Competition Through The Courts

The mobile phone industry has been the scene of enormous competition and innovation. Mostly this has taken the form of software and hardware companies hiring engineers to try to build better mobile devices and sell them to consumers. Firms have risen and fallen, and nobody knows where it will end. But what we do know for sure is that all of us now have access to much better phones than were available five years ago. It's like a capitalist's dream. And then we have the bidding over the corpse of Nortel Networks:

Google is the youngest of these companies and has probably the smallest patent portfolio, most of which isn't mobile or telecom related. This puts Google and Android at a legal disadvantage and explains the 45 patent infringement suits that one analyst says Google in presently facing in the mobile area alone. Google would have preferred to win the auction, but with the consortium sitting on more than $100 billion in cash, the outcome came down to determination, not resources. Google stayed in it only long enough to make sure of the consortium's intentions and to make the purchase more painful for them, if that mattered. It certainly mattered to Google, because that $4.5 billion number will be at the heart of the inevitable anti-trust lawsuit Google will file almost immediately. Every good anti-trust lawyer in America just cancelled his or her July 4th holiday to prepare their pitch for Google, which will probably claim Restraint of Trade as well. Given that the courts will shortly be involved, Google can probably operate unfettered for another 2-3 years, during which they'll try to build their own mobile patent portfolio. Google may well be able to use the courts to slow the actual Nortel transaction, too, according to my lawyer friends.

This kind of competition in which huge sums of money are sent to lawyers and consultants has a very different dynamic. When Google and Apple compete with one another in terms of designing better products, they're both trying to enrich themselves. But their efforts spill over and enrich consumers at large. When Google and Apple compete with one another in terms of designing better lawsuits, they're both trying to enrich themselves. But in this case, their efforts spill over and enrich law firms.