Android Lawsuit: Google's Gonna Pay, but Not as Much as Oracle Wants

In Oracle's (ORCL) patent infringement lawsuit against Google (GOOG), both sides have taken extreme views. "We want billions and billions," said Carl Oracle Sagan. "Read my lips: No new taxes," snaped George Call-Me-Google-But-Not -Junior Bush. It looked as though Android might be taxed out of existence.

But now we have another voice: "Get real," says Judge William The-Grownup Alsup. Nothing like a note of reason to turn a situation upside and let the world of mobile commerce peacefully amble on.

The law of large mean numbers
Although a number of Android-fan commenters strongly disagree, it looks inconceivable that Google could show non-infringement on all fronts given the number of patent claims that Oracle has asserted. Oracle was pushing for a $2.6 billion payment, including a 10 percent to 15 percent cut of all ad revenue Google got from the mobile platform, but not including the "network market" promotional effect value that Google's brand receives from Android use.

Google would have had to cover those costs somehow, and an Android usage fee for hardware vendors would seem the logical way to do it. Free Android only makes sense if Google can get enough out of advertising to see a good return on investment. With the other potential royalties that vendors might have to pay Microsoft (MSFT) or Apple, this would have been a heavy blow to the business model.

Everyone goes into time out
Alsup has brought some needed perspective and balance to the argument: "You're both asking for the moon and you should be more reasonable." He called Google's assertion that it owed nothing "ridiculous," but set expectations for a potentially much lower range of damages than what Oracle sought:

Google will have to pay damages "probably in the millions, maybe in the billions" if it is found liable in the case, Alsup warned. But the judge seemed to agree with Google that an Oracle expert had gone too far in estimating damages of as much as $6 billion, although he did not formally rule on Google's motion to throw out the expert's report.

The Dalvik virtual machine, which allows Android to run Java code, was a contentious point between Google and Sun Microsystems as far back as 2007. The creation of Dalvik was an attempt to get around Sun's licensing at the time. If Google did infringe on patents that apply to the virtual machine, claiming that the action was unknowing is going to be pretty hard to prove.

Related:

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• 4 Big Questions About Google Android's Success
• How Microsoft and Oracle Will Tax Google Android Out of Existence
• Google Blows It Big Time: Microsoft, Apple, RIM Get Nortel Patents
• Apple Says Uncle to Nokia; Welcome to the Next Phase of Mobile Competition