Sonos Case Against Google Gets Closer Scrutiny by ITC

(Bloomberg) -- A U.S. trade agency is taking a closer look at Sonos Inc.’s claims that Alphabet Inc.’s Google infringes patents for home audio systems and is considering whether to shut some Google smart home devices, phones and laptops out of the U.S. market.

The International Trade Commission said it would review part of a judge’s findings that Google infringed five Sonos patents and cleared product redesigns of any violation. Both companies asked the agency to review aspects of the judge’s findings that went against them. 

Specifically, the commission said it would review whether products accused of infringing two of the patents are “articles that infringe at the time of importation.” The commission said it won’t review remaining issues in the judge’s determination, and will consider a possible remedy, which could mean an import ban. A final decision is scheduled to be issued on Jan. 6.

Sonos said the notice means that the administrative law judge’s finding of a violation will stand.

“We are pleased that the commission will be affirming the ALJ’s ruling that all five Sonos patents at issue are valid and that Google infringes all five of those patents,” the company said. “We also look forward to engaging further with the commission on the details of the remedy to which we are entitled, and pursuing our damages case in District Court.”

Google denied using Sonos technology.

“We compete on the quality of our products and the merits of our ideas,” said José Castañeda, a Google spokesperson. “We disagreed with the preliminary ruling and will continue to make our case in the review process.”

Sonos claims that Google learned of Sonos’s technology under the guise of a working partnership to integrate Google Play Music into Sonos’s products, but instead used the patented ideas in its Home and Chromecast systems and Pixel phones and laptops. Google has filed its own claims in district court accusing Sonos of trying to take credit for work owned by Google.

Investors have been watching the ITC case closely, seeing it as a test of Santa Barbara, California-based Sonos’s ability to enforce its intellectual property, protect its market from competitors, and develop a new revenue stream in licensing. Sonos and Google have traded patent-infringement allegations in the U.S. and Europe.

Sonos wants imports halted at the border, as well as an order preventing sales of any Google products already brought into the U.S. An import ban could be overturned by President Joe Biden on public policy grounds, though presidents have rarely used that power. 

Google’s gadget sales are a small fraction of its business; the company doesn’t disclose revenue from devices. But Google has continued to invest in phones and home speakers as a strategy to fortify its search and media services against threats from Apple Inc. and Amazon.com Inc. A Google victory on the redesign issue would blunt the impact of any import ban imposed by the commission.

Sonos said Google is trying to evade a potential import ban by pointing to “incomplete” products that shouldn’t have been considered by the judge. 

Google acted to ensure it would never be affected by an import ban by “flooding the case with piecemeal, hypothetical redesigns, dashed off with no quality control, and never incorporated into any product through any standard product design channels,” Sonos told the commission.

Sonos has the backing of the Innovation Alliance, a group of patent owners including Qualcomm Inc. and AbbVie Inc., which said big tech companies find it cheaper to use another company’s inventions and worry about litigation later, a strategy known as “efficient infringement.”

“Ultimately, if small companies cannot look to the ITC to exclude articles that are unfairly competing in the marketplace, they may very well find themselves pushed out of the market due to larger companies’ ability to use others’ patented innovations without major consequence,” wrote Centripetal Networks Inc., a cybersecurity company that won a $1.9 billion district court judgment against Cisco Systems Inc. that’s currently under appeal.

Google said it “expended considerable resources in designing” products that worked around the Sonos patents, and that there was “overwhelming evidence” in its favor even though “Sonos threw the kitchen sink at Google’s redesigns throughout this investigation.”

Two of the five patents involve techniques to synchronize audio playback and thereby eliminate minor differences that the ear can interpret as echoes. The others involve ways to pair up speakers to create stereo sounds, adjusting volumes of either single or groups of speakers with a single controller, and a way to easily connect the system to a home’s Wi-Fi.

The case is In the Matter of Certain Audio Players and Controllers, 337-1191, U.S. International Trade Commission (Washington). 

©2021 Bloomberg L.P.