Okay, even I will admit that my prior post on this litigation was somewhat one-sided. I took the weekend to gain some clarity and be more objective. I am still not a fan of the litigation, but let’s be honest, what’s a big fish to do in a gradually shrinking pond when there are bigger fish that mooching from its food supply?
First, Oracle spent a small (massive to me) fortune to take over Sun Microsystems and its IP portfolio ($5.6 billion). At that time, Larry Ellison said that Java was the most important piece of software his company had ever acquired. That was an understatement. Java is everywhere. You cannot compute in today’s society without coming across a Java application or applet. Oracle reports that billions of devices run Java ME, a version of the Java programming language for applications built for mobile phones and other devices (e.g., TV set-top boxes and printers). Therefore, Oracle might view the Google patent work-around as a threat to one of its revenue streams (estimated by Peter Goldmacher, an analyst at Cowen and Co., at $250 million per year). Would you lay quietly? I think not.
Second, Oracle’s patent rights permit it to exclude others from making, using, selling, offering for sale, or importing the patented invention. Therefore, to protect the integrity of your invention, and maintain the ability to exclude others, you sue. In other words, why does a dog lick himself? Because he can.
Importantly, we all know that patent lawsuits tend to settle with licensing agreements that grant each party the right to use the other’s technology. Do I need to remind you again of Microsoft’s $1.6 billion payment to Sun in 2004? Oracle may be attempting to expand the revenue stream of Java – either before it becomes defunct or in anticipation is some great expansion. Alternatively, in all likelihood, Oracle is attempting to gain some leverage in its licensing negotiations with Google, which started long before the lawsuit was filed. The other potential fruit of this litigation is a piece of the magic between Google and handset manufacturers (either phone or tablet). Ka – wait for it – ching!!!
My final thought on this, which is not original, is that Oracle dumped a lot of cash into the Sun deal knowing that there was a large target on Google. That tells me that Oracle hoped to get several billion dollars in a licensing deal with Google, and several billion more from handset/tablet manufacturers. Nice investment if you play your cards correctly. However, you will get burned if you slow-play those pocket aces.
