506 million from exactly a year ago.
Optis had sued Apple for infringing patented wireless technology that goes into 4G capabilities of iPhones, iPads, and Apple Watches. Last year’s verdict came from a Texas federal jury in August 2020, the first in-person one since the outbreak of the Wuhan virus.
According to Optis’ lawsuit, Apple was requested a fair amount for using the patents. Optis said Apple refused to pay for using the patents and had infringed upon:
- “Method and Apparatus for Transmitting and Receiving Shared Control Channel Message in a Wireless Communication System Using Orthogonal Frequency Division Multiple Accessâ€
- “Method for Transmitting and Receiving Control Information through PDCCHâ€
- “Mobile Station Apparatus and Random Access Methodâ€
- “System and Method for Channel Estimation in a Delay Diversity Wireless Communication Systemâ€
- “Method for Transmitting Uplink Signalsâ€
- “Mode switching between SU-MIMO and MU-MIMO.â€
- “Control Channel Signaling Using a Common Signaling Field for Transport Format and Redundancy Version â€
The five patents in question are: US Patents 8,019,332Opens a new window , 8,385,284Opens a new window , 8,411,557Opens a new window , 9,001,774Opens a new window , and 8,102,833Opens a new window .
Apple then vowed to fight back and appeal the decision. The company said, “Lawsuits like this by companies who accumulate patents simply to harass the industry only serve to stifle innovation and harm consumers.†This is Apple’s way of calling out Optis as a patent troll.
See Also: What’s Going Wrong at Apple These Days?
Post Apple’s appeal, U.S. District Judge Rodney Gilstrap upheld infringement claims but ordered a retrial to determine a revised payout amount for infringing five Optis patents. These five LTE patents are standards-essential and were acquired by Optis between 2014 and 2017 from Samsung, LG, and Panasonic.
According to the judge, the jury failed to take into consideration “fair, reasonable, and non-discriminatory,†or FRAND practicesOpens a new window required in standard-essential patentOpens a new window cases. All these patents are essential to 4G LTE implementation in mobile devices.
The latest jury’s ruling in the patent dispute case deems Apple liable to pay $300 million to Optis. $300 million is by no means a small amount but for Apple, it is just a speck in its vast fortunes. Just for perspective, the Cupertino-based company earned $81.4 billion in Q2 2021 of which profits were $21.74 billion.
Obviously the amount, which Apple can recover in less than two full days, is not the issue. What’s concerning for Apple is that this can set a precedent for Optis and other companies to keep coming after them.
For instance, Optis also made a case against Apple for patent infringement in the High Court of England. The company seeks $7 billion in damages. But more than that, the company hopes to set a global royalty rate for all its patents. Presently, FRAND does provide a framework to carry out patent-related deals but the terms are a bit vague, which have often led to lawsuits.
Some lawsuits that arose due to inadequacies in FRAND terms for standards-essential patents include:
- TCL vs EricssonOpens a new window over 2G, 3G, and 4G tech
- Huawei vs ZTEOpens a new window over 2G, 3G, and 4G tech
- Unwired Planet vs HuaweiOpens a new window for wireless mobile communications tech
- Motorola Mobility vs AppleOpens a new window for device components
- Apple vs EricssonOpens a new window for wireless communications tech GSM (2G), UMTS (3G), LTE (4G)
If fined a “commercially unacceptable†amount, Apple threatened to leave the British market, according to BloombergOpens a new window .
Google vs Sonos
Google was also found to have infringed five patents of Sonos, the U.S. International Trade Commission (ITC) saidOpens a new window over the weekend. The ruling is preliminary and not set in stone but it does give Sonos an upper hand for upcoming proceedings.
ITC judge Charles Bullock found some of Google’s hardware products such as smart speakers to have been derivative of the audio streaming company’s technology. Bullock, who is the chief administrative law judge at ITC upheld Sonos’ claims relating to all five patents that the company claims were infringed.
Sonos sued Google in January 2020 alleging that the search giant stole U.S. patents 9,195,258Opens a new window ; 10,209,953Opens a new window ; 9,219,959Opens a new window ; 8,588,949Opens a new window ; and 10,439,896Opens a new window . Sonos’ hopes to extract financial damages and block the import of Google’s smart speakers, along with other hardware products such as Chromecast and Pixel phones.
See Also: Fourth Time’s the Charm: EU Probes Google Ad Tech Over Antitrust Behavior
Sonos contends that Google stole the idea when both were collaborating on designing a music service for Sonos’ home speakers. Sonos had then handed over designs of its innovative wireless speakers to Google. At the time, Google was not producing speakers of any kind, and thus was not a competitor. It became one in 2016 when Google launchedOpens a new window its own wireless smart speaker.
Sonos in the lawsuit claimed the followingOpens a new window wireless multi-room audio systems functions to have been infringed:
- Setting up a playback device on a wireless local area network
- Managing and controlling groups of playback devices (e.g., adjusting group volume of playback devices and pairing playback devices together for stereo sound)
- Synchronizing playback of audio within groups of playback devices
Sonos said it tried to bring Google’s attention to the issue. However, Google failed to recognize the infringement and wouldn’t appropriately compensate Sonos. “Google has been blatantly and knowingly copying our patented technology,†Sonos CEO Patrick SpenceOpens a new window told the New York Times in 2020. “Despite our repeated and extensive efforts over the last few years, Google has not shown any willingness to work with us on a mutually beneficial solution. We’re left with no choice but to litigate.â€
Additionally, Sonos’ perturbation also stems from the fact that Google’s speakers (and Amazon’s) are positioned cheaply in the market. They are able to do that because of the immense financial power the companies possess over smaller companies like Sonos. Moreover, Google and Amazon’s business is underpinned by profit-making divisions, which is why both can afford to lose money with competitive pricing.
Besides Google, Sonos also planned on going after Amazon that also has its own range of smart speakers. However, Spence settled on suing Google initially because going after two Big Tech companies seemed risky.
Sonos is dependent on Google’s search engine to sell its products. Sally HubbardOpens a new window , director of enforcement strategy at the Open Markets Institute and formerly the assistant attorney general in the Antitrust Bureau of New York State told the NYTOpens a new window in 2020, “The fear of retaliation is a real fear. Any of these companies could bury them tomorrow. Google could bury them in their search results. Amazon can bury them in their search results.â€
“It’s really hard to find any industry where corporations are not dependent on one of the big tech giants,†she adds.
Spence asserted this in his testimonyOpens a new window before a House Judiciary Antitrust Subcommittee hearing. He said, “Given these companies’ dominance in certain essential services, you have to do business with them. They are like platforms or basic infrastructure. In many respects, the relationships are productive and mutually beneficial, as these firms also value access to Sonos’s large and growing customer base.â€
Spence also pointed out the use of smart speakers to collect consumer data that can be monetized on their existing platforms, which are already dominant and profitable. He’s referring to Google Search and Google Assistant, YouTube, Android, AWS Cloud, Amazon Alexa, Amazon Prime Music etc.Â
Google refuted that it uses Sonos’ technology and said its products are based on “merits of our ideas.†The company will fight Sonos in the upcoming review process.
ITC’s final decision is expected in December 2021Opens a new window . Sonos had also sued Google in the Federal District Court in Los Angeles.
Closing Thoughts
Larger companies may be happy to pay a small fine by infringing on intellectual property instead of going the legal way and actually paying a higher amount for licenses.
Sonos, for example, was clearly a leader in wireless speakers even before Google and Amazon entered the space. So if Google brought its own product after meeting with Sonos, and taking their designs, it is hard to argue with Judge Bullock’s assessment. Google, whose track record when it comes to infringing is sketchy, will certainly try.
And while Sonos may have some credibility, there are some variations evident in how smaller companies sue larger ones. Optis sued Apple in the Eastern District of Texas, a court known for patent litigation and favoring the plaintiff. Optis, which doesn’t actually sell anything, is also riding on the ambiguity of FRAND terms.
Apple knows this which is why it doesn’t want a $7 billion “commercially unacceptable†payout. A reasonable payment order on the other hand could make both Apple and Optis happy. Meanwhile FRAND continues to be misused.
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