Skyhook Says A Preliminary Injunction Against Google Could Help Level The Playing Field in the Mobile Location-Finding Space

[Updated 11/18/10] After lawyers from Google and Skyhook Wireless convened in court yesterday, a Massachusetts’ Suffolk County Superior Court judge is deliberating whether to prevent the Mountain View, CA-based Internet giant from issuing compatibility standards for its Android mobile phone platform that could largely keep Boston-based startup Skyhook out of the location-finding space.

The move comes as part of a lawsuit Skyhook filed against Google in September, where it alleges that the California company intentionally interfered with contracts Skyhook landed to get its technology into Motorola and Samsung Android phones. The complaint says that Google engaged in “unfair and deceptive trade practices.”

In a hearing Wednesday, Skyhook sought a preliminary injunction that would prevent Google from setting technology standards rules for its Android mobile phone platform that it says would unfairly exclude Skyhook’s technology. If enacted, the move could have both practical and philosophical implications for how Google determines what technology can go into Android phones. “Conceptually it’s very easy,” Skyhook lawyer Morgan Chu said at the hearing. “We want a level playing field.”

The Skyhook lawsuit contends that in order to promote Google Location Services, its own free system for the Android platform, Google interfered with contracts Skyhook landed with both Motorola and Samsung earlier this year that would have put Skyhook’s “XPS” location-finding system in their Android phones. Shortly after Skyhook landed the contracts, Google changed its definitions of what makes a device compatible with its Android platform, to define phones with the XPS software as non-compliant, Skyhook CEO Ted Morgan told Xconomy earlier this fall. (The lawsuit actually refers to the second mobile company as Company X, but the company’s identity as Samsung can be surmised from the case details, as Wade wrote in his recap of the litigation in September. The contract does not permit Skyhook to name Samsung directly.)

Soon after the Skyhook-Motorola contract was announced, Google vice president of engineering and Android overseer Andy Rubin called Motorola co-CEO Sanjay Jha to inform him that the company could not ship its Android phones with the Skyhook technology, Morgan said. Motorola shipped its phones with Google’s location-finding technology instead, a breach of contract that cost Skyhook millions of dollars in royalties, according to the legal complaint. A similar situation played out with Company X, which had already begun shipping phones with the XPS technology, and had reported no issues with the devices, Skyhook lawyers said Wednesday in court.

In Wednesday’s hearing, Skyhook made it clear that it thinks Google made some deliberate moves to keep it off the court as a competitor. The company says that Google has a subjective standard for compatibility that it adjusted specifically to make Skyhook’s XPS system unsuitable for the Motorola and Company X phones. Skyhook claims the mobile phone makers it had previously signed contracts with had to drop out of the agreements due to Google’s edicts.

In opposing the injunction, Google lawyers stated that Motorola’s termination of the contract had nothing to do with Google’s compatibility standards. Google lawyer Jonathan Albano said at the hearing yesterday that Motorola ended the contract in part because Skyhook failed to perform. [Editor’s note: this sentence was rephrased for clarity at 3:30pm on 11/18/10.] He also said that Google had a contract with the phone makers before Skyhook did—surrounding the collection of user data with its Google Mobile Services (GMS) apps that come standard as part of the Android platform. I contacted Albano for more details on these arguments, but have not yet heard back.

In seeking the preliminary injunction, Skyhook is not asking that the contracts it previously had with Motorola and Company X be enforced, only that the court order Google to in effect loosen its compatibility requirements so that the mobile phone makers can decide to do what is best for them. This also means asking the court to prevent Google from issuing stop-ship orders for phones already including Skyhook’s technology. Skyhook is also asking the court to order that Google inform it of any changes to the requirements for location-finding technology in the Android platform, so that the company can modify its software to meet those standards and have a fair shot at the market. “The injunction would specifically preclude Google from interfering with Skyhook contracts or threatening cell phone manufacturers to force them to choose Google location software over Skyhook’s superior XPS software,” according to Chu. [Editor’s note:  This story was updated with Chu’s comment at 3:50pm 11/18/10.]

Skyhook is looking for these actions to go into effect immediately, even as the court decides on the full merits of the lawsuit. The two firms are next scheduled in court in January, for a hearing on Google’s motion to dismiss the suit.

The impact of Google’s actions for seven-year-old Skyhook, which depends on licensing contracts for its revenue, is grave, the lawsuit claims. Beyond the preliminary injunction, the startup is asking for monetary damages from Google. Skyhook has also filed a separate patent-infringement lawsuit against Google in the U.S. District Court for the District of Massachusetts, relating to four patents it has on technology that enables mobile devices to determine their locations based on their proximity to mapped Wi-Fi networks. In this case, Skyhook is seeking an injunction that would terminate Google’s in-house location service.

The implications of this case could go far beyond the immediate dispute over Google’s alleged interference with Skyhook’s Motorola and Samsung contracts. Skyhook has claimed that Google’s attempts to make Google Location Services the dominant location-finding service on Android phones stands in direct contrast to the open-source ethos the company has previously espoused with the Android project. As Wade noted previously, Google’s About page for the Android project reads: “We wanted to make sure that there was no central point of failure, where one industry player could restrict or control the innovations of any other.”

There’s also another revenue stream at stake for the winner, in the form of all the data that is generated by the Wi-Fi and GPS-based location-finding technology. Companies in the targeted mobile ad space are willing to pay for this information, which can reveal where mobile users are at a given time and provide good clues about what they are doing. So the company whose technology makes it into most Android phones is the one that could win big in that slice of the mobile market. (Skyhook formerly provided Wi-Fi-based location finding services to Apple for its iPhone line, but Apple now uses its own technology, presumably for the same reason.) At Wednesday’s hearing, Skyhook lawyers claimed that the database of user information the company has accumulated would take a hit and “atrophy” if Google’s actions to exclude its technology persisted.

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