Thursday, December 18, 2014

Android May Be Big Loser In Oracle-Google Patent Trial

Samsung android smartphone i9000 Galaxy S Fran...

Samsung i9000 Galaxy S

The main attraction of Android for mobile phone manufacturers has been that it is free, but as phone makers like Samsung and HTC have found out, Android’s encumbrance is that it is constantly pursued in courts all over the globe by Apple  and Microsoft.

Samsung has already agreed to pay millions to Microsoft (MSFT) for licensing patents related to Android.

Some investors may be surprised to know that the biggest blow landed on Android may not be coming from the fist of iPhone maker Apple, but instead from the samurai sword of Larry Ellison at Oracle.

Jury selection begins today in San Francisco in a trial that pits Google against Oracle.   Oracle is suing Google over intellectual property related to Java that was previously owned by Sun Microsystems.  Oracle bought Sun Microsystems. Google’s defense is that Java was free and that Sun was a supporter of Android.

Obviously Oracle disagrees.  Oracle’s arguments may include an email from a Google engineer concluding that Google should seek a license from Oracle to use Java.

Barring a settlement, we will know the results soon as the trial is expected to last only eight weeks.

If Oracle wins, it will be in a position to seek an injunction against the sale of Android devices.  In all likelihood, Oracle is not after an injunction, because it is not in the mobile device business.  Oracle is angling for licensing payments.  If Oracle wins, it may seek $5.00 to $7.00 in royalties per handset.

Over a period of time, royalty payments may add up.  Such royalty payments may cripple Android as it will take away its advantage of being free.

Even if Google wins, Android is facing a big challenge from Apple.  (Please see Apple To Make Billions On Google’s Android and Apple Could Rake In Billions From Android Licensing Instead Of Enriching Lawyers.)

Android is also facing a new challenge from Nokia.

About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . You can follow me here and get email notification when I publish a new article.

Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, $525 and $629. We are also long Nokia.

 

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