Bloomberg News

Google Says Apple, Microsoft, Oracle Wage ‘Hostile Campaign’

August 03, 2011

(Updates with Microsoft comment in ninth paragraph.)

Aug. 3 (Bloomberg) -- Google Inc. accused Microsoft Corp. and Oracle Corp. of waging a “hostile, organized campaign” against its Android mobile software, a sign of escalating tension in the technology industry’s patent war.

The company’s rivals are joining forces to purchase patents to keep them out of Google’s hands and taking other steps to make it more expensive for handset makers to use the Android operating system, David Drummond, chief legal officer at Mountain View, California-based Google, said in a blog posting.

“We thought it was important to speak out and make it clear that we’re determined to preserve Android as a competitive choice for consumers, by stopping those who are trying to strangle it,” Drummond wrote. Android’s success has resulted in a “hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents.”

Apple, Microsoft and Google have ramped up spending on patent portfolios in recent months to gain exclusive rights to a broadening array of technology, much of it used in the emerging area of smartphones. As bidding intensifies, prices for patents are surging, fueling concerns that portfolios are overvalued. Oracle sued Google last year, accusing it of patent infringement over the use of Java technology used in Android.

“This patent scramble is a land rush for leverage -- leverage over Google, for starters,” said Patrick Walravens, an analyst at JMP Securities. “The best defense in patent legislation is having a bunch of patents of your own.”

‘Patent Bubble’

A group that includes Apple and Microsoft beat out Google in June with a $4.5 billion bid for patents previously owned by Nortel Networks Corp. Rivals are “banding together” to purchase patents they in turn can use to charge fees that will make Android devices more expensive, Drummond said.

“This anti-competitive strategy is also escalating the cost of patents way beyond what they’re really worth,” Drummond wrote. “The law frowns on the accumulation of dubious patents for anti-competitive means -- which means these deals are likely to draw regulatory scrutiny, and this patent bubble will pop.”

Drummond also cited Microsoft and Apple working together to acquire Novell Inc.’s patent portfolio as an example of the campaign against Google. Microsoft General Counsel Brad Smith denied that allegation, saying his company asked Google to participate in the bid.

‘They Said No’

“Google says we bought Novell patents to keep them from Google,” Smith said in a message on Twitter. “Really? We asked them to bid jointly with us. They said no.”

The U.S. Justice Department is examining the Nortel deal to see whether it hurts competition in the smartphone industry, a person familiar with the matter has said. If the Justice Department doesn’t challenge the transaction, the winning bidders will control more than 6,000 patents and applications that cover wireless technologies.

Steve Dowling, a spokesman for Cupertino, California-based Apple, and Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, declined to comment. Tricia Payer, a spokeswoman for Redmond, Washington-based Microsoft, also declined to comment.

--With assistance from Cory Johnson, Adam Satariano and Aaron Ricadela in San Francisco and Dina Bass in Seattle. Editors: Tom Giles, Nick Turner

To contact the reporter on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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