Two companies pledge to work together to push patent reform

In perhaps an olive branch between the world's two largest smartphone operating system makers -- Google Inc. (GOOG) and Apple, Inc. (AAPL) -- an announcement was made today to Reuters that all of the suits and countersuits between the companies would be dropped.

First let's clarify -- this settlement does not cover Android phonemaker Samsung Electronics Comp., Ltd.'s (KRX:005930) (KRX:005935), who recently fought Apple to an effective stalemate in a jury trial.  That said, the settlement raises hope that a settlement between the world's two largest phonemakers (Samsung and Apple, respectively) might not be far off.

What was dropped in this case were the series of suits regarding Motorola Mobility, which recently became the wholly owned subsidiary of Lenovo Group Ltd. (HKG:0992).

Motorola Atrix 4G vs. iPhone 4
After years of battling to a standstill in international courts, Google and Apple have finally agreed to settle their messy legal brawl. [Image Source: Phone Arena]

Motorola Mobility launched a preemptive strike in Oct. 2010, suing Apple, who at the time had sued Samsung and HTC Corp. (TPE:2498) -- two other major Android phonemakers.  Apple fired back with a lawsuit of its own, and expanded the battle across numerous internationals jurisdictions.
Judges acknowledged early in the U.S. hearings on these cases that it was probable that Motorola smartphones infringed on some feature cover by Apple's software patents.  At the same time, they expressed frustration that Apple refused to license those patents, instead trying to exclude its rival from the marketplace.  And they also expressed frustration that Apple refused to pay Motorola Mobility royalties for its standards patents.
Rather than ban both companies' product lines, frustrated judges have simply suggested the pair solve their quibbles between themselves throwing the case out of court three times.
Judge Richard A. Posner, a Seventh Circuit Court of Appeals judge who moonlighted in the U.S. District Court, Northern District of Illinois (Chicago) chastised the pair's behavior in June 2012, commenting, "Both parties have deep pockets.  And neither has acknowledged that damages for the infringement of its patents could not be estimated with tolerable certainty."
At the same time the case -- like others between Android and Apple -- has grown expensive and embarrassing for both companies.  Apple currently leans heavily on Google to provide a variety of iOS software, including its mapping utilities, which are still popular among iPhone users, even with the introduction of Apple's own in-house Maps product.

Google Maps on the iPhone
Apple users rely on Google for a variety of software products and internet services, including Google Maps. [Image Source: Getty Images]

In the end, recognizing the damage to both companies that was being inflicted by the "thermonuclear war" against Android -- triggered by late company co-founder and CEO Steve Jobs -- Apple offered to shut it down, and Google agreed.
The deal does not include cross-licensing.  Reuters reports:

Apple and Google have agreed to dismiss all the current lawsuits that exist directly between the two companies. Apple and Google have also agreed to work together in some areas of patent reform. The agreement does not include a cross license.

The deal does, however, include a plan to cooperate on efforts to beat back so-called patent trolls, such as Intellectual Ventures (IV).  IV has targeted Google and its allies with a variety of lawsuits.  And most recently both Apple and Google have both been sued by Microsoft Corp. (MSFT) cofounder and billionaire Paul Allen.
In the end there's a lot of reasons for Apple and its Android rivals to make peace.  And it fortunately looks like things are finally entering that phase.

Sources: Scribd [joint statement], Reuters

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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