Rockstar, a patent consortium owned by Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Ericsson (NASDAQ:ERIC), Sony, EMC and BlackBerry (NASDAQ:BBRY), dropped a lawsuit against Huawei. Rockstar had sued Huawei, Google (NASDAQ:GOOG) and other Android manufacturers last fall, arguing that their products infringed on patents owned by Rockstar, which bought a trove of Nortel Networks' patents in 2011.
The dropping of the lawsuit represents a cracking in the coalition of Android OEMs Rockstar went after. The other defendants, besides Google, are Samsung Electronics, ZTE, LG Electronics, HTC, Pantech, and Asustek.
It's unclear if Huawei actually reached a formal settlement with Rockstar in exchange for Rockstar filing a motion to dismiss the lawsuit. "As a world-leading innovator and patent holder, Huawei has great respect for intellectual property rights," William Plummer, Huawei's vice president of external affairs, said in a statement to FierceWireless. "Licensing and cross-licensing of intellectual property rights is the normal course of business in the ICT industry-- litigation is the exception, not the rule."
However, FOSS Patents' Florian Mueller, who first reported on the filing, noted that "it would be utterly unrealistic to believe that Rockstar would let Huawei use those patents without a royalty-bearing license. Whatever the basis of this settlement may be, a 'freebie' it's certainly not." The vast majority of Huawei's smartphones run Android.
Rockstar paid $4.5 billion for the 6,000 patents that bankrupt Nortel offered up for auction in 2011. Rockstar is primarily backed by Apple, which paid $2.6 billion into the effort. BlackBerry paid $770 million for its share of the patents, Ericsson paid $340 million and the remaining $790 million was split among cloud-storage company EMC, Microsoft and Sony. According to a report from Wired, Rockstar for the past several years has employed 10 full-time workers to reverse-engineer various products in a search for infringing companies. Rockstar would then pursue those companies for patent licenses.
In Rockstar's lawsuits, the consortium notes that Google participated in the auction for Nortel's patents, starting with a $900 million bid and offering as much as $4.4 billion. Thus, Rockstar notes, Google is well aware of the value of the patents.
Indeed, shortly after Rockstar won Nortel's patents in auction, Google announced in 2011 its $12.4 billion acquisition of Motorola Mobility, which Google at the time said was partially to obtain Motorola's trove of 17,000 patents.
"The Huawei settlement is a problem for the remaining defendants because it suggests to the court and possibly one day to a jury (or multiple juries) that Rockstar's infringement allegations have merit," Mueller added. "It increases the likelihood of other 'defections' from the Google-led defensive alliance."
Meanwhile, Apple is still hammering away at Samsung in the companies' long-running patent battle. In November, Apple won $290 million in damages from Samsung after a jury ruled in its favor in a retrial of the smartphone titans' 2012 patent infringement clash.
Earlier this week, Judge Lucy Koh of the U.S. District Court of Northern California issued a partial summary judgment in an ongoing Apple/Samsung case that invalidated one Samsung patent and found that Samsung was infringing on an Apple patent, CNET noted.
- see this FOSS Patents post
- see this CNET article
- see this ZDNet article
Apple wins $290M in new patent infringement verdict against Samsung
Rockstar, backed by Apple, blasts Google and Android handset makers with patent lawsuits
Apple's $1B patent victory over Samsung has long-term implications for smartphone industry
Apple paid $2.6B of $4.5B Nortel patent bounty
Apple, Ericsson, RIM and others win Nortel patents for $4.5B
Google shields Android from patent lawyers with $12.5B Motorola Mobility deal
Aritcle updated Jan. 23 at 5:10 p.m. ET with a comment from Huawei.