With a filing with the U.S. Federal Trade Commission and Department of Justice Friday, Google (NASDAQ:GOOG) hopes to stop the so-called patent privateering supported by tech companies like Nokia (NYSE:NOK). Both Nokia and Microsoft (NASDAQ:MSFT) were identified as companies who contract third-party patent assertion entities (PAEs) to enforce the protection of proprietary technology. Blackberry (NASDAQ:BBRY) was on board with Google for this FTC-DOJ filing.
The complicated nature of technology company lawsuits can shed light on the need for a PAE. Normally, if a company like Google were to file suit against a competitor like Microsoft over patents, the two companies would reach an agreement that gave credit to each individual company while determining the share each has in its technology. PAEs are useful to a company since they don’t produce products. Therefore, any settlement would lead to larger losses for the company not represented by PAEs, known in the industry as patent privateers.
Google and Blackberry claim they have been on the bad end of many deals, forcing them to take issue with the role of PAEs in the tech industry. Nokia was mentioned as an offender in this regard, though the company maintained its right to contract PAEs in a FTC-DOJ hearing last December. According to Bloomberg, a Nokia executive defended the system as “a very important channel for us to monetize and realize the value of research and development.” In this respect, Nokia is asserting its underdog status…
Nokia’s has been successful in its PAE-led efforts. It has won judgments against both Blackberry and Apple (NASDAQ:AAPL) in recent months. These rulings came around the same time that Nokia struck deal with Blackberry over future patent disputes. Google, for its part, has been hurt by a British Telecom suit. By filing this request with the FTC, Google framed its cause as a way to stop its innovations in the industry from being hampered by non-players.
Though Google clearly can afford to brush off such suits, Nokia would suffer greatly if losing any more ground in the industry. Analysts expect the Finland-based company to remain close to $3.50 per share in the coming quarter. Its sales of smartphones have been weaker than expected, as competitors managed to undercut a producer formerly known for its budget options. Microsoft showed no signs of changing its policy toward PAEs for the time being.