Space Data strikes win in getting key Project Loon patent canceled

Project Loon (X)
The first Loon balloons were launched in New Zealand. (X )

The legal war between tiny company Space Data and Alphabet’s moonshot X subsidiary, previously Google X, continues as the U.S. Patent and Trademark Office (USPTO) reportedly agreed to cancel most of one of Project Loon’s foundational patents.

The case, which consists of claims of “eerie similarities” in how Project Loon’s balloons move with the wind exactly the way Space Data’s balloons sail in the “peaceful band,” pits some longtime industry veterans against the much larger search giant. It's made all the more notable given that Google's relationship with Space Data has ties to the 700 MHz spectrum that Verizon bid for and won in 2008. 

Last month, the USPTO basically said Space Data came up with the idea first for changing a balloon’s direction by adjusting the altitude, putting Loon’s patent legally back in Space Data’s hands, Wired reported last week.  

A spokesperson for Space Data wasn’t immediately available for comment. An X spokesperson told FierceWirelessTech via email that “We don’t comment on active litigation. We don’t believe their claims have merit and are vigorously defending ourselves.”

According to Wired, Alphabet has never before had any of its 36,000 patents change hands because of “interference,” the term for when a patent describes the same invention as an earlier filing from another company. The USPTO decision changes the dynamic of the case, which is headed to trial in 2019, because Alphabet can’t argue that the central invention was its own, according to Brian Love, co-director of the High Tech Law Institute at Santa Clara University School of Law, who was quoted by the publication.

Space Data filed suit last year alleging that Project Loon improperly used Space Data’s confidential information and trade secrets that Space Data shared with Google in 2007 as part of a nondisclosure agreement (NDA). Talks about a possible Google acquisition of Space Data fizzled in 2008 after someone leaked information about a potential deal to The Wall Street Journal in violation of the NDA.

RELATED: Google accused of stealing idea for Project Loon

According to the initial complaint, Space Data and Google executed an NDA in December 2007, shortly after which the Arizona company provided Google with access to confidential and trade secret information. Because it looked like Google might be interested in acquiring Space Data, details were shared, including financial models to show that a Loon project was commercially feasible and worth Google’s investment.

Space Data was formally incorporated in 1997 and filed its first patent related to the balloon technology in 1999. In 2004, the company deployed a number of balloons covering four states, serving oil companies and oil field service companies. The company says its SkySite network has provided wireless services from a constellation of balloons in the stratosphere on a commercial basis since 2004.

The company uses inexpensive weather balloons to carry radio transceivers to altitudes between 60,000 and 100,000 feet, where they hover far above commercial aircraft. Space Data is also licensed by the FCC to provide narrowband PCS nationwide and has broadband spectrum licenses in remote and rural areas, including Alaska and the Gulf of Mexico.

Alphabet and Google attorneys argue that Space Data's claims should be dismissed because the company fails to present facts that support its claim about how Google positions its balloons. In February, a California federal judge said she would dismiss with leave to amend Space Data’s suit, saying the wireless services company needs to be more specific about which trade secrets Google allegedly stole, according to Law360 (reg. req.).

For the past few months, Project Loon has been delivering basic internet connectivity to tens of thousands of people in flood-affected areas in Peru. X partnered with Telefonica, the Peruvian government and others to deliver more than 160 GB of data.

In February, the company announced that Project Loon’s smart software can send small teams of balloons to form a cluster over a particular region where people need internet access. That represented a shift in the original model for Loon, whereby they planned to create rings of balloons sailing around the globe.

Led by the chief of moonshots, Astro Teller, engineers at X experimented with various materials to make their balloons. Teller has talked about how in the early manufacturing process, the balloons were so big, they had to stand on them and they discovered that wearing fluffy socks made a difference in preventing leaks. Engineers have also described times prototype balloons got away in the U.S. and people reported them as UFOs. 

Space Data also accuses Google of stealing its "if found, please call" label idea for retrieving materials.