How do you make that decision? Sonos Startups Indonesia's Broom builds out automated asset-backed lending for used car dealers Kate Park 7:00 PM PDT March 13, 2023 The Indonesian used car market is on a course for growth. The patent battle between Sonos and Google just went in the speaker maker's favor, with a final ruling finding that Google imported and sold products that infringed . This category accounted for 18 percent of Alphabets revenue in the third quarter, which ended in September. PS: How do I make decisions? PS: Innovation is at the core of everything we do. How was Sonos structured when you took over? Sonos said it was pleased with the preliminary ruling, which it said "confirmed Google's blatant infringement" of Sonos patents . John Deere now employs more software engineers than tractor mechanical engineers, which is utterly surprising if you think about it. In fact, I think its an advantage for us. That is where the bulk of our investment and our time and our energy goes. Thats why your intellectual property people are here, they love the products as much as all of us do, and they want to make sure that we are protecting those inventions. I think commonly people think that the money just wins. Everybody knows what patents we have. We were upfront with all of our partners and let them know what we were doing ahead of time so they understood where we felt it fit. It really is the core of the system and why we can introduce new products that make the system better over time. Theyre coming to us because they understand that having real-world, detailed examples that are frankly, kind of easily understood is very important. You have a large patent portfolio that maybe a younger company like Eero had not acquired or built. "We will seek further review and continue to defend ourselves against Sonos' frivolous claims about our partnership and intellectual property," a Google spokesperson told us. Usually the choice is made for you because youve just got a few patents at issue, but here we decided we would take our first-generation patents first. Something Ive learned over my career is how to set up the organization to do that. Im super proud of the team. Thats one of those things that were being very thoughtful about: how we bring people together. Thats just wrong. Turn on the TV with your voice using the Google Assistant on Sonos Beam. The patents were illicitly used to . Google started as a search engine more than two decades ago. By Mark Knapp. Sonos sued Google in 2020 over five patents, which include one that details a technology allowing wireless speakers to sync with one another. But just in terms of, how do you figure it out, we dont have to figure it out because some of the top executives admitted that they were selling below cost when they testified in Congress. Googles going to say that these patents are invalid or that theyre not infringing. The global audio market is $89 billion a year in sales. Thats why 99% of my time goes into innovation, what are we doing for customers, all of those things. We have a long conversation on innovation and how much we need to be investing to continue to drive our business and grow our business. Then were just thoughtful about what it says about Sonos based on the artists that were bringing onto the platform. A range of companies now have taken political positions against the tech giants. Weve created a world in which customer expectations continue to increase as well. The patents at issue cover technology for setting up home audio systems, the synchronization of multiple. Google was the only target actually sued. And Eero eventually had to sell itself to Amazon. Sonos said Google was violating more than 100 of its patents and proposed a licensing deal to Google. I have one fellow on my team who works part-time with me on the policy stuff. Sonos has recently been in the spotlight for its financial troubles during the covid-19 pandemic and for its feud with Google, which has seen the two companies trading one lawsuit for. Im keeping the board up to date on our partnerships, our conversations with all of our key partners as we go through this, and kind of where we are. And everybody in the smart speaker space is infringing on our intellectual property. Anybody who says they know exactly what its going to look like a year or two from now is just fooling themselves. Im just learning. I think they know, obviously, with us testifying in Congress and Congress being very supportive of making sure that theres no retaliation for doing that, theyve been on their best behavior as well. Then they potentially infringed on some of your technology to make their speakers go. Sonos sued Google in early 2020. NP: Patrick, Im curious for your perspective on this. PS: I think theres probably something to that, but I also think the labels are pretty smart,like Eddie said, about trying to keep it a pretty level playing field in terms of whats there and not simply let it become a loss leader either. If theres not change, if these lawsuits dont work and get Google to the table appropriately, are these existential issues for you? Our team will figure out how to work most effectively. Has it strained it? Epic Games, creator of the popular Fortnite game, sued Apple and Google over app store commissions. Most of our homes listen to both a radio service and then have an on-demand streaming service as well. A U.S. trade agency is taking a closer look at Sonos Inc. 's claims that Alphabet Inc. 's Google infringes patents for home audio systems and is considering whether to shut some Google smart . Remember, the most important thing for us is being open and supporting all the services that matter to our customers. Similar topics It is bipartisan. Others in the industry are more constructive in their conversations with us. Going to the labels for access is a different layer of the music rights stack. NP: Whereas Apple can just wave away a zero margin. If something does happen in Web3 and theres a transition or a shift in terms of how music is delivered or serviced, we will be there to support it for our customers. They drove out a business and then whoa, imagine that! Sonos had asked the trade commission to block imports of Google products that the speaker company says infringes on its patents. It was an area where I felt it would be complementary to what a lot of our partners are doing as opposed to anything that is really competitive. The proofs right there in the testimony. Its such an unusual circumstance where you have the luxury of being able to choose. I think the other side of that coin is that, hey, if we are inventing things, people shouldnt just be able to copy those things and put those out into the world and do that. In January 2020, Sonos filed two lawsuits against Google, claiming that the latter stole its multiroom speaker technology and infringed on 100 patents. NP: Obviously you guys have a lot of partnership deals with the platforms the Spotifys and Apples of the world. I guess its a choice, Nilay, at the end of the day, of, are we okay with the ultimate result where it is going to be one or two companies and we all work for those companies and we all buy our stuff from those companies? Thats a big cost. Weve been solving problems and innovating generation after generation of this company. Software patents are pretty controversial to begin with, so I wanted to understand how Patrick and Eddie decided to take the risk of a lawsuit here. PS: From everything Ive seen, I think that is right. NP: See, you start doing the lawsuits. The final ruling by the United States International Trade Commission, a quasi-judicial body that decides trade cases and can block the import of goods that violate patents, closes a two-year investigation into the intellectual-property dispute. But then I look at Apple, and they just roll it out for free at the same price. Theyre just charging the same rights to everyone. Both of you have testified before Congress. Theres two things that I say I spend my time on. Its really us, as well, sharing with our customers our perspective on the world, to some degree, and the kind of artists that we think should be celebrated. NP: Eddie is proud of you. Unfortunately, this means your existing speakers will lose a helpful feature, which is never a good thing. How has this litigation affected your relationship with Google? Its a symbiotic relationship with the engineering teams. And we won on infringement on all five as well. Every generation of that innovation is being infringed by Google. Here we go. We have these amazing people inside the organization. Every one of them survived, five for five. As cynical as I am by dint of being a lawyer, I am enough of an optimist that I really believe, in this case, narrative is going to win. On Tuesday, Sonos sued Google in two federal court systems, seeking financial damages and a ban on the sale of Google's speakers, smartphones and laptops in the United States. We think thats horrible for the consuming public. NP: Thats actually interesting because you litigated some of those patents before with Denon. The teams done an incredible job. Are you like, I just vibe with these guys, or do they do decks? With technology conglomerates under scrutiny from regulators and politicians, other smaller rivals are challenging the business practices of the industrys biggest companies in court. We have a really great culture. How big is the Sonos team? Were building great hardware and some of these things, so some people need to be in the office. NP: Do you sit in a yearly budgeting meeting deciding how much to spend on hardware engineering versus legal services? Back in January, Sonos won a key round in a patent dispute with Google when a U.S . Its the price to the consumer where it seems that, in order to not be a money-losing proposition, you have to charge an appropriate rate with an appropriate margin. They ought to pay you royalty for it. If somebody decides, Hey, I dont want service A, for whatever reason they choose, they can go to service B. The import ban will go into effect in 60 days. As The New York Times notes, the products affected. Sonos also has two patent infringement lawsuits pending against Google in federal court. EL: I was new to Sonos when we started making these decisions. He was like lasering No comment! into your brain. Sonos said it later informed Google that it believed the search giant was infringing on Sonos' patents, according to the suit. Sonos (SONO) alleges that Google (GOOG) stole its technology for creating a system of. It accused the company of copying some of the technologies most critical to its speakers, including its Trueplay tuning tool . So were going to hold them to account in court until theyre willing to come to the table and give us a fair royalty. Youre always investing ahead of the curve as well. Google infringed on audio patents held by Sonos Inc. and is barred from importing some of its Nest audio speakers and other violating products, a U.S. trade agency ruled on Thursday. In this photos, a Sonos Roam speaker is seen. That is the most important thing to me. The lawsuit is part of a cross-jurisdictional battle between the two companies which spans Canada, the U.S., France, the Netherlands, and Germany. Its largely a commoditized circumstance, but we have some licensing folks who get into it with the major labels, but its not been a source of any contention or anything like that. Its pretty standard. Obviously, we started to get into new categories as well. But that is a pretty big shift in terms of what were doing from work from home. I try to keep it pretty focused in terms of the amount of time that I will put into this. Then they fundamentally said, All right, Patrick, call the shot in terms of where were going.. Where are we setting our priorities? What talent do we need on the team? Is that to help you make headphones? The phrase you used was, biased to action, which I have ruthlessly stolen, by the way. People have liked the curated station. You can go see those and you can work around them if you want to invent. How are we working as a team together? Sonos filed a lawsuit over claims that Google stole its multiroom speaker technology during its 2013 partnership with the company in which both agreed to work together in order to bring. One of the things were advocating for on Capitol Hill is that they actually make some adjustments to the standard to modernize the law. "With its update," the lawsuit states, "Sonos acted by force to limit consumer choice instead of competing lawfully, based upon the quality and servicing of its devices." The plaintiff says that after both of his CR100 controllers failed, the devices displayed a message directing him to www.sonos.com/cr100, which states, in part: U.S. District Court Judge Edward M. Chen granted a motion to dismiss one of the patents used by Google in its countersuit against Sonos on Monday, agreeing with the smart speaker maker that the technology described in the patent in question represented an abstract idea that was "not patent eligible." We just think the self-evident nature of this, once people understand whats really happening, is going to carry the day. NP: We have spent a lot of time talking about Google thats obviously who youre suing. PS: We are working on some really exciting stuff that I cant wait to tell you about. How do you make that call between the ones youve won with before versus the ones that youre going to put at risk? In late September, for example, Google filed a declaratory judgment action to try to head off Sonos' assertion of additional patents in a second infringement case against Google. Or is it just, I think we have to do it, everyone nods, and then youre off to the races? I think people need to step back from that potential knee-jerk reaction and understand why we have a system the way we do and the way that its being abused right now to eliminate competition. NP: Well, thats a good place to wrap it up, but were not going to wrap it up because Im just going to ask you about new products. 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