November 4, 2013

Is the future of ebooks about to be decided by a judge in East Texas?


The dust is being kicked up by the vast herd of corporate cashcows behind them.

A lawsuit filed last Thursday by a proxy for Apple and Microsoft could deal a sharp blow to Google, and might be a glimpse of the bare-knuckled future of competition between tech giants.

As reported widely in tech media the suit, filed by Rockstar Consortium, alleges patent infringement by Google, Asus, Huawei and others. The basis of the lawsuits is a series of patents—seven in the filing against Google—formerly held by the former Canadian telecom giant Nortel. The patents in the suit against Google primarily involve pairing search terms with relevant advertising—Google Adwords is called out by name in the documents—but in the lawsuits against others like Asus the scope is expanded to include such generalities as navigation methods on a device.

Rockstar Consortium is a company formed by Apple, Miscrosoft, RIM, Ericsson and  Sony in 2009 for the purpose of buying patents held by the bankrupt NORTEL. Google also bid in that auction, but the tranche of over four thousand patents ended up with Rockstar at a price tag of $4.5 billion.

Rockstar manufacture nothing themselves, and thus is not exposed to countersuit as its parent corporations might be. Their entire staff, according to a recent profile by Wired, are devoted to tearing apart devices looking for infringing aspects, and then negotiating licensing fees from those devices’ creators. They are, in a real sense, patent trolls, but with deep pockets and the biggest backers imaginable. Ars Technica’s Joe Mullin calls them “privateers.”

The suits are being filed in East Texas, of all places because, as ForbesRakesh Sharma writes, in this particular district  “the median damages awarded to plaintiffs are fifth-highest in the country and the District is the second most favorable district for patent holders.”

If Google loses the suit—and there’s every reason to expect they will—the worst case for them is a hefty bill in damages and some onerous licensing fees thereafter. But this is about more than just the single suit. For instance, Asus, the defendant in another of the Rockstar suits, is the maker of Google’s popular Nexus 7 tablets. Could this lawsuit alter, even subtly, the way future Android devices look and feel?

And Rockster is unlikely to stop there. Amazon, for instance, while it holds a patent for “Augmenting search query results with behaviorally related items” clearly runs afoul of the same earlier Nortel patent that is being used against Google here. In the profile by Wired, John Veschi, Rockstar’s CEO, said, plainly “Pretty much anybody out there is infringing, I would think. It would be hard for me to envision that there are high-tech companies out there that don’t use some of the patents in our portfolio.”

Where does this leave the future of e-reading devices? It won’t do much to slow the inevitable rise of context-driven advertising in your ebooks. It might mean some specific devices are restricted to international markets. It could shape design elements by companies hoping to avoid licensing fees.

Above all, it adds some volatility. This full-scale attack on Android devices by Microsoft and Apple likely won’t affect overall ebook sales here—Google Play and Google devices are still minor players in the ebook marketplace, though they claim a larger margin in much of Europe. Even if similar suits are leveled against Amazon, it might inhibit them for a time, but wouldn’t sink them by any means. But it does mean that these device manufacturers are waging war more openly, which if nothing else will be fun to watch.


Dustin Kurtz is former marketing manager of Melville House.