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Google Whispers "Uncle" to Oracle -- and May Start Charging for Android Soon

The ongoing one-sided patent fight between Oracle (ORCL) and Google (GOOG) has seen a quiet but important admission, with the search giant effectively saying it would consider settling the case.

It's not capitulation, nor even an admission that the company did anything wrong. But a statement by Google in the most recent round of court filings, which patent blogger Florian Mueller spotted, suggests that it is ready to write a check to make this mounting problem go away. Given that the plaintiff is hardball negotiator Oracle, you can bet that there would be many zeros on that paper, quite possibly rendering the concept of a free Android operating system nothing but a nice memory.

The statement in question, referring to Google's proposal that Oracle narrow its case for greater efficiency, seems bland on the surface:

Such a narrowed case will also eliminate the need for those efforts specifically directed at the claims rejected through reexamination, including motion practice, expert reports, and other trial preparation, as well as make it more likely that the parties could reach an informal resolution of the matter.
It's the mention of a possible informal resolution that translates into the word "settlement." Either that, or Google's management and lawyers are naive enough to star in a 1950s children's book.

Ploy it again, Sam
This may be a legal ploy to sway the court, which has been concerned about the expansive nature of the suit and how long it could take to adjudicate. In essense, that would make it part of Google's effort to limit the number of claims that Oracle can bring to bear. Such a decision would simplify Google's defense and allow it to concentrate all resources on key patent claims.

Mueller takes the statement as an admission by Google that it's not so sure about its defenses. I don't agree. If you speak with corporate litigators and general counsels enough, you learn that they often consider a settlement in a strict economic equation: accrued legal costs and payment to the other party is less than the likely cost of a continued defense.

Still, it does suggest that Google knows it will have to pay. Oracle says that it wants $2.6 billion in damages split between an upfront payment and a 10 percent to 15 percent cut of Google's ad revenues from Android.

It's increasingly doubtful that Google can walk away without paying some kind of royalty, unless it can completely prevail on all fronts, and given the number of patents and claims involved, that certainly doesn't seem likely. Maybe Google has just become more pragmatic under CEO Larry Page -- as evidenced, for instance, by yesterday's decision to close its Google Labs arm.

But remember, this is only one battle. With a recent win at the International Trade Commission, Apple (AAPL) could conceivably block HTC phones from entering the U.S. Depending on the final results after HTC's appeal and the nature of the patent claims, this could become another impediment to selling Android phones in the U.S. Despite all the growth of Android in the mobile market, the success could still come tumbling down.


Image: Flickr user Frerieke, CC 2.0.