Welcome. Thats why we felt it was important to tell our story. Sonos sued Google in 2020 over five patents, which include one that details a technology allowing wireless speakers to sync with one another. It should just be a level playing field for everybody, kind of a golden rule of, do unto others as you would do unto yourself. First of all, Id say it is totally bipartisan. We have a ton of runway for growth and were in a good position. We think that there is an overwhelming sense that the antitrust laws need to be refurbished for the digital age and indeed brought back to some of the theorizing that gave rise to those laws in the first place a hundred and something years ago. Google markets its speakers every day on things that Sonos actually invented and that they took from us. That just is the way that these things work. Later on, we actually filed a second case on a second generation of patents, which are our direct control and zone scenes patents. Or is it just, I think we have to do it, everyone nods, and then youre off to the races? Sonos first filed suit against Google in the federal court system in January 2020. How do you think about allocating resources for Eddie to go talk to Congress to fight patent lawsuits? Were probably not ahead of the curve necessarily in terms of whats there, but were certainly thoughtful about what were putting out there. Are you still hiring in Santa Barbara and Boston or are you hiring for software jobs anywhere now? Sonos said it later informed Google that it believed the search giant was infringing on Sonos' patents, according to the suit. That is an across-the-board win that is surpassingly rare in patent cases.. Lets pick out one decision because I think it will be illuminating in a variety of ways. It got to a point where I didnt feel it was constructive anymore and we needed to take action to both stand up for both consumers, in terms of having that ability to use this concurrently because weve shown we can do that, and ourselves as well. Google went on to countersue Sonos, and the conflict between the two companies is also being litigated in front of the International Trade Commission. We had a fantastic discussion and debate about the pros and cons. The District Court for Central Netherlands has rejected an injunction request by Google against wireless speaker manufacturer Sonos. Weve always found in history that its dangerous to have all that power in just a few hands. Were not seeing a great resignation. Sonos counterclaimed that Google's patent is invalid due to obviousness and lack of inventiveness. PS: We are working on some really exciting stuff that I cant wait to tell you about, Nilay. Its really led from the strategy of, What do we want to achieve in that particular area?. But then I look at Apple, and they just roll it out for free at the same price. Then the fact that I knew we had invented the space and the category. Paul Thurrott. Is that material to you? 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? The lawsuit, which was filed Tuesday in Los Angeles, says Google gained knowledge of Sonos technology when the two companies worked together to bring Google's streaming music service to Sonos . Then Eddie and I have a conversation with Brittany [Bagley], our CFO, around the right investments to make. The patent troll issue, as its generally known, is a real one. Has it made it better? Alphabet Inc.'s Google LLC filed two lawsuits Monday in a California federal court, alleging in one that Sonos Inc.'s audio players with a voice-control feature infringe three patents, and in the other that they infringe four different patents, expanding an already heated battle over royalties for various technologies.. You can go see those and you can work around them if you want to invent. 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. We also have Eddie Lazarus, the chief legal officer at Sonos. Lazarus says Sonos was granted a preliminary injunction in a German court against a Google affiliate for allegedly infringing on a Sonos patent that enables and controls the transfer of media content from a mobile phone or tablet to one or more playback devices. When did you do it? Do you feel outgunned? NP: But the labels dont care; they just want to get paid. You want them both on your speakers. Its probably even more existential for a lot of startups, quite frankly, that are trying to compete and go into new spaces because theres a very clear playbook now, where in these new areas, certain companies will jump in and theyll use their other kind of dominant monopoly area to cross-subsidize and really suck the oxygen out of the room. Connect everything Smart home control The Google Assistant works with hundreds of home appliances and other smart devices. Eddie, I dont know if you want to add anything. Weve been solving problems and innovating generation after generation of this company. Turn on the TV with your voice using the Google Assistant on Sonos Beam. By the way, they think of themselves as inventors in and of themselves some of my lawyers are actually inventors on patents. During that time, the matter will be subject to a presidential review. Every one of them survived, five for five. That is something Im still trying to figure out with some of the Web3 technologies. Beyond my responsibilities as CEO of Sonos is to be watching whats happening a little broader in the industry and notice patterns. Youre always investing ahead of the curve as well. If somebody decides, Hey, I dont want service A, for whatever reason they choose, they can go to service B. After that initial ruling, the full commission met to consider whether to accept or overturn that decision. PS: Its pretty well-defined at this point. Theyre still going to be trillion-dollar market cap companies whether these laws pass or not, but its going to allow the smaller players more oxygen and a fairer environment. Apple, Amazon, they all spent similar amounts. NP: When you said you had to engage your board, you go to the board meeting and you say Were going to do this. What is the case you lay out? 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. We do it in a unique way. Thats a big cost. How has this litigation affected your relationship with Google? The court might agree. I try to keep it as small as possible in terms of that feeling, culturally, but its hard at this number, certainly. The patent portfolio as a revenue stream is the other part. Sonos wins patent lawsuit, Pixel phones and other Google devices face sales ban By Nadeem Sarwar January 6, 2022 Google and Sonos have been locked in a long-drawn legal battle over patent. Google, I think, infringes over 100 of those today. January 7, 2022. Its just self-evident that the law needs to change in ways that wont compromise these large companies. Sonos filed a patent infringement lawsuit against Google at the beginning of last year. Some people will say, Well, thats great, because now theyre selling it under cost. As we saw with Google Photos, they will sell it under cost until theyve driven competition out of the market. As part of its suit, Sonos asked for a sales ban on tons of Google hardware, including Nest. Through this entire period, again, weve been continuing to innovate and introduce new products. We put out a couple every quarter. NP: This is the Decoder question. They want to lean back and then at the same time, they want an on-demand service. Read Sonos, Inc. v. Google LLC, No. PS: Id take you back to my point about the decision to sue Google and take this path. Thats a lot of room to run to take more and more of that $89 billion. Or are we going to put guardrails in place that foster competition? Who knows? Sonos claims Google actually infringes over 150 patents, so how did they pick five to sue over? This was great. I hear a lot about the technology. My assumption is that Apples just taking the hit because they can afford it. Of course. Eddie Lazarus, the chief legal officer at Sonos, told The New York Times, "We appreciate that the ITC has definitively validated the five Sonos patents at. Thats a lot of partnership work. I just had my team together in person last week. That is job one. Seven more patents are allegedly infringed upon according to these latest cases. If Im doing both of those things, this is part of it standing up for our people, and the fact that we are inventing things here. The conflict began in 2020. You want to be bringing out new features and functions and making sure youre making it better over time. All of the things that so many companies picked up in the pandemic were already a normal course of operating for us. The teams done an incredible job. Im glad to have you both. We bring out products which our existing customers buy more of. Thats pretty impressive. They were a great sounding board. On Saturday, a judge ruled that Google . Lets start all the way back at the beginning. The case concerns technology around the latter's smart speaker products. Okay. We have talked several times, Patrick, about wanting them both to be active at once. NP: Patrick, you mentioned Sonos has been around for a long time. In response, Google had to change how some of its speakers worked, including reducing some functionality. Spotify or Sonos maybe cant. I started here at the beginning of 2019. But now youre also responsible for what they say or do or program, which I think has been shocking to many tech companies. EL: I think thats just wrong. It seems like I can just look at the pricing of music services and say, Okay, it seems like theres cross-subsidization here. Its way harder to look at the price of a Google Home and say, I know how much that should cost and this is cheaper than it should be. When youre putting together your lawsuit against Google, how do you go about making a determination where you are confident that, this seems really unfair and potentially illegal, and were going to go make that case?. Anybody who says they know exactly what its going to look like a year or two from now is just fooling themselves. In fact, we just talked about this at our offsite at Patricks house this week. Just look at our track record and the actions we have taken over the last five years. Google and Sonos have been battling it out in the legal arena for a while now, with Sonos alleging that Google infringed on its patents. Sonos is a classic American success story, and Google's piracy of its technology is a tragedy. Epic Games, creator of the popular Fortnite game, sued Apple and Google over app store commissions. Parties, docket activity and news coverage of federal case Sonos, Inc. v. Google LLC, case number 2:20-cv-00169, from California Central Court. Thats a problem, but thats not a problem that should be solved by punishing companies that are truly innovative have solved problems that no one else had solved before and who are facing a competitor who is actually taking those inventions. NP: Its way more intense than when the PR person is there. 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 . Actions speak louder than words. I think the country would be better off with thousands of companies that are innovating and employing more and more people than enabling all that power in a few hands. Thats the fun stuff that occurs out of everybodys line of sight the generational process of capturing one wave of innovation after the other. 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. 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. Theyre coming to us because they understand that having real-world, detailed examples that are frankly, kind of easily understood is very important. We have these amazing people inside the organization. The impact of the ruling on Googles business appears limited, because the import ban is likely to have little impact on newer products that use different technologies. Back in January, Sonos won a key round in a patent dispute with Google when a U.S . Tactically, Eddie, youve got to go into that patent portfolio and pick some to litigate. On 6 January 2022, as reported by The New York Times, the US International Trade Commission (ITC . Are you like, I just vibe with these guys, or do they do decks? PS: It is, again, keeping it in perspective of what were trying to achieve overall. Everybody knows what patents we have. We did feel it was important at least to plug into that process and understand what was going on. So they werent surprised when I came to them, because they knew I felt like it wasnt heading in a constructive direction. And then they will gouge customers. Sometimes you also need to think about which decisions need to get made when. Back in January of last year, a smart speaker company by the name of Sonos initiated a lawsuit against Google, accusing it of stealing original features for its own speakers. You have a large patent portfolio that maybe a younger company like Eero had not acquired or built. How are we working as a team together? That leads how I work with the team, how I think about the industry, and who I engage with outside of Sonos. Weve been able to pick up some talent we never wouldve been able to before. We had tried to address this constructively. How did you make the decision to have political activism become part of that Sonos story? I get that part. NP: Every tech company that veers into programming lands in this place where you have to pay Kareem and Erykah Badu. I felt that was a good balance for really what we try to do. Hes like, He doesnt even need the help. You just bought a company called T2. NP: Patrick, Im curious for your perspective on this. I think theyve gone through a long road here a journey of discovery on what it means to be the programmer. For me, the real test with Web3, blockchain, all of these areas, is, whats been built that solves a customer problem in a better way?. So far, thats been the learning as well okay, people will listen to both. One of the things you have mentioned to me over the years is your desire to change the culture of Sonos when you first started: You wanted to make it a more nimble organization that innovated faster. Sonos first sued Google in Los Angeles federal court in January for allegedly infringing five patents. 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