By Alicia Lai, JD Candidate L’21
The biggest news of CES 2020 (the annual Consumer Electronics Show highlighting hot new consumer tech gadgets on the floor of a Las Vegas showroom) revolved around a company that was not present at the show yet designed its entrance for “maximum impact” at CES. On January 7, 2020—an hour before the doors opened for the first day of the fair—the New York Times broke the story that the audio company Sonos was suing Google for patent infringement.
In its complaint filed in the US District Court for the Central District of California, Sonos alleges that Google had infringed upon five of its patents for various aspects of multi-room audio devices and systems—for example, how to set up a playback device on a wireless local area network, how to manage and control groups of playback devices, and how to synchronize the playback of audio within groups of playback devices. It also alleges that Google had gained knowledge of this technology through a joint partnership with Sonos in 2013 (when Google was not yet a competitor), and later utilized the technology in the Google Home Mini, Google Home, Google Home Max, and Pixel phones, tablets, and laptops, despite four warnings since 2016. The complaint further states that Google has subsidized its infringing products at the entry level, flooding the market, resulting in significant damage to Sonos.
Sonos CEO Patrick Spence released a public statement saying, “Google has been blatantly and knowingly copying our patented technology . . . Despite our repeated and extensive efforts over the last few years, Google has not shown any willingness to work with us on a mutually beneficial solution. We're left with no choice but to litigate.” He has also been called to testify before the House Judiciary Antitrust Subcommittee.
The industry was quick to frame the lawsuit as a “David vs. Goliath” battle between tech companies. The recent district court complaint underscores the difficulties that smaller tech companies face when working in the shadow of larger tech giants who have the leverage to squeeze their smaller competitors. Not only can Amazon and Google price their speakers lower ($50, with further discounts) relative to Sonos’ ($200), the business relations of the companies are intertwined. The last several years have snowballed into Sonos’ dependence upon Google and Amazon: Sonos relies on Google’s advertising to consumers; it uses Amazon’s servers; it sells its speakers through Amazon’s storefront. Especially with initiatives to promote the interoperability of digital assistants, there is more pressure for accessories to be compatible with the entire suite of technologies, like Alexa, Google Assistant, and Siri. In 2017, when Sonos joined an alliance with Amazon to make its virtual assistants functions together, Google refused to join. Sonos executives claim that Google threatened to pull its support from any company working alongside Amazon, Microsoft, or Baidu. Promptly, Sonos dropped out. Additionally, Google and Amazon have threatened to pull their support if Sonos enabled simultaneous wake words (allowing speakers to listen for both “Alexa” and “Okay Google”), which would establish Sonos as a competitor with Google and Amazon’s own products. Sonos’ recent suit in the face of the threat of retaliation is perhaps what has CES 2020 abuzz.
Yet this lawsuit may not provide the fruition that Sonos hopes. Their complaint seeks financial damages as well as a ban on the sale of Google’s speakers, smartphones, and laptops in the United States. Prevailing is no easy task. As a preliminary matter, the costs of litigation may prove unsustainable for Sonos: Google has the option to drag on the dispute by employing inter partes review before the PTAB to invalidate Sonos’ patents (likely 1-2 years) then filing motions and countermotions in federal court to prove non-infringement (likely several more years). In 2018, Google’s revenue was $136.8 billion; Sonos’ revenue was $1.1 billion. Already, Sonos has lamented that while Amazon also infringed its products, Sonos only has the resources to sue one tech giant. Here, Google needs only to run out the clock.
Even if Sonos can stomach the costs of litigation, the remedies would likely be inadequate. Following a Supreme Court decision in 2006, injunctions for patent infringement became much harder to obtain. In eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the court established a four-factor test for injunctions, including proof of “irreparable harm” and “public interest.” While this curbed the extortive effect of patent trolls, it also dampened the power of small companies to force infringing big companies to negotiate a license or pull products off shelves. If the district court only issues a financial remedy, this suit may well be classified as another successful case of efficient infringement, for better or for worse. Google certainly has the means to write it off as a business expense—perhaps an expensive one, but one that would have bought them the past, present, and future use of the technology.