Oracle Wants to Pick Its Poison

Business software giant Oracle (Nasdaq: ORCL  ) is trying a novel tactic in its high-profile lawsuit against Google (Nasdaq: GOOG  ) . Please delay or even toss out the patent claims in the suit, the company asks of Judge William Alsup. That way, the perhaps-more-promising copyright claims could move ahead much faster.

This doesn't mean that Oracle is giving up on its patent claims against the Android platform. The proposed dismissal would be without prejudice, meaning that Oracle could simply start a separate lawsuit over those claims later on.

Still, it's a pretty drastic proposal. According to intellectual property expert Florian Mueller, this is a sign that Oracle wants an injunction against the sale of Android devices rather than a fat damage award.

If a trial starts, and then begins to lean toward such an injunction, Google would have no choice but to settle the whole shebang for a truly astronomical sum. I mean, a totally game-changing bank check. At the last quarterly report, Big G has over $40 billion in cash equivalents -- or more than one-quarter of Oracle's market cap.

And from the way Oracle describes Android in these court papers, you'd think the platform held the secrets to truth, beauty, and eternal life. Relying on the court-ordered discovery process plus analyst estimates, Oracle says that Google lands another $10 million of annualized sales every day from 700,000 new Android activations. By the end of the year, that figure could more than triple.

At that rate, Google would have a $13 billion annual revenue generator on its hands. And that's only the tip of the value iceberg, according to Oracle: "This revenue does not even include all the other value Android generates for Google, ranging from Android Market revenue, to other Android-related services, to ensuring that Google will not be locked out of the mobile business, to lucrative relationships with manufacturers of myriad devices on which Android can and does run, to the inordinately valuable access Android provides to customers for its new social network service, Google+."

Oracle wants a large piece of that action. Most Android apps were made with tools created for Oracle's Java language, after all. According to Java co-creator James Gosling, the prospect of filing megalucrative suits against Google and Android was perhaps Oracle's biggest motivation to buy Sun Microsystems: "During the integration meetings between Sun and Oracle, where we were being grilled about the patent situation between Sun and Google, we could see the Oracle lawyer's eyes sparkle."

Will Oracle's gambit pay off or backfire? As a Google investor, I'm clearly convinced that the Android model holds water. Every IP lawyer in the house should feel welcome to weigh in on the outcome in the comments section below. In the meantime, investors in the mobile space might want to see some direct market plays that don't rely on Android, iOS, or any other particular platform killing all the others.

Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies mentioned. The Motley Fool owns shares of Google and Oracle. Motley Fool newsletter services have recommended buying shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.


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  • Report this Comment On January 20, 2012, at 11:19 AM, zoningfool wrote:

    Well now, this makes the Sun acquisition look like alot more sound a decision than those currently flagging hardware sales indicate. Thanks for the article!

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