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Google in a patent pickle?

Attorney Eric Sinrod takes a closer look at claims by RTI on the search giant's use of Internet phone technology.

As technology companies become established and financially successful, it is not uncommon for smaller businesses and individuals to allege that those larger, established companies have infringed and trampled on intellectual property rights during the rise to the top.
A correction and a disclosure were made to this story. Read below for details.

Many of these allegations lack merit, and do not go past the demand-letter stage, or result in lawsuits that are dismissed before they have gained much traction.

Once in awhile, however, the allegations stick. Indeed, a small company called NTP obtained a substantial jury verdict against Research In Motion, the maker of the BlackBerry. NTP had alleged that RIM's BlackBerry wireless e-mail devices and services infringed dozens of NTP's patent systems and methods. RIM has been fighting that jury verdict in subsequent legal proceedings ever since.

Apparently, there have been settlement discussions between the companies, which could yield a significant payout to NTP.

The key questions that are emerging center on just how bogged down Google might get in a legal morass, and how much of a distraction it might prove.

Another small company, Rates Technology Inc., or RTI, now seeks a sizable recovery from the really, really big kid on the block--Google. RTI has filed suit against Google in federal court in New York, arguing that the search giant has infringed two of RTI's patents by way of the search giant's marketing and selling of Google Talk VoIP services and related products. The smaller company seeks damages caused by the alleged infringement, including a tripling of lost profits and royalties. RTI also requests a court injunction that would bar Google from further marketing and selling Google Talk services and products, which use VoIP, or voice over Internet Protocol, technology to let people make phone connections via the Internet.

The two patents at issue were assigned to RTI by the inventors and bear patent numbers 5,425,085 and 5,519,769. The abstracts for the 085 patent describes it as follows:

"A device interconnects within the phone line coming from a first phone and routes telephone calls along a least cost route originating from the first telephone to a second telephone via the network. A housing forms an enclosure and has a first jack for interconnection to the phone side of the phone line and a second jack for interconnection to the network side of the phone line. The housing forms an enclosure which includes a switch for disconnecting the first phone from the network. The device generates a source of current through the switch to the first phone corresponding to the amount of current provided by the phone network. A database stores billing rate parameters for determining various communication paths of different carriers based on parameters such as the time and date of the call.

Google might argue that RTI is trying to hold it hostage to try to extract a major settlement.

"Phone calls from the first phone are detected and stored. The database is addressed and a plurality of communication switch paths are identified as well as the cost rate of each path. The cost rates for each identified path are compared to determine a least cost route for the call. The device generates a number sequence corresponding to a desired carrier so that the dialed call is routed through the second jack and phone line to the selected communication path and carrier so as to establish a switched connection between the first and second phones."

Thick stuff, eh? These types of patent cases are complicated as a matter of technology and law.

RTI's president, Jerry Weinberger, put it more succinctly late last month: "When a VoIP call can be transferred to the regular PSTN (telephone network), the switching of that call infringes our patents."

As the companies square off for what could be a long battle, the key questions that are emerging center on just how bogged down Google might get in a legal morass, and how much of a distraction it might prove.

Google has already said it will "vigorously" contest RTI's patent infringement claim, and the search company undoubtedly will present various defenses. It might also try to paint RTI as a "patent trolling" entity--asserting that RTI has obtained numerous patents from others and uses them to litigate frequently, as has been reported. Google might argue that RTI is trying to hold it hostage to try to extract a major settlement.

Google isn't the only company that RTI is pursuing. Weinberger said his company has already received one-time technology usage fees from heavyweights including Yahoo, Microsoft and Cisco Systems, has sued Vonage and Cablevision, and is in discussions with Skype and America Online.

To the extent that RTI truly has valid patent rights and Google Talk VoIP services and products infringe those rights, it might be able to gather a head of legal steam, arguing that Google improperly seeks to grow even larger on the back of RTI's patents. RTI could make that argument whether or not it has obtained other patents and has initiated litigation against other parties over time.

It is quite possible that this case will proceed to the point where Google ascertains RTI's case could survive early efforts at a dismissal. At that point, serious settlement talks could ensue, or RTI, like NTP in the BlackBerry case, might want to take its chances at trial.


Correction: Due to an editing error, this column gave the wrong name of a cable service provider being sued by RTI. The company being sued is Cablevision.


Disclosure: Several months after this column was posted, Eric Sinrod learned that other attorneys in his 600-lawyer firm were representing a defendant, Vonage, in one of the lawsuits filed by RTI.? Sinrod himself is not involved in the case, and was unaware of his firm's involvement at the time he wrote the column.