Sonos who have been struggling from declining sales is set to reap revenue from royalty payments after Google was told by the US The U.S. International Trade Commission to stop importing into the USA, phones, smart home devices and laptops that are using Sonos’ patented inventions without permission.
Apart from Google speakers the ban also affects sales of Nest Hubs, Nest Wi-Fi points, Pixel smartphones and Pixelbook laptops.
Google has 60 days to implement pre-approved software changes to avoid having the ban take effect.
Sonos shares rose 4.71% after analysts’ factor in the possibility of increased revenues.
The ruling was a “clear win” for Sonos and provides further proof that the firm has industry-leading intellectual property that it can successfully defend, Katy L. Huberty, an analyst with Morgan Stanley, said in a note to clients.
“We’ve seen Sonos defend its IP and negotiate licensing agreements with smaller competitors,” Huberty wrote. The ITC ruling “against one of the largest technology companies in the world marks an important point in Sonos’ path towards monetizing its IP portfolio.”
The big question now is will Sonos go after other competitors and will it deliver additional sales for Sonos as Google already has a solution to using Sonos patented technology.
Sonos claims Google learned of Sonos’s technology under the guise of a working partnership to integrate Google Play Music into Sonos products, but instead used the patented ideas in its Home and Chromecast systems and Pixel phones and laptops Google like Apple has in the past simply stole the technology.
Google has filed its own claims in district court accusing Sonos of trying to take credit for work owned by Google and said Sonos has “misrepresented our partnership and mischaracterized our technology.”
There is also the possibility that Google could stop Sonos from having access to Google Voice technology leaving Sonos having to use Amazon’s Alexa.
Sonos has been losing market share to lower-cost devices from Google and Amazon as well as brands such Bowers & Wilkins Ultimate Ears and Denon.
Reaching an agreement won’t be easy or fast. That Google can work around the import ban means “remote odds of a near-term pact,” Tamlin Bason, an analyst with Bloomberg Intelligence, said in a note.
He said Google is looking to chip away at how much it would have to pay in royalties. Bason said the next big catalyst is in one of the suits between the companies in California where a June hearing “will test the strength of each side’s case.”
The case is In the Matter of Certain Audio Players and Controllers, 337-1191, U.S. International Trade Commission (Washington).
