David Sonos v. Goliath Google

Cognitive dissonance, that's what it is. When we are growing up, small and weak, we yearn to be big and strong. We naturally admire anything that dominates. And yet as adults most of us do not dominate. We must endure submission and we resent it. We root for the underdog. So, how do you feel about Sonos beating the tar out of Google?

Alert readers will remember that I previously blogged about Sonos and its fight against predatory pricing. In particular, by its own admission, Amazon sometimes sells its Echo speaker at below cost. I noted that Sonos was no fan of Amazon and was in litigation against another big company, Google. As Patrick Spence, the CEO of Sonos, noted, “You gotta stand up to bullies.” The chickens in the Google patent lawsuit came home to roost last week.

In Sonos v. Google, in a preliminary ruling, Judge Charles Bullock found that some of Google's Nest speakers and Pixel phone products infringed on Sonos U.S. patents. Five patents were infringed; they deal with means to adjust volume, synchronize audio, and connect to WiFi. This preliminary ruling will be reviewed by the U.S. International Trade Commission, which could accept or amend the ruling. Further, the Biden administration can review the terms of the ruling.

In theory, the ruling could mean that import of those the products could be barred from sale in the U.S. Sonos previously won a patent lawsuit against Google in Germany; as a result, sale of some Pixel and Nest products are banned there. However, these sorts of things are often resolved when the infringing party agrees to pay a royalty. In either case, this preliminary ruling will strengthen Sonos as it seeks to make royalty deals with other companies; unless a company has ulterior motives, it is usually better to pay a royalty, rather then roll the dice on litigation.

No matter the resolution, the ruling is a victory in Sonos' continuing battle against its much bigger competition. Now, Sonos is hardly a mom 'n' pop operation. But its fight with Google can hardly be characterized as an even match-up. Sonos has annual revenue of about $1 billion. Alphabet, Google's parent, has revenue of $182 billion. Ditto its other competitors, Amazon and Apple.

And there is a wrinkle. Rather than pay a royalty, Goliath might decide to exert some muscle. Google has denied that it infringes on Sonos patents. It is appealing the German case, and it has counter sued Sonos in the U.S., alleging that Sonos infringes some of its patents. In other words, Google might instigate a costly legal battle that it can afford more readily than its opponent.

Perhaps, more interestingly, Google could withhold its proprietary Google Assistant from Sonos. That would present a problem for Sonos because a selling point has been giving the customer a choice between Assistant or Alexa. In response, Sonos might consider developing its own limited voice assistant. You might say “Hey Sonos” to adjust volume or change tracks, and “Alexa” to see if it's going to rain. If the companies choose the nuclear option, with Google withholding its assistant, and Sonos developing its own, it would be a little-guy versus big-guy battle royale. It could even be described as biblical.