After cutting deals with Cisco, Samsung and LG, Google shakes hands with Verizon Communications over a long-term patent cross-licensing agreement that will help both companies avoid the risks of future patent litigation.
Both companies announced the deal, which will cover a "broad range of products and technologies," but declined to provide further details about what patents will be included in the agreement. The agreement will not provide both companies access to the thousands of patents owned by each, but it will prohibit both companies from suing each other over patent infringements of any of their existing patents and patents acquired by each company in the next five years.
"This cross license allows both companies to focus on delivering great products and services to consumers around the world," says Kirk Dailey, Google's head of patent transactions. "We're pleased to enter into this agreement with an industry leader like Verizon, and we welcome discussions with any company interested in a similar arrangement."
Verizon says the deal will also help reduce the risk against patent privateers, or big companies that sell their patents to small companies that then sue the bigger company's competitors in an attempt to distract them or collect royalties without the risk of counter-litigation. This practice has long been known to thrive in Silicon Valley, where low-quality patents abound and the justice system usually favors plaintiffs over defendants.
The result is an industry where companies are afraid to innovate for fear of litigation and where they would rather pay the massive licensing fees rather than face patent litigation.
"In high-tech industries like ours, the patent system can be exploited to get in the way of innovation," says Verizon's general counsel Randal Milch. "High-tech products can implicate thousands of patents, and when patent litigation takes years, costs millions of dollars, and comes long after innovators have launched new products, the Johnny-come-lately owner of a single patent can threaten an entire innovative ecosystem."
Like Google, Verizon says it is looking forward to striking similar deals with other companies that want to eschew the "innovation tax" that patent trolls are imposing on technology companies.
Google and Verizon have a history as business partners, with Verizon chipping in to help Google make Android as a popular alternative to Apple's iPhone. In 2010, both companies also teamed up to draft an alternative net neutrality plan for the Federal Communications Commission, but the draft was never taken up.
Both are also rivals in some respects, with Google becoming an Internet service provider and shaking up U.S. markets with the introduction of its 1Gbps Fiber broadband service. However, in all the 34 cities Google is thinking of expanding Fiber into, not one is a Verizon market. Google and Verizon have also shown interest in telemedicine, and it's possible that both companies want to move forward with their plans without being impeded by each other's patents.