The Implications of Commercializing IP: How Patent Rights Get Compromised in Big Tech

The Implications of Commercializing IP: How Patent Rights Get Compromised in Big Tech

Patent protection is a crucial consideration for inventors with new innovations. It ensures that innovation persists in the marketplace, and also guarantees some form of monopoly and profit for inventors who invest in engineering new solutions. However, the recent tension between Google and Sonos forces us to consider: how useful are patents to start-up companies with limited resources?

Sonos is suing Google in two federal court systems for the infringement of five patents. For a collaboration in 2013 between Google’s music services and Sonos’ home speakers, Sonos shared the blueprints to their speakers— a mistake in hindsight which led to the alleged infringement on Google’s part. Sonos is seeking financial damages and a ban on the sale of Google’s speakers, smartphones, and laptops in the United States.

Beyond patent infringement related to the company’s wireless speaker technology that allows speakers to connect and synchronize with one another, the company makes an anti-competition argument: allegedly, tech giants Amazon and Google created an environment in which Sonos would be dependent on them, only to then use their leverage to “squeeze” the smaller company. Despite attempting to enforce their intellectual property rights against Google privately through negotiations for years, Sonos has had no luck in attaining a resolution.

This type of lawsuit between Sonos, valued at $1.7 billion, and Google, worth approximately $110.8 billion, is not uncommon. Similar cases have occurred between Apple and Spotify in relation to anti-competitive practices and between Amazon and Elastic regarding trademark infringement.

Sonos was one of the first players to innovate in the wireless home speaker market in 2005. While there is a benefit to being first in the market and securing patent protection to attain a monopoly for a specified time period, “bigness” in the technology industry threatens the enforceability of patent rights. For example:

  • When Sonos initially found that Google was infringing its patents, it approached the company with a licensing contract. Google responded with a deal that would require them to pay next to nothing for the use of the technology.
  • Where tech giants infringe on patent-protected technology, they can out-compete smaller companies by offering new devices at lower prices. Google and Amazon did this by selling their speakers starting from $50, while Sonos speakers typically start at $200.
  • Large companies have significant negotiation leverage when it comes to exclusivity. For example, Google has maintained that it will pull its virtual assistant from Sonos’ speakers if users can simultaneously use other assistants from services like Apple or Amazon.

These factors put Sonos in the impossible position of having the right to monopolize a technology they developed, but not having any practical way to enforce these rights, due to a lack of resources and influence in the market.

This lawsuit is a reminder to start-up companies of the importance of a sound IP strategy before entering collaborations in the marketplace. It is important to consider what information should remain private and what protections contracts can ensure, such as an ability to freely collaborate with others in the marketplace (thus avoiding the exclusivity issue).

Written by Summer Lewis, a second year JD Candidate at Osgoode Hall Law School. Summer is also the Content Editor of the IPilogue.

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