The BlackBerry veteran who took on Google and won

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Patrick Spence learned two crucial lessons working at the company formerly known as Research In Motion: Do whatever you can to protect your inventions, and expect America’s digital titans to try and crush you.

So, not long after he left RIM in 2012 to serve as chief commercial officer for the California-based speaker maker Sonos Inc., Spence stepped into a meeting with the company’s director of intellectual property and one of its co-founders to discuss a threat that didn’t even exist yet. Sonos had created the market for high-end wireless, connected and increasingly “smart” home speakers—a field it had dominated for nearly seven years. At the time, Alexa was still just a human name, and anyone overheard yelling “Hey Google” at one of their devices would invite questions about their well-being. But Spence had a hunch the digital power players of the U.S. West Coast were about to invade their turf.

This was not an uneducated guess on his part. He’d joined RIM fresh out of university in 1998 and sold the very first BlackBerrys on Wall Street. He had, in other words, fired the opening salvo of what would become the smartphone war—a war RIM ultimately lost to Apple and Google as they squeezed the BlackBerry right out of the market it had pioneered. But Spence had also witnessed up close RIM’s early-2000s IP dispute with an obscure U.S. shell company called NTP Inc. That battle nearly killed RIM and eventually cost it more than US$600 million. It also spurred RIM to double down on protecting its patents.

Now, Spence was meeting with Sonos’s IP boss, Mark Triplett, and co-founder Craig Shelburne to discuss doing the same thing—investing deeply in the company’s IP, to the tune of millions of dollars a year. At the time, the company held just 14 patents, all registered solely in the United States. They would make patenting, and protecting those patents, a bigger piece of Sonos’s strategy.

Spence’s hunch proved correct: In 2014, Amazon launched the Echo smart speaker; Google followed two years later with Google Home. By 2019, hundreds of millions of smart speakers were in use worldwide, with Amazon and Google dominating the market. Spence, now Sonos’s CEO, believed those devices were built on his company’s ideas—ideas for which it deserved fair compensation. Late that year, after negotiations with Google left him unsatisfied, he announced to the board that Sonos would defend its inventions before the U.S. International Trade Commission (ITC).

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For the next two years, Sonos and Google (whose parent company has a market cap roughly 500 times larger than Sonos’s) would spar in at least six different courts across five countries over a pair of questions that increasingly underpin the modern economy: How much are ideas worth, and how much are they worth defending? In January 2022—days after Spence’s former employer decommissioned service for the last of its legacy BlackBerrys—the ITC decided in Sonos’s favour, ruling Google had infringed all five patents under dispute in devices including its popular Nest speaker systems and even its Pixel phones. Google has already developed workarounds that could help it avoid paying millions in licensing fees for Sonos’s IP, and it’s expected to appeal the ruling, too. Whatever happens, the ITC’s decision has shifted the ground beneath the giants of tech, proving smaller players can stand up to their piles of cash and sheer might.

It has emboldened Spence, too. “It’s great validation, and we know everybody’s paying attention to it.” That should definitely include Amazon, which is likely his next target—though he won’t say so outright. “I’m working every day to make sure that Sonos is here well after I’m gone,” he says. “That’s the biggest kind of legacy I can leave and a testament to what I learned at BlackBerry.”

The parallels between the early days of Sonos and the RIM of the late 1990s are startling. Like RIM, Sonos was built by a group of innovators looking to leapfrog past established players that owned the 1.0 version of a space with a 2.0 solution—and would later be challenged by a different and more powerful set of giant digital competitors on the 3.0 battleground. And though it was closer geographically to Silicon Valley, Sonos’s home base of Santa Barbara, Calif., was about as unlikely a hometown for innovation as Waterloo, Ont., was for RIM.

Spence was born not far from RIM’s headquarters, in Kitchener, Ont. After graduating from Western University’s Ivey Business School in 1998, his plan was to work for IBM, where he’d interned the previous year, and then launch his own tech company. Then the towering varsity volleyball star saw an ad on an Ivey job board for a 150-person company at the vanguard of combining computing, wireless communications and the internet. RIM was rolling out a two-way pager for U.S. telecom giant BellSouth, while hatching a side plan to offer its own wireless email service using the same hardware, under the name BlackBerry.

Most of Spence’s classmates were heading to jobs on Wall and Bay Streets. But Jim Balsillie came after Spence hard. He was just the kind of person RIM’s co-CEO was trying to hire: a smart, down-to-earth, high-achieving, middle-class kid with a sense of adventure. Spence was so excited to get started at RIM that he dispensed with a post-graduation summer break and started as a product manager in May 1998.

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Within months, he was evangelizing the BlackBerry on Wall Street, seeding traders and financiers with devices. Each week, he’d return to RIM’s HQ like a conquering hero to share tales of the BlackBerry’s rampant success. The moment he knew he’d truly made the right career choice came when a former Western classmate-turned-banker in L.A. reported he’d spotted Baywatch star Pamela Anderson using a BlackBerry.

Spence’s stature grew along with RIM’s as it outsmarted larger rivals like Palm, Motorola and Nokia, and redefined mobile communications. He eventually became the company’s executive VP of global sales and marketing, and Balsillie’s most trusted lieutenant.

He also witnessed the unfolding of a patent case that threatened RIM’s very existence. Balsillie says the company was managing hundreds of IP files at any given time, from trolls and established tech players alike, and haggling over cross-licences with rival handset makers. But in 2001, NTP—which held the wireless email patents of failed American entrepreneur Thomas Campana—sued for patent infringement in Virginia court. The jury found in its favour, and the judge awarded NTP US$53.7 million in damages, plus 8.6% of RIM’s annual U.S. sales. RIM fought back, persuading the U.S. Patent Office to invalidate NTP’s patents. But when the original judge threatened to shut down BlackBerry service in the U.S. in 2006, RIM agreed to pay NTP a settlement of US$612.5 million.

To Balsillie, it was a successful outcome: RIM wouldn’t have to pay increasingly costly royalties to NTP for years to come. (Investors agreed—the stock shot up by 15%.) But the drawn-out battle had taken its toll. “We lost some of who we were through that,” Spence would say later.

RIM also got religion on IP, and its war chest would grow to roughly 44,000 patents. That strategy stuck with Spence. “I learned from Jim the importance of acquiring all that IP, inventing the things we did, building that portfolio,” he says now. For Balsillie’s part, he says the NTP fiasco taught RIM’s top executives that IP wasn’t simply a purview of the legal department. “It’s a critical tool that enables a company to grow by creating the necessary freedom to operate and allows you to charge money for the ideas you own,” he says.

All the lessons RIM learned on the IP side, however, were quickly overshadowed. Less than a year after the NTP settlement, Apple introduced the first iPhone. BlackBerry wasn’t prepared for the game-changing device, and it never recovered. In 2011, as BlackBerry’s smartphone market share collapsed, Balsillie tried to push a software-led strategy underpinned by its popular BBM mobile messaging service. Spence strongly supported the idea, but it divided the company. After Balsillie and co-CEO Mike Lazaridis stepped down in early 2012, their successor, Thorsten Heins, killed the plan and doubled down on handsets. Balsillie quit the board and sold all his shares. Spence left not long after. He told Ivey alumni last year that he considers the abandoned BBM pivot the seminal failure of his career.

But thanks in part to a warm reference from Balsillie, Spence quickly landed at another innovator still on the rise. Sonos had also just hired Triplett, a patent attorney. Refining its patent strategy was on both their to-do lists. “We were trying to decide how much we were going to invest in this,” Spence says. “With what I’d seen play out both in terms of NTP and then how aggressive we got at RIM on developing our own patent portfolio, I was all in—this was absolutely critical.”

Sonos was founded in 2002, during the awkward era between the fall of Napster and the hegemony of iTunes and, eventually, legal music streaming. Entrepreneurs everywhere were trying to develop devices to accommodate the rise of MP3s. As music fans abandoned CDs for digitized songs they could share online, four friends from Santa Barbara began to wonder if they could replace another legacy tech: what they called “the tangled spaghetti of stereo and speaker wires.”

John MacFarlane, Tom Cullen, Trung Mai and Shelburne had built Software.com (which itself worked on wireless messaging) before merging with another dot-com-boom company for US$6.8 billion. After the merger, they struck out on their own again and began brainstorming opportunities in local networks. Eventually they settled on how to banish cables from high-end sound systems without compromising sound quality or creating lag, even as the listener moved from room to room. “Every feature we wanted to include turned up a new challenge that necessitated an inventive solution,” says chief innovation officer Nick Millington.

One of Sonos’s first hires was a technical product manager charged with putting together the company’s early patent applications. But aside from protecting its key ideas—such as speaker synching—filing wasn’t a significant focus. “We spent 99% of our time, as we do today, on building and shipping the best products we could for our customers,” says Millington.

SINCE THE INDUSTRIAL REVOLUTION heralded the creation of the modern patent system in the 18th century, great technological advances have typically been followed by messy patent disputes. It happened with the sewing machine, the cotton gin, the lightbulb, the automobile, the telegraph and telephone, airplanes, digital computers and semiconductors. By the 1980s, court rulings had made it easier for software makers to patent concepts. That shift sparked an IP arms race: Companies began to obsessively patent everything they did, while some fading tech players like Texas Instruments and Xerox put more emphasis on litigation to drive new revenue streams from their neglected patent portfolios. Through the 1990s and 2000s, the number of patent lawsuits in the U.S. grew at a faster rate than patent filings.

When Spence joined Sonos in 2012, he wanted to ensure the company kept innovating, while at the same time protecting and capitalizing on the tech it had already invented. He knew the giants would eventually jump into the smart-speaker category—Apple had unveiled its Siri voice assistant a year earlier—and the team began registering and protecting ideas at a frenetic pace, spending millions of dollars a year writing and revising patent applications, with staff and lawyers honing the language in case of later infringements. In a decade, Sonos went from just 14 U.S. patents to 3,046, nearly two-thirds of them filed internationally.

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But Big Tech lives in a small world, and for the company’s speakers to actually sell, it needed to work with the giants whose platforms played the music. In 2013, that meant letting Google look under the hood so its Google Play Music service was compatible with Sonos systems. Sonos would later write in a court filing that its “integration work with Google was especially ‘deep’ and gave Google a wide aperture through which to view Sonos’s proprietary technology.”

Sonos’s first experience defending its IP came in 2014, when it sued Sound United, the parent company of Japanese audio firm Denon, for violating its patents in wireless speakers. After a four-year battle, Denon was forced to pay Sonos royalties. That case, Spence says, “helped build to where we are today.”

By 2019, smart speakers were no longer the exclusive realm of music nerds. Google’s Home and Nest speakers, Apple’s HomePod and Amazon’s Echo had flooded the world, with combined smart-speaker sales of 147 million worldwide, up 70% from the year before, according to market research from Strategy Analytics.

Sonos, meanwhile, sold 6.1 million speakers, components and other products that year. It had also recently gone public and had a market cap of roughly US$1.6 billion at the end of 2019, making it decidedly Small Tech. With its books open to new ranks of investors and the Denon settlement bringing in licensing revenue, a group including Spence, Triplett and the company’s new chief legal officer, Eddie Lazarus, began exploring a licensing strategy to monetize the company’s thousands of patents. “But with respect to Google, we just didn’t get anywhere,” says Lazarus. The team began to consider litigation and asked itself a key question: Did Sonos have a litigation-proof portfolio?

At the end of 2019, they decided it did.

SPENCE HAD SPENT the previous year assuaging jittery colleagues worried about how a lawsuit would affect Sonos’s working relationship with Google—not just one of its biggest partners but also one of the largest companies in the world, whose parent company’s market capitalization was about to hit US$1 trillion. In December, Spence, Lazarus and the rest of the executive team met the Sonos board of directors for dinner at a Santa Barbara restaurant to lay out their plan. The first step was to file suit against Google through the ITC.

There were a few reasons for going the ITC route rather than the traditional courts, where lay juries could be flummoxed by the tech-heavy blueprints laid before them and were prone to being swayed by good-versus-evil narratives laid out by lawyers. ITC cases, on the other hand, are heard by expert judges who understand the intricacies of such technical disputes. The ITC also has the power to impose a ban on the import of any products found to infringe another company’s patents. If Sonos came away victorious, this could immediately throw Google’s speaker business, and maybe even its handset business, into disarray. At the same time, Sonos could launch a companion case in federal district court to seek damages. “The expertise, speed and remedies all made the ITC super-important and the right venue for our first go with Google,” says Spence.

As Lazarus told Sonos’s directors that night, there were certainly risks: a costly loss, reputational damage, counter-litigation. But there were plenty of potential rewards, too, including a lucrative new licensing stream. “At the end of it,” Lazarus says, “we all held hands and decided we were going to jump together.”

Through it all, Spence spent lots of time talking to his former boss and mentor, Balsillie, who wholeheartedly endorsed the ITC strategy. “ITC is a pretty powerful weapon in this type of dispute,” says Balsillie. “If you were counting on shipments crossing a border, that creates a lot of leverage pretty quickly.” More importantly, he acted as a sounding board for his former right-hand man. “He was always there,” says Spence. “He really steeled my will as we were bearing down on having to make a big decision like this. I leaned on him pretty heavily in terms of thinking through the steps, as well as pulling the trigger.”

Sonos filed a complaint to the ITC against both Google and its parent company, Alphabet, on Jan. 5, 2020. (Alphabet was later dropped from the suit.) Though Spence’s team felt Google may have infringed more than 150 of Sonos’s patents, the ITC would only consider disputes for up to five at a time. The five Sonos ultimately picked, says Lazarus, represented the company’s “true innovation”—such as the ideas underpinning how its speakers sync together over WiFi and how high their volume was.

Google was a formidable opponent. It’s one of the world’s most prolific patent filers and has a history of routinely taking multibillion-dollar hits for allegedly flouting competition law, particularly in Europe. But the company didn’t take Sonos’s suit lightly. In June 2020, Google filed a patent infringement lawsuit of its own, arguing the company “gave Sonos significant assistance in designing, implementing and testing a solution that would bring Google’s voice recognition software to Sonos’s devices.”

Google would eventually file infringement lawsuits against Sonos in at least five countries, including Canada, a move Spence insists the company’s executive team was ready for. Lazarus calls the countersuits “frivolous.” Google’s chief legal officer, Kent Walker, disagrees. “We feel as though our engineers didn’t copy Sonos’s work,” says Walker. “They were independently deriving things that we thought would be helpful for users.”

The dispute didn’t exactly make for compelling courtroom drama. It was a battle fought with stacks of paper, hundreds of pages at a time, with two armies of lawyers defending two corps of inventors over ethereal ideas. The never-ending exchange of briefs, prolonged by various pandemic-related delays, was exhausting. “People have told me that in track and field, the [800 metres] is the hardest race because it’s the longest one where you basically have to sprint from start to finish,” says Lazarus. “There’s no moment for pacing yourself. And that’s how the ITC feels.”

In August 2021, a commission judge released a preliminary decision: Google had, in fact, infringed Sonos’s patents. It was then up to the full commission to either accept or reject the decision. Both parties spent the latter half of 2021 sending in their final submissions.

On Jan. 6, 2022, the ITC released its final decision: Google had indeed violated the Tariff Act of 1930, unfairly importing products into the United States that infringed on five of Sonos’s patents.

“It’s a great story for a smaller innovative player,” says Ottawa patent lawyer Natalie Raffoul. “It just shows this stuff matters. If you’re a smaller company and you go into a situation with a larger company thinking you can trust that business relationship, you also have to be thinking about how those relationships can go sideways. That handshake may not stand the test of time.”

Two years ago, of course, Spence had no idea how it would all turn out. “There were people saying, ‘You’re crazy—you can’t take on Google. They’ll just swamp you in every market,’” he says. “I felt it was important to stand up to say we’ve got to stop this—this doesn’t make sense, and it’s fundamentally going to hurt innovation in the long run.”

THE ITC HANDED DOWN its Sonos decision four days before Anthony de Fazekas was set to deliver a winter lecture on commercializing IP at Osgoode Hall Law School. Sonos was one of the patent expert’s favourite case studies and a rare treat for IP buffs like him, since these kinds of disputes are often settled out of court. But here was a turf battle, wrapped into a lesson on portfolio protection, unfolding in public. De Fazekas and his students discussed it on their first day of the new semester. “It’s rare that you see all that interplay played out in the news,” says de Fazekas, who is head of technology and innovation for Norton Rose Fulbright Canada.

Sonos’s suit also illustrates the dangers of collaborating too closely. “I think there’s almost a cautionary tale for companies to closely evaluate their collaboration strategy, in addition to their IP strategy,” says de Fazekas. He believes the ITC decision should prompt companies to ask themselves some important questions: “How do you assess whether large tech companies you want to partner with are likely to move into your space? Do you give them your best technology? Do you give them maybe a lesser version of your technology? How can you be very strategic around what you share?”

As for Sonos, its tussle with Google isn’t over. The giant is almost sure to appeal the ITC decision. (This story went to press shortly before the end of a 60-day presidential review period that opened the window for an appeal.) And Google has already come up with numerous workarounds, which it began readying before the ruling was even finalized. As tech website the Verge reported, users of Pixel phones, for instance, quickly noticed they could no longer remotely control volume for large groups of Google speakers. But the workarounds mostly worked. “We were pleased that the ITC approved of the workarounds we had proposed, so there’s no interruption to the consumer experience,” says Walker.

Still, Sonos is seeking damages in federal court and hopes to end the dispute once and for all by signing a licensing deal with Google. To do so would set a significant example—that you can force the giants to play fair. “There are a few companies with way too much power,” says Spence, “and they should not be able to copy what somebody else invents and try and trample them.”

Is that a hint about Spence’s next move? “What’s on our mind right now is making sure we really get this injunction,” he says coyly. But Amazon might want to watch its back. Sonos executives have said they believe the company’s Echo speakers infringed its ideas, but decided early on that it was too dangerous to wage two IP battles simultaneously. Not only would that risk taking executives’ eyes off the day-to-day operations of the company, but off the future, as well. After all, that’s exactly what happened to BlackBerry. When pressed on whether Amazon is Sonos’s next target, however, Spence will only say with a laugh: “We’re not going to specifically play out the legal strategy.”

Aside from his potentially industry-shaking win, January was a strange month for Spence and other BlackBerry alumni. The company shut down service on the last of its handsets on Jan. 4, just days before Sonos’s win. A few weeks later, BlackBerry sold off the bulk of its mobile patents to a Baltimore licensing company—another on-paper-only entity like its old nemesis, NTP. One of the first people who reached out to Spence after the ITC decision was the man who’d led RIM’s commercialization charge in the first place, Jim Balsillie. He’d also spent several post-RIM years insisting as loudly as possible that a Google sister company, Sidewalk Labs, could gain an unfair advantage over IP generated by a neighbourhood it wanted to build in Toronto. Balsillie told Spence he was proud of him—to “keep fighting the good fight.”

The Sonos win has certainly validated Spence’s strategy. “If you are in a category where Big Tech is going to step in, get those inventions patented,” says the man who took on Google and won. “Invest in it, because they’re going to come for it.”

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