Can Google's Larry and Oracle's Larry Get Along?
How long will the Larry & Larry Show run?
Oracle (NAS: ORCL) and Google (NAS: GOOG) CEOs Larry Ellison and Larry Page have less time to run their respective businesses these days. Both companies first tried to send lower-ranking executives to a series of court-ordered settlement talks, but to no avail. District Court judge William Alsup suggested in no uncertain terms that only the best was good enough.
So the two tech-titan leaders duly attended a first settlement talk yesterday, trying to untangle a hairy mess of an intellectual property case. Oracle claims that Big G had no right to model the software development tools for Android on Java, which the database giant acquired along with the rest of Sun Microsystems last year.
Google believes that using Java tools for Android development is perfectly fine as many of the components have been published under a royalty-free open source license. Oracle disagrees with a vengeance and asks for billions of dollars in back damages plus a royalty on future Android sales. It's a high-stakes game of chicken, and arguably the reason why Oracle paid $7 billion for Sun to begin with.
So it's no surprise that TheWallStreetJournal reported an unproductive first day of settlement talks. The issues are too large and too thorny to be hammered out in a couple of hours, even with two CEOs at the table.
Big G has armed itself with a couple thousand patents from IBM (NYS: IBM) , just in case this lawsuit goes to trial. Many of the Big Blue patents acquired seem to deal with server technology and system software, which would come in handy for countersuits against a very large software house with a newfound interest in Sun's server hardware. These weapons sure seem more appropriate for the Oracle battle than anything MotorolaMobility (NYS: MMI) might bring to the table.
Also worth noting is the fact that Google Chairman and former CEO Eric Schmidt played a central part in creating Java to begin with, as CEO of Sun in a former life. You'd think the guy might have some insights into the software and at least early versions of its licensing scheme. So Google isn't completely defenseless against Oracle's assault.
Still, there are no sure things in lawsuits except for death, taxes, and lawyers getting rich. If you're invested in Google, this suit is a dangerous game. For Oracle, you're looking at potentially huge gains if the company gets a finger into the only smartphone platform that has truly challenged the Apple (NAS: AAPL) iPhone so far. If you're Apple, onerous licensing costs could slow down Google's momentum.
Either way, it's definitely in your best interest to keep a close eye on the proceedings. Add Google to your Foolish watchlist by clicking here, and add Oracle right here to stay updated on all news as settlement talks progress.
At the time this article was published Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies discussed here. The Motley Fool owns shares of Oracle, IBM, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Google and Apple as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders'holdings and a concise bio, follow him on Twitter or Google+, or peruse our Foolish disclosure policy.
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