3 Questions Answered About the Google/Sonos Patent War...

Gaston Kroub

For a relatively small company, albeit one with a reputation for making premium products for an affluent clientele, Sonos has been in the news quite a bit over the past few weeks. Some of that news has been favorable, with rumors of an Apple takeover sending shares soaring earlier this week. At the same time, the company announced yesterday that it was laying off over 10% of the company’s workforce and closing its flagship NYC store. On top of these important developments, investors in Sonos are also watching the nascent patent dispute between the company and Google as well. For their benefit, here are three questions answered about that dispute.

Q1 - What is the status of the competing lawsuits?

A1 - Each of the 3 pending cases are in extremely early stages. The one that is furthest along is the International Trade Commission (ITC) investigation initiated by Sonos against Google. In that case, Sonos alleges that Google infringes on 5 patents. While ITC cases generally move more quickly than those in District Court, patent disputes of this magnitude still take time to resolve. The first substantive process in the ITC will be the claim construction process — that will unfold over the summer under the current schedule.

In addition to Sonos’ ITC case, there is a companion District Court case asserting the same 5 patents currently pending in the Los Angeles area. The parties in that case were supposed to file a joint status report apprising the judge of the status of the ITC action. That deadline was missed and the report will likely be filed next week. It is relevant to whether the Court will enter a stay of the case pending resolution of the ITC action, a common occurrence when parallel actions are filed in both fora.

Finally, Google filed its own case — asserting 5 of its patents — against Sonos in San Francisco a few weeks ago. Other than an initial conference set for September, nothing of note has happened in that case yet.

Q2 - Why were these cases filed in different courts and places?

Venue is an important strategic consideration for litigants in patent cases. For Sonos, filing in the ITC was likely done in the hopes of getting to a favorable resolution on the merits more quickly than in District Court, before a forum with dedicated resources and deep experience in resolving patent matters. Add in the possibility of an exclusion order blocking importation of the accused products and an ITC filing is an important component of Sonos’ apparent total war strategy. Because there are no damages in an ITC dispute, filing a companion case in a district court is important to keep the possibility of a monetary recovery absent settlement alive. For its part, Google filed its own case in San Francisco — it’s home court, despite a reputation as a defendant-friendly jurisdiction — as a counterbalance to Sonos’ filing in Los Angeles.

Q3 - Why did Google have to say it was “reluctantly defending its patent rights” when it countersued Sonos?

A3 - In patent circles, Google has a clear reputation. It is known as a frequent target, a tough defendant, and instrumental in getting legislation passed that has made recovering from patent infringers more difficult. Google also takes pains to file patent cases of its own rarely, in order to maintain its public posture as an aggrieved target of patent claims, rather than the initiator of them. At the same time, mega-patent disputes can be difficult to settle (the expected result in 95%+ of patent cases) unless there is equal risk to all sides. So Google had to bring its own patents to bear against Sonos, if only to introduce the risk of Sonos needing to pay damages for its own patent infringement. The hope for Google, of course, is that by escalating the dispute, a pathway can be forged to a settlement based on a cross-license, rather than the mega-bucks return Sonos may have been hoping for. Even though Google came under some criticism for the move, including for using acquired (from its huge transaction with Motorola) patents in its countersuit, it really had no choice but to introduce some risk for Sonos.

At this point, it is safe to say that the battle lines are drawn. While the parties will likely continue to consider settlement and do everything they can to strengthen their positions for those discussions, investors in Sonos must stay abreast of the legal developments for as long as they last.