Patent battles: how media makes us clueless.

The media does a major disservice to the public when they describe current patent disputes between various parties in the mobile industry. For example, the headline in Wired reads: Google Thumps Oracle In Heavyweight Bout Over Android. What's behind the headline? A minor change in the number of patents asserted against Google.

Dec 29, 2011. Wired -- Just before the Christmas holiday, as reported by Groklaw, the US patent office effectively invalidated one of the seven patents Oracle asserted against Android in a suit filed in August 2010.

Instead of 7 patents we've got 6 patents active in the lawsuit - big deal. And what if Oracle prevails, which is a highly like outcome? Wired claims "the case could have a very real effect on the mobile phone and tablet market." What's the impact?

The two sides would enter a “hypothetical negotiation,” Dergosits says, where each hires economists to estimate Google’s revenue from the product and what it’s paying other licence holders. The jury would then award damages based on these estimates.

Based on industry discussions, top estimates for licensing fees for Java are about $5 per unit. If Google wanted, they could've negotiated a volume discount, similar to the deal Microsoft made with Samsung. But Google provides Android for free and makes money on search and other services, which default to Google properties on Android phones. This way Google can claim losses on Android and try reject demands for licensing fees, which are customarily calculated as a percentage of revenue. Usually, the seller of software operating system includes the fees into the price. But ... Android is "free." Tricky, tricky, tricky.

It's funny though, that a dispute about a method of calculating licensing fees is presented in the media as a battle for or against innovation. 

tags: business, strategy, mobile, google, patents