Oracle Sues Google - Analyst Blog

For Google (GOOG), the list of adversaries just grew longer. Oracle (ORCL), which dominates the business software space, recently filed a lawsuit in a federal court against Google, accusing the Silicon Valley giant of infringing on the patented Java technology it inherited from Sun Microsystems. After a protracted antitrust review in Europe, Oracle was able to acquire Sun Microsystems, which invented the Java software, in a $5.6 billion deal.  
 
The suit, filed with the U.S. District Court for the Northern District of California, alleges that Google’s Android operating system software infringes on patents and copyrights related to the Java programming software. It is hard to tell whether the allegations are sound, due to the limited comments from either side and the fact that Java has been used by many software developers around the world. 
 
It is evident that the Android ecosystem is large and growing. Research firm Gartner Inc. notes that smartphones using Android edged past Apple Inc.’s (AAPL) iPhones in the second quarter, taking the No. 3 position and accounting for 17.2% of the smartphone market. These are stunning numbers (even if Google did give away a large number of devices for free). If Google’s development efforts and industry research are to be believed, the strong growth in Android-based devices will continue in the foreseeable future.
 
Oracle has tried to highlight Google Chief Executive Eric Schmidt’s deep familiarity with the hugely successful Java language (Schmidt was Sun’s chief technology officer when the programming language was being developed). Oracle has also stated that Google has been aware of Sun's patent portfolio, including the patents at issue, since the middle of this decade, when Google hired certain former Sun Java engineers. Since Java employment rules did not prevent such appointment, there doesn’t seem to be any reason for crying foul on this count.
 
The question to be decided here is whether Google had the right to use the technology that it did to develop Android or whether it used technology it was legally required to license from Sun. Google executives have denied charges. We will have to wait and see what the court decides. Either way, the stakes are high.