A Japanese court has ruled that Google’s Pixel 7 and Pixel 7 Pro smartphones violate a standard-essential patent held by the South Korean company Pantech, leading to a broad ban on the devices’ sale and promotion.
Google was found guilty by the Tokyo District Court of breaking Japanese patent law by utilizing a crucial 4G LTE communication technology without obtaining a license. The disputed patent concerns the use of “acknowledgement signals” (ACK) by smartphones to communicate with cellular base stations, which are essential for preserving dependable connections in LTE networks.
In addition to banning the Pixel 7 and 7 Pro’s sale in Japan, the ruling also forbids their import, transfer, promotion, and even public display.
In one of its most promising foreign markets, where its Pixel line has been steadily gaining traction, the decision represents a major setback for Google.
A court condemns Google’s actions.
The court’s decision also criticized Google’s actions during the court case. The judge called the company’s behavior “insincere,” which apparently affected how harsh the court’s ruling was. Transparency and cooperation in court proceedings are highly valued in Japanese legal culture, and Google’s inadequate response to demands, particularly those for statistics on Pixel 7 sales, seems to have had a significant impact on the conclusion.
The severe decision was influenced by legal records that showed Google failed to completely comply with court orders and failed to pay fair royalties.
Pantech: A former company that now enforces patents
Despite having long since left the smartphone industry, Pantech still owns a number of wireless communication-related standard-essential patents (SEPs). It has concentrated on making money off of these through litigation in recent years, frequently with the assistance of IdeaHub, a company that specializes in obtaining and enforcing valuable patents.
One of the most well-known court wins for Pantech’s IP approach is this case. The business has already brought legal action against multinational corporations like BLU, Niantic, and OnePlus. Court decisions were made in certain cases, while settlements were achieved in others. Additional Pixel smartphones are in danger.
Pantech has already started additional legal action against the Pixel 8 and the anticipated Pixel 9, even though the current verdict only applies to the Pixel 7 series. According to court documents, these new cases revolve around the same LTE patent.
The extended restriction might have a big effect on Google’s business in Japan if it is approved. The Pixel 9 is anticipated to serve as the focal point of Google’s upcoming significant product cycle, while the Pixel 8 is still a component of the company’s flagship lineup.
Regardless of whether a restriction on more recent smartphones actually happens, analysts caution that even the impression of uncertainty surrounding the Pixel brand might damage sales and undermine consumer trust.
One important market at risk
A crucial market for Google’s smartphone business is now Japan. In the first quarter of 2023, shipments of Pixels in Japan momentarily exceeded those in the US, according to Counterpoint Research. Google surpassed Samsung to become the second-largest smartphone brand in the nation, behind only Apple, thanks to the positive local reception of the Pixel 7 and mid-range Pixel 7a.
This sales momentum is currently in jeopardy, and if such measures are taken in other countries, the ramifications might go beyond the Japanese market.
Inactive patents posing new difficulties
The Google-Pantech case is indicative of a larger trend in the sector, where businesses that are no longer involved in hardware development are using patent enforcement to generate income. FRAND (Fair, Reasonable, and Non-Discriminatory) terms are anticipated to govern the licensing of standard-essential patents, which are necessary for interoperability in technologies like LTE. However, disagreements frequently occur when terms of licensing are not agreed upon or when licensing is completely avoided.
Despite its controversy, legal experts point out that this strategy is growing in popularity as digital companies come under increasing scrutiny for using legacy systems.
