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TheStreet Open House

Google Headed for Patent Showdown

NEW YORK ( TheStreet) -- Google (GOOG) has gained some mighty enemies.

The unlikely consortium of Apple (AAPL - Get Report), Research In Motion (RIMM), EMC (EMC), Ericsson (ERIC), Sony (SNE) and Microsoft (MSFT - Get Report) that paid $4.5 billion for Nortel's patent portfolio is perhaps the clearest sign yet that the tech sector is dividing into two camps.

"The battle lines are drawn, and it's basically the world against Google," said Recon Analytics' Roger Entner.

Google's loss in the Nortel auction puts about 6,000 patents in networking and wireless technology into the hands of its rivals.

The move comes as patent wars heat up in the mobile industry, which is enjoying enormous growth in segments like smartphones, application development and location-based advertising.

Not only does the loss put Google at a disadvantage in patent cases, it also threatens to raise the cost of Android operating system, which could slow the rapid expansion of Google's mobile software.

Google, which helped launch the auction when it originally offered Nortel $900 million for the patents, was a little bitter about seeing the assets fall into enemy hands.

"This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition," Google told Bloomberg Friday.

The setback is one of many lately for Google.

Oracle (ORCL), for example, said this week that it is looking for $2.6 billion from Google for use of the Java codes in Android as part of a patent dispute that started last summer.

And last week, arch enemies Nokia (NOK) and Apple came to a sudden agreement over wireless phone technologies. The swift resolve had all the markings of some behind-the-scenes brokering by Microsoft in order to assure a smooth launch of the Nokia Windows 7 phones later this year.

The alignments are largely a response to how successful Google has been in mobile thanks to its popular, low-cost Android operating system.

"Right now," said Entner, "Android is the one to beat."

And judging by the consorting of its enemies, the beatings will start soon.

Google shares were rising 1.74% to $515.18 in late-morning trading Friday.

--Written by Scott Moritz in New York.



>To contact this writer, click here: Scott Moritz, or email: scott.moritz@thestreet.com.

To follow Scott on Twitter, go to http://twitter.com/TheStreet_Tech.

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