Tech Giant IP Love Fest? Probably Not

Battles among today’s big dogs of high tech can create some pretty dramatic headlines. This is particularly true for intellectual property battles—especially when those battles come with multibillion dollar price tags and the threat of product-distribution injunctions. One bad judgement or verdict can send stock prices plummeting and execs running for cover.

It’s a lot more entertaining to see these patent dust-ups through the eyes of the alarmists who imagine clashing egos and impending financial ruin. The truth, however, really isn’t that exciting.

Ever since phones and computers started to merge, tech IP owners have been making necessary (or seemingly necessary) IP acquisitions and then forming cross-licensing agreements with companies that previously weren’t even in each other’s field of vision. This has been occurring with reliable regularity over about the last five years and DTC thinks it’s just about over. Once the IP assets are bought and sold and the inevitable cross-licensing agreements are signed, the patent-infringement lawsuits will dwindle and the eye-popping valuations of certain IP will float back to earth.

But, no less than the likes of Microsoft and Google made recent IP news with the announcement that they’ve ended smartphone (and other) patent-infringement litigation and presumably entered into a cross-licensing agreement. They have also, along with a handful of Internet heavyweights, formed an alliance to develop a “royalty-free” next-generation video compression technology.

The patent litigation truce falls under the dull cross-licensing category. The genesis of the Google v. Microsoft story is the Google acquisition of Motorola Mobility. The computer software giant and the maker of cellular phones (then owned by Google) wouldn’t have had much reason to do cross-licensing negotiation before the computer, its software and the cellular telephone came together like the tasty combo of peanut butter and chocolate. (Aside: Google kept the patents when it sold Motorola to Lenovo).

Google/Microsoft cross licensing? Check.

What role does the Alliance for Open Media—the codec-developing consortium which also includes Netflix, Amazon, Mozilla, Cisco and Intel—play in the sudden Google/Microsoft friendship? Probably not a very big one. The IP litigation truce is much more substantive and has immediate consequences, one of which is ending costly and distracting litigation.

The Alliance appears to have less meat on its bones. It says it wants to “create a new, open royalty-free codec specification based on contributions of members, along with binding specifications for media format, content encryption and adaptive streaming.” Developing a new codec, especially one that won’t infringe on core video compression technology IP, will likely take years even though Google, Mozilla and Cisco have been working separately on new codecs.

The timing of this sudden friendship comes on the heels of news that a new patent pool for the HEVC/H.265 codec, HEVC Advance, proposes to charge royalties for content,  including all Internet content encoded in H.265. Internet content providers and distributors have so far avoided paying royalties on ITU/MPEG based video compression technologies. The Alliance may very well be developing a next-generation (after H.265) codec, but the immediate goal was more likely to send a message of displeasure to the new patent pool.

The coming together of tech giants like Microsoft and Google for cross-licensing agreements or R&D consortiums doesn’t portend a slackening of competition among tech giants. It just confirms what we’ve always known. Everybody temporarily plays nice in the sandbox when cooperation gets you want you want.