On August 13, 2021, a federal judge issued a preliminary ruling that Google had infringed on five Sonos patents. The preliminary ruling is a notable victory for the developer and manufacturer of speakers and home sound systems. Compared to the BigTech giants, Sonos is a relatively small company, with an approximate value of $5 billion. Alphabet, Google’s parent company, is a trillion-dollar company.
Sonos initially brought a patent infringement lawsuit against Google in January 2020. The lawsuit targeted Google’s smart speakers. The company claimed that the Google Home and Nest Audio line contained similar hardware and audio features that violated its patents. Sonos also believes that Amazon is violating its patents, but the company decided to focus its efforts on Google.
Chief administrative law judge (ALJ) Charles Bullock of the U.S. International Trade Commission (ITC) issued the preliminary ruling. While Sonos has stated it believes Google has violated over 100 of the company’s patents, it chose to focus its legal battle on five patents. The five patents are related to synchronizing audio, adjusting volume, and WiFi connectivity.
Outcome of the Lawsuit
Following the preliminary ruling, Sonos’s stock price surged over 10%. However, it is likely to be a long legal battle. Sonos first sued Google in California federal court in January 2020. Google retaliated with a counter lawsuit in June 2020. The countersuit alleged that Sonos was actually infringing on Google’s patents. The company then sued Google again in September 2020. It filed its lawsuit in the Western District of Texas, known for its patent-owner friendly rules.
Today the ALJ has found all five of Sonos’ asserted patents to be valid and that Google infringes on all five patents. We are pleased the ITC has confirmed Google’s blatant infringement of Sonos’ patented inventions,” said Sonos’ Chief Legal Officer Eddie Lazarus. This decision reaffirms the strength and breadth of our portfolio, marking a promising milestone in our long-term pursuit to defend our innovation against misappropriation by BigTech monopolies.
Jose Castaneda, a Google spokesperson, pushed back on the outcome of the preliminary ruling. Google has claimed that it independently had developed technology containing similar features. “We do not use Sonos’ technology, and we compete on the quality of our products and the merits of our ideas. We disagree with this preliminary ruling and will continue to make our case in the upcoming review process.”
Possible Ramifications of December 2021 Ruling
The final ruling will occur in December 2021. U.S. Trade Representative Katherine Tai will make the ultimate decision. If Sonos wins, Google likely must pay retroactive licensing costs. Sonos hopes to strike a royalty agreement with Google for a portfolio of its patents. Experts says that the the company could earn $50 million per year from such a royalty arrangement. A decision in favor of the company could also result in an import ban of certain infringing Google products. Approval of an import ban would have to be weighed against considerations of the public interest.
Based in Santa Barbara, California, Sonos is known for wireless speakers that cost over $300. The company’s products work with Apple Siri, Amazon Alexa, and Google Assistant. Founded in 2002, the nineteen-year-old company has grown its market share over the years.
“Google has been blatantly and knowingly copying our patented technology,” stated Patrick Spence, the CEO of Sonos. “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.”
What Could the Sonos Decision Mean for Smaller Tech?
If the company wins again in December’s final ruling, it could also prove a win for other smaller tech companies against BigTech giants. Companies such as Google, Amazon, Apple, and Facebook have been accused of adopting ideas from smaller companies, who often do not have the resources to engage in lengthy legal battles with large tech players.
Some analysts think Google will drag out the legal battle to squeeze Sonos financially. “There’s elements of a Pyrrhic victory here,” states Tom Forte, a senior research analyst at D.A. Davidson & Co. “They could get the decision they want but then Google could decide not to let them integrate the Google Assistant anymore.”
Others think a legal victory for Sonos could provide a substantial boost to its business. Revenues from a royalty agreement with Google could enhance the company’s financial outlook. Sonos reported a $20 million loss last year.
Regardless of the ultimate legal outcome, Sonos will face staggering competition from Amazon, Apple, and Google. Unlike these three BigTech companies, the company does not have its own voice assistant. This makes the company dependent on these other companies when offering Sonos speakers to accompany its voice assistant technology.