Google Inc. (GOOG) received some happy news from the U.S. Patent and Trademark Office(USPTO).  Oracle Corp. (ORCL), who contends that code used by Google's Android smartphone operating system infringes on patents held by Oracle acquisition Sun Microsystems, was dealt a setback by the USPTO who recently reexamined three of its patents.

I. Victory Over Oracle

Oracle's patents pertaining to Java were dissected during a re-review by the USPTO.  Of the 66 claims in the patents, 50 of them were subjected to reexamination.  Of those, 46 of them were ruled invalid.  At a 92 percent invalidation rate, the USPTO is sticking close to the 90 percent rejection rate that academic studies found it averages during re-reviews.

If Oracle's remaining four patents receive similar treatment, Oracle's six patents could be reduced from around 168 claims to around 51 claims.  Further, as some of the remaining claims are likely dependent claims, the damage to the patents will likely be severe, if the current course is followed.

Depleted of its legal firepower, Oracle may be forced to drop the case or offer Google a favorable licensing settlement.  In short things are looking very good for Google in the case.

II. Google Staff Face Subpoenas

In the bad news department, the U.S. Federal Trade Commission is reportedly preparing to issue subpoenas of Google staff in the investigation into whether it abused its dominant search and web-advertising position, according to The Wall Street Journal.

Subpoenas are a key tool to investigators as they can provide key testimony and insight into a company's inner workings.  While the investigation is currently only a probe, the results of the subpoenas could lead to a full fledge investigation.

Antitrust lawyers say it will be difficult to prove that Google acted illegally and abused its internet monopoly.  The company is facing lawsuits that claim it looked to crush small service competitors in the Android ecosystem, using underhanded tactics.  However, emails obtained in these cases show Google employees learned from the 1990s antitrust case against Microsoft Corp. (MSFT) and were more careful about what they committed to writing.

That said, Google has set aside $500M USD, according to financial documents, to cover possible antitrust fines.

Google, currently under investigation being formally investigated by the European Union for antitrust violations, serves approximately two-thirds of internet searches.  The company's rivals accuse it of deceptive display of search content, using rival firms' content without permission, manipulation of search results, and buying out would-be competitors.

Describes Fairsearch.org, an industry group representing Microsoft, Expedia, Inc. (EXPE), Kayak.com, and Sabre Holdings, "Google engages in anticompetitive behavior…that harms consumers by restricting the ability of other companies to compete to put the best products and services in front of Internet users, who should be allowed to pick winners and losers online, not Google."

Finer details will likely be ironed out as the FTC balances Google and its competitors’ statements.  Nonetheless, subpoenas would make the first major probing of Google's competitive behavior, not pertaining to a specific acquisition.  For that reason Google's executive management can't be too thrilled about this development.