Sonos Inc. SONO 2.03% netted a legal victory in a patent dispute with Google, as a U.S. trade judge ruled Friday that some Pixel smartphones and Nest audio speakers infringe on Sonos’s technology and could be barred from import.
Judge Charles Bullock of the U.S. International Trade Commission found that Google has infringed on five patents related to synchronizing audio, adjusting volume and connecting to Wi-Fi. The judge’s full ruling is expected in coming days.
The initial decision should help Sonos as it presses Alphabet Inc. GOOG 0.01% subsidiary Google to strike a royalty agreement for a portfolio of patents. Amid rising competition from Amazon.com Inc., AMZN -0.29% Apple Inc. AAPL 0.14% and others, the speaker maker has looked to supplement hardware sales by licensing its portfolio of patents to other tech companies. Analysts estimate such an agreement could be worth as much as $50 million annually. Sonos reported $1.34 billion in its latest fiscal year ended Oct. 3.
The patent dispute is playing out as regulatory pressure rises for tech giants, including Google, Apple and Amazon, which lawmakers and regulators alike have accused of using their platforms to curtail competition. Sonos has helped lead an attack against those larger players, testifying before the Senate that they subsidize products to gain market share and collect data to further their dominance.
“This decision re-affirms the strength and breadth of our portfolio, marking a promising milestone in our long-term pursuit to defend our innovation against misappropriation by Big Tech monopolies,” said Eddie Lazarus, Sonos’ chief legal officer.
Google has denied Sonos’s patent-infringement claims, saying that the technologies that its products use were independently developed by Google. “We disagree with this preliminary ruling and will continue to make our case in the upcoming review process,” said José Castañeda, a Google spokesman.
Shares of Sonos rose more than 11% to $42.40 after the market closed.
The ITC case is part of a full-court press Sonos has advanced against Google for more than a year, filing a complementary patent-infringement lawsuit in U.S. District Court in California and later in Texas. It won a patent case in Germany, which has prohibited the sale of some Pixel smartphones and Nest speakers.
Google has fought back, countersuing Sonos in June for patent infringement in California federal court. Its lawsuit claims Sonos infringed on five Google patents, including ones related to echo cancellation and search. It has appealed the decision in the Germany case.
The ITC judge’s decision Friday will be reviewed by the full commission, which will have the option to accept or modify his determination. Afterward, the Biden administration can accept the ruling and allow a potential import ban or forgo it out of public interest.
The ultimate decision on a ban will be made by U.S. Trade Representative Katherine Tai. In 2013, the Obama administration vetoed an ITC ruling that would ban the import and sale of some iPhones after Apple Inc. lost a case to Samsung Electronics Co.
The commission’s final decision is expected in December. If Ms. Tai approves an import ban, it wouldn’t be introduced until early next year—after the Christmas shopping season. Most of Google’s hardware products are imported from Asia.
Any lost hardware sales would have a minimal effect on Google’s business. Last year, hardware accounted for 12% of the advertising giant’s $182.53 billion in total sales.
Several analysts played down the likelihood that Google will end up paying royalties to Sonos. D.A. Davidson & Co.’s Tom Forte said he expects Google to squeeze Sonos financially by dragging out the legal battle and potentially withholding its Google Assistant from Sonos speakers.
“There’s elements of a Pyrrhic victory here,” Mr. Forte said. “They could get the decision they want but then Google could decide not to let them integrate the Google Assistant any more.”
Others were watching the decision and the expected negotiations closely because licensing patents is a high profit-margin business, which would help Sonos boost its bottom line. The speaker maker reported a $20 million loss last year.
Sonos’ business has boomed over the past year as people sequestered at home bought new speakers to upgrade their sound systems.
Still, the company has faced competition from Amazon, Apple and Google, which have proprietary voice assistants that allow them to develop an array of wireless speakers designed around their technology. Many of those speakers are also sold at a lower price point than Sonos’s products.
Without a voice assistant of its own, Sonos has been forced to strike agreements with Amazon and Google to offer Sonos speakers with their assistants. Those speakers are still being sold—even as Sonos battles Google in court.
Write to Tripp Mickle at [email protected]
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