The combination of Google and Motorola has elicited a flood of comments and analyses. Those relating to Motorola’s patent portfolio are of most immediate importance for enterprise Wireless customers. As noted by Verizon’s deputy general counsel John Thorne, “the extent that this deal might bring some stability to the ongoing smart phone patent disputes, that would be a welcome development.” This point was amplified by Marguerite Reardon, highlighting how the Motorola patents could bolster Google’s position against patent infringement actions by competitors. Android is now the top-selling smart phone operating system worldwide, reportedly commanding around 43% of the market as of the second quarter of 2011.
The debacle of IP infringement litigation is playing out in Europe. In an action brought in the Netherlands, Computerworld reports that Apple “is demanding an extensive ban on all [Samsung]Galaxy series smart phones and tablets, including a complete recall of stock by European distributors and resellers.” Enterprise customers have little interest in revisiting the wireless IP infringement precipice of several years ago when RIM and NTP settled their patent infringement litigation at the 11th hour, assuring continued use of Blackberry handsets.
One question raised by the Motorola-Google combination is whether there are options for Wireless customers to simply “rolling the dice” and hoping the Blackberry debacle is not reprised. One approach is to secure an indemnity, running from the handset manufacturer/operating system licensor or Wireless carrier or both to the customer to address 3rd party IP infringement claims. Securing the indemnity from the handset manufacturer may be doable for the largest customers.
The carriers’ preferred position is that the customer look to the equipment supplier for handset issues, such as warranty, indemnity, and continued use. That argument would ring true, but for the fact that the Wireless carriers determine which equipment customers can use on their networks. The carriers also have more insights into “ongoing smart phone patent disputes” than customers. While customers may have the option to procure and use equipment (subject to the carrier’s approval) that is not supplied by the carriers, most, if not all, of the latest and most desired handsets, particularly smart phones, and tablets are bundled with the carriers’ services. (WiFi-only tablets being the principal exception).
A practical solution is appropriate. If an IP infringement action threatens the continued use of a carrier-supplied handset, the carrier should be obligated to replace the unit with a comparable device at no incremental cost to the Customer.