A lot has happened in the technology world in the past year. So let’s take a minute to reflect on the defining moments of 2011 and where we stand now, as a local tech community with increasingly global impact.

This is by no means comprehensive, or even a summary of the most important stories of the year. It’s just a select few of the biggest highlights and lowlights, organized in spaghetti western fashion (cliché alert).

The Good: Oracle Buys Endeca

Some might argue this wasn’t necessarily “good” for the local tech scene, but Oracle’s $1B+ purchase of Cambridge, MA-based Endeca, the enterprise search and business intelligence firm, was one of the biggest deals of the year, and was kept under wraps pretty well. It will be interesting to watch whether Endeca’s technology and talent give Oracle a leg up in its competition with IBM, SAP, Microsoft, and Google. Endeca, which started in 1999, stands as a testament to the notion that billion-dollar tech companies can be built—and are being built—in Massachusetts. (See Acme Packet, Progress Software, Wayfair, and others on their way.)

Honorable mention: Carbonite, TripAdvisor, and Zipcar each went public with successful IPOs in 2011. That’s three more publicly traded tech companies in Boston that seem to be thriving in a tough market. Who will join them in 2012?

The Bad: RSA Gets Hacked

No one would argue this isn’t bad—and not just for local companies. In March, RSA Security reported a data breach involving its authentication products, which are widely used by big companies and government agencies. The Bedford, MA-based division of data storage giant EMC said it had … Next Page »

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Some big acquisition news before the holidays here. Cambridge, MA-based Akamai Technologies (NASDAQ: AKAM), the Web delivery and networking giant, said today it is acquiring a competitor, Sunnyvale, CA-based Cotendo, for $268 million in cash. The deal, which has been rumored for the past month, is expected to close in the first half of 2012.

Akamai has been positioning itself as a provider of a secure software platform for businesses to reach customers via Web, mobile, and cloud. Cotendo competes with Akamai in the realm of accelerating Web and mobile applications. The California-based company started in 2008 and has about 100 employees, more than half of them based in Israel.

About a year ago, Akamai and MIT filed a lawsuit against Cotendo alleging patent infringement. Presumably that case is resolved now.

This is a relatively rare case of a Boston tech company acquiring a Silicon Valley company. Most of the other big deals this year have gone the other way (such as Oracle-Endeca, Google-ITA, eBay-Where, and HP-Vertica).

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Cambridge, MA-based voice-to-text tech startup Vlingo, which just three months ago charged Nuance Communications with unfair competition, commercial bribery, breach of contract, and intentional interference with prospective business relationships, is being acquired by the Burlington, MA-based speech software giant, according to an announcement today.

Nuance (NASDAQ: NUAN) and Vlingo, which develops speech-recognition technology for cell phones that has been likened to Apple’s Siri, have spent years wrangling in court, starting with a 2008 patent infringement lawsuit filed by Nuance, covering its patent known as ’295. As of this September, the two companies were involved in seven open lawsuits with each other, five of which were filed by Nuance and two of which came from Vlingo.

[Disclosure: the brother-in-law of Xconomy Boston editor Greg Huang is a co-founder of Vlingo. Mr. Huang was not involved in the planning, directing, reporting, or editing of this story.]

Today’s announcements make no mention of the lawsuits. Nuance said in its statement that consumer demand for voice-enabled controls on devices like phones, tablets, televisions, and navigation devices prompted the deal, and that “Nuance and Vlingo will combine their deep innovation and R&D expertise to deliver next-generation natural language interfaces across numerous markets and industries.”

Vlingo’s statement was much less detailed, noting that the transaction was subject to customary closing conditions, that it is expected to close in 2012, and that its purchase price is not being revealed. The startup also noted that it will operate as an independent company until the closing is complete. The Nuance press release quotes Vlingo CEO Dave Grannan as saying: “Vlingo and Nuance have long shared a similar vision for the power and global proliferation of mobile voice and language understanding. As a result of our complementary research and development efforts, our companies are stronger together than alone.”

In its September lawsuit against Nuance, Vlingo revealed the complicated relationship it shared with Nuance. The lawsuit alleged that at one point Nuance CEO Paul Ricci attempted to bribe three Vlingo executives by offering them $5 million each if they could convince their board of directors to sell to Nuance (which was already an investor in Vlingo). Despite all of it, Grannan mentioned that he wasn’t opposed to selling his startup to Nuance, but that they “don’t want to be forced into doing it at a low price based on these tactics that they use.”

When I spoke with Grannan back in the summer, right after Nuance accused Vlingo of false advertising based on statements Vlingo made on its website about its technology, he noted that the bigger company was using litigation as a business strategy. “They just want to get us into court to cost our startup time and money,” Grannan said.

Vlingo appeared to have gained some ground in August, though, when a federal jury in Boston found that Vlingo did not infringe on the Nuance ’295 patent, which covers the technique for making computerized transcriptions of a users’ speech more accurate over time using audio samples from multiple sessions. But it’s presumably been a costly road for Vlingo. Grannan hasn’t disclosed the startup’s exact legal expenses, but noted that each patent trial can run a company between $2 million and $3 million. And in 2010 Vlingo bought a crop of patents from Bellevue, WA-based Intellectual Ventures as aid in the patent litigation.

Both companies say that they are committing to innovating and taking a bigger share of the voice-driven virtual assistance space. It will be interesting to see whether the two companies are truly “stronger together,” given their bitter and embattled history.

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LivingSocial will skip the IPO and get acquired. Hundreds of smaller daily deals startups will shut their doors. Groupon’s special product offerings will crash and burn.

Those are among predictions for 2012 from Seattle’s Tippr, a daily deals startup that focuses mainly on offering white-label services to publishers that want their own discount brands.

Headed by CEO Martin Tobias, Tippr has taken a pugnacious approach to its competition in the bubbly daily deals sector, unafraid to call out the big names or use its Paul Allen-sourced patent portfolio to wage court battles and takeovers. Not surprisingly, Tobias’s predictions for the year ahead in daily deals reinforce his own position—that standalone consumer brands are hard to build and unsustainable, and partnering with dedicated publishers is the place to be.

So apply that filter when assessing Tippr’s 2012 prognostications. But recall that, with the astronomic ascendance of Groupon (and the whole sector) in the past year or two, there’s going to be plenty to watch in the months ahead—and these guesses are probably as good as anyone’s, if not better:

• LivingSocial Will Be Purchased
In September, it was rumored that the No. 2 daily deals brand behind Groupon (NASDAQ: GRPN) would shelve its IPO ambitions amid a slack market and seek more private fundraising instead. Tippr’s Tobias says that pattern will hold, and LivingSocial—whose investors include Amazon.com—will tie up with “a major e-commerce player. By merging with a company backed by both a large Rolodex and bank account, LivingSocial will be poised to successfully leapfrog Groupon and render it a mere also-ran in the daily deals landscape,” Tippr says.

• 200 Groupon Clones Will Bite the Dust
Even after a wave of consolidation and continued battles for third place and beyond, Tippr says there are still more than 600 companies in the group-buying sector. That means consolidation will continue. Data from the industry aggregator Yipit pegs the number of failed deal sites this year at more than 170, and Tippr predicts that more than 200 will go down in flames in just the first half of 2012.

• Year of the White Label
Tippr shifted its primary focus to providing white-label services to online publishers earlier this year, and Tobias previously told us about his bullish bet on that approach—lower (or nearly zero) costs to acquire an audience being a big part of the calculation. So it’s no surprise that he thinks next year will be the prime time for providers chasing that model. Tippr says that in 2012, white-label providers could make up about 20 percent of the market.

• Branded Sites’ Futures: Instant Contextualized Deals
Also along the lines of the deals-as-a-service idea articulated above, Tippr says the big-name providers Groupon and LivingSocial will find profitability—but only after they start pairing their discounts with relevant content of other types, rather than building standalone commerce brands. Tobias says that Google, Facebook, and other big-audience players will come at this problem from the other end of the spectrum, adding deals in context with the content they already have.

• Lacking Loyalty, Groupon Goods Will Come to a Dreary Demise
Groupon’s foray into direct e-commerce, Groupon Goods, doesn’t have a very bright future in Tippr’s eyes. Tobias cites research from Forrester that suggests a plurality of customers would buy a given good at full price anyway—hinting that those shoppers aren’t loyal to the Groupon discount, but more to the product. “Merchants, lacking the customer acquisition required to justify the steep discounts, will opt out of the site’s partnerships,” Tobias predicts.

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The Federal Communications Commission gave AT&T and T-Mobile USA a little kick on the way out the door today, releasing its staff report on the companies’ proposed $39 billion merger. AT&T and T-Mobile parent Deutsche Telekom pulled their merger application last week (on Thanksgiving!), choosing instead to focus their regulatory fight where it really matters—the antitrust lawsuit from the Justice Department.

The companies didn’t want the FCC report to be made public, but they lost that battle, so we now have some extremely detailed reading to dive into. You can check it out for yourself over at the FCC site. The document is chock full of technical detail and legal analysis, but it really boils down to a broad rejection of the claims made by the two companies to support their deal.

The upshot is on pages six and seven, where the staff report tears apart the justifications for the buyout. There are three basic areas of concern—first and most broadly, the report says the effects on competition would be too severe, with a higher likelihood of coordination among the remaining players and questions about the markets for handsets along with roaming, wholesale, and other wireless services.

The report also slaps aside the economic and engineering models that AT&T and Deutsche Telekom used to claim that the buyout would drive down wireless industry prices and network costs. And finally, the report says any savings from the combined operations of the two carriers could result in poorer customer service rather than lower prices, and wouldn’t drive any increase in jobs.

Of course, lots of the really interesting information is redacted—but I did find one fun spot where someone messed up and forgot to white out some things that are marked confidential. It’s in the footnotes on page 12, where the commission is discussing T-Mobile’s strength as an independent competitor.

“Indeed an email exchange argues that ‘T-Mobile’s 4G network is much faster than AT&T’s network,’” the unredacted material says, citing December 2010 email between Paul Weisbecker of AT&T and Kelsey Joyce of T-Mobile. Here’s a screenshot of that passage, in case it gets pulled later:

As you can see, a second area that appears to be unintentionally published immediately follows that, saying that T-Mobile’s network expansion “puts T-Mobile ahead of its competitors in terms of network speeds.” That citation points to Network Business Quarterly, an industry report by the analysts at Technology Business Research, so I’m not sure why it would have been designated for redaction in the first place.

The report’s discussions of small, regional wireless carriers has some new weight amid the New York Times report that AT&T’s hope now is to carve off chunks of T-Mobile  to prop up a new No. 4.

The discussion on pages 33-38 of the FCC report lays out just how tiny these small wireless providers are in relation to the big guns—if measured by revenue, the three largest of those also-rans only makes up about 6.5 percent of the national wireless market combined, compared to T-Mobile’s 11 percent.

“To provide service comparable to a nationwide provider, and thus be able to compete effectively and prevent competitive harm, a regional provider would most importantly need to obtain a nationwide spectrum footprint and the resources to build it out,” the report says. “In only one of the top ten markets to Leap, MetroPCS and U.S. Cellular, the largest regional firms, have half as much spectrum combined as T-Mobile’s spectrum holdings.”

That’s a pretty big gap to make up with pieces from a dismembered T-Mobile. If AT&T can get a deal in place with the feds to make a new fourth-place carrier, this report would provide plenty of ammo for evaluating whether the deal passes the smell test.

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Updated 10:45 am Pacific
After Groupon’s season of woe, a truckload of me-too disappearing acts, and last week’s mass-layoff meltdown at third-place competitor BuyWithMe, it sure isn’t looking like a very bullish time to be operating a daily deals startup.

Martin Tobias would disagree. The Seattle entrepreneur, who been through some notable ups and downs in digital and cleantech ventures over the years, still sees a huge upside in the group-buying dynamic that daily deals services have unleashed. He’s chasing that opportunity with Tippr, a roughly 90-person startup headquartered in Seattle’s University District. [Changed headcount number from 120 to about 90---Tippr halved the number of people working in its marketplace division after this interview.]

The trick, Tobias says, is aiming at the white-label side of the market—providing deals services to other publishers, rather than trying to build a standalone consumer brand, as market leaders Groupon and Living Social have done. Cut out the huge marketing and sales expenses, spread the technology and other costs across a pool of customers, and blammo—you’ve potentially got yourself a pretty nice business.

Tippr CEO Martin Tobias

It also doesn’t hurt to be armed with a trove of patents. Tippr’s were acquired from former Paul Allen company Mercata, and Tobias has not been shy about using the portfolio, employing it in a licensing program, using it to gain at least one acquisition, and more recently opening up a broad federal patent lawsuit that, as we reported last month, has now been quietly settled.

Interestingly, Tippr has thus far gone after other middle-tier or small group-buying companies in the courts, but not market leaders Groupon or Living Social—when asked about that in our interview, Tobias declined to comment.

Tippr is backed by $9 million in venture financing, led by New York-based RRE Ventures (Vulcan Capital also acquired a stake in parent company Kashless in the patent deal). The startup debuted in February 2010, but by that November had announced the white-label provider service that is now the company’s major focus.

That software platform, called PoweredbyTippr, runs daily-deals offerings for other website publishers around the country. A prominent example is Yollar, the daily-deals offering from TV station owner Belo (NYSE: BLC). Tippr provides the technology back-end for the Yollar service, but the local TV stations keep their own branding on the group discounts that are offered to subscribers.

That strategy appears to be paying off. Tobias wouldn’t talk revenue specifics, of course, but left plenty of bread crumbs that point toward a possible multi-million-dollar revenue stream for the startup.

The overall daily deals sector in North America is pegged at $2 billion-$3 billion by such observers as research firm BIA/Kelsey and daily deals aggregator and data provider Yipit.

Yipit also estimates that white-label operators only make up about 10 percent of the daily deals market right now. But white-label providers should have success “working with media companies as a way to monetize existing subscriber bases rather than having to build entire bases from scratch, which is the plight of most smaller daily deal sites,” said Unaiz Kabani, a Yipit data analyst.

Tobias pegs the white-label slice at 5-10 percent of the overall market. And he says Tippr’s the leader of that white-label subsector, with about 35 percent market share. That leads me to a back-of-the-envelope figure of maybe $44 million-$88 million in possible annual revenue.

Tobias says Tippr’s annual revenue growth is “comparable to a Groupon. We are growing at hundreds of percent year over year.”

“Our numbers aren’t the size that they are. But if you actually look at our quarterly growth rate versus the first couple quarters of Groupon, we’re growing faster than they did when they came out,” Tobias says. “I haven’t raised a lot of money and I’ve got 120 guys, so do the math. I’m doing OK. I’ve raised $9 million. Groupon’s raised a billion and a half.”

Continuing that growth, of course, depends on more publishers jumping on the daily deals bandwagon with gusto. That’s a potentially dicey proposition, since a lot of … Next Page »

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Intellectual Ventures is stepping up its position in the mobile patent wars, suing Motorola Mobility in federal court today for allegedly infringing on a range of patents covering hardware and software.

Irony alert: Google, which is in the middle of acquiring Motorola Mobility for about $12.5 billion, has been listed in previous court filings as an investor in Intellectual Ventures, possibly through a licensing agreement. Motorola’s own patents were a major reason behind the acquisition—they were touted specifically by Google CEO Larry Page in this August blog post.

Patent expert and blogger Florian Mueller writes that, even though Google’s financial stake is in an IV subsidiary fund that’s not involved in the new Motorola suit, the development amounts to an “own goal” on Google’s part. (He’s also got some critical analysis of Google’s willingness to defend the Android ecosystem).

In a blog post announcing the lawsuit, Intellectual Ventures lawyer Melissa Finocchio writes that IV has “a responsibility to our current customers and our investors to defend our intellectual property rights against companies such as Motorola Mobility who use them without a license.”

“Our goal continues to be to provide companies with access to our portfolio through licensing and sales, but we will not tolerate ongoing infringement of our patents to the detriment of our current customers and our business,” Finocchio writes.

As Ina Fried at AllThingsD points out at the end of this post, this suit just adds to the long list of patent claims being tossed around between technology heavyweights, including Apple, Samsung, HTC, and Microsoft. One thing of note, however: I wouldn’t say this really constitutes Intellectual Ventures “joining” the mobile patent wars, since it already has publicly cut licensing deals with both Samsung and HTC, among others.

Intellectual Ventures was co-founded and is led by Nathan Myhrvold, the former CTO of Microsoft. The court filing says Intellectual Ventures has “a portfolio of more than 35,000 assets,” with more than 3,000 patents or applications the result of the firm’s in-house invention lab or its network of contract inventors.

Intellectual Ventures also reiterates that it has earned more than $2 billion so far from licensing patents, and has paid more than $400 million to “individual inventors.”

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—Amazon (NASDAQ: AMZN) jumped into the tablet game with the much-hyped Kindle Fire device, but don’t be fooled. The new tablet is not about Amazon getting into the hardware business—it’s much more about making sure that consumers get access to Amazon’s slew of cloud services and traditional shopping on something other than Apple’s iPad, which requires a 30 percent revenue cut on offerings like books (or a tricky workaround).

—Speaking of digital content, streaming-music service Rhapsody bought Napster from Best Buy in a deal that made the retailer a minority shareholder. Rhapsody, spun out of RealNetworks last year, has been facing a lot more competition on a model it helped pioneer with increased heat from startups, including European import Spotify. The Napster deal might lead to a little more pond-crossing: Rhapsody tells us it also has an option on the international subscribers of Napster, where the cat-headphone brand could live on.

—Big-name venture capitalist Vinod Khosla dropped into town for Startup Weekend EDU at the University of Washington, an event co-organized by Seattle startup TeachStreet. Khosla, interviewed by VC/blogger Michael Arrington, told the budding entrepreneurs to aim for a big impact with their projects. Arrington also made a little news: He disclosed that Khosla was an investor in the new CrunchFund.

—We went back into the court filings to check in on a very interesting summer for Seattle daily-deals startup Tippr. Run by entrepreneur Martin Tobias, Tippr has been proudly proclaiming the trove of patents it purchased from Paul Allen as a key asset in the ballooning daily deals sector. And it made that case in a big federal lawsuit, which eventually pulled in 14 defendants. They’ve all settled now, with at least one likely signing a licensing agreement.

—What’s the key to keeping a research arm cranking inside a global technology behemoth for two decades? In Rick Rashid‘s view, it’s to make the R&D shop into a utility—something that’s always there, ready for product leaders to come over and grab off the shelf when they need it. That’s how Rashid, the head of Microsoft Research, described serendipitous successes like the Kinect controller in an interview marking MSR’s 20th anniversary.

—Over on the cleantech side of things, we saw UW and WSU land an $80 million grant from the federal government to spur biofuels research in the Northwest. Each university gets $40 million over five years, with U.S. Agriculture Secretary Tom Vilsack sounding pretty bullish on the prospects of developing wood-based biofuels with the research boost.

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Washington state Attorney General Rob McKenna, the Republican favorite for governor in 2012, has joined his counterparts from six other states to support the U.S. Justice Department’s lawsuit blocking AT&T’s proposed $39 billion takeover of T-Mobile USA.

It’s not unusual for state governments to get involved in cases like this, particularly when there may be some business or consumer impact on their residents. In McKenna’s case, of course, part of the motivation is that T-Mobile is based in Bellevue, WA. As Politico noted, “Washington … stands to lose, potentially, many jobs if the transaction is approved.” The other states involved are California, Illinois, Massachusetts, New York, Ohio, and Pennsylvania.

In his announcement about the lawsuit, McKenna said allowing the buyout would lead to fewer choices and higher prices for consumers. “If the deal goes through, two companies will control roughly three quarters of mobile subscribers in the U.S.,” McKenna wrote. “Antitrust laws exist to prevent such strangleholds over products and services.”

McKenna had previously said he shared the DOJ’s concerns about the merger, but this is obviously a much stronger step. McKenna’s Democratic opponent for governor, U.S. Rep. Jay Inslee, also opposes the merger. Inslee has publicly criticized the two companies’ responses to his request for more details about the effects of the buyout, and applauded the DOJ’s lawsuit, saying “the last thing Washingtonians need are more layoffs, increases in their wireless bills and fewer choices for wireless service.”

McKenna joining the lawsuit will turn some heads because Republicans are generally friendlier with business than Democrats. But it’s been a long time since the GOP elected a governor in Washington, and the consumer and local-jobs angles to opposing this deal are probably winners with the voting public.

One last note: I checked the state campaign contribution database to see how the candidates were faring with any money from AT&T or T-Mobile. I couldn’t find any contributions to the candidates or to their respective parties’ major political action committees. Both McKenna and Inslee did have some small contributions from individual employees.

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[Updated at 3:30 pm Pacific with details, AT&T response]
Sprint (NYSE: S) was already cheering the federal government’s antitrust lawsuit against competitor AT&T’s $39 billion bid to acquire Bellevue, WA-based T-Mobile USA. Now, the third-place U.S. wireless carrier is putting some skin in the game with its own, separate civil suit, filed today in federal court.

Sprint announced the lawsuit with this press release, and here’s a copy of the actual complaint. While the Justice Department’s lawsuit filing focused mostly on the potential losses for consumers, Sprint’s lawsuit delves into great detail about how a duopoly of Verizon and post-merger AT&T would affect the overall carrier business.

AT&T has responded with a public statement, saying it will “vigorously contest” the lawsuit. It accuses Sprint of being “more interested in protecting itself than it is in promoting competition that benefits consumers.”

As you’d expect, Sprint doesn’t paint a pretty picture. It calls AT&T’s bid for T-Mobile “brazenly anticompetitive,” and goes on to write that the deal “would eliminate one of four national competitors and marginalize a second (Sprint), pushing the market back toward a 1980s-style cell phone duopoly.” Throughout the lawsuit, Sprint recalls the bad old days of Ma Bell by referring to Verizon and AT&T as the “Twin Bells.”

Sprint, of course, reportedly wanted to buy T-Mobile itself earlier this year. But it argues that letting AT&T make the grab would concentrate power between AT&T and Verizon, and the latter company “would not have the incentive to constrain AT&T, and would have a substantially increased incentive to coordinate with AT&T rather than compete,” a charge that DOJ lawyers also raised last week.

Sprint worries that AT&T’s increased size would effectively lock up the market for new handsets, and it points to the fact that AT&T and Verizon are still the only carriers allowed to have the iPhone. “The Twin Bells have had a tremendous time-to-market advantage with the iPhone, and have been able to lock many customers into two-year contracts with the iconic device,” Sprint writes.

Sprint also says it could wind up paying more for “backhaul,” the connections that link cell towers back to switches and other network equipment, because a large share of that market is controlled by AT&T and Verizon. It also raises worries about higher prices for roaming on another carrier’s network, saying that larger AT&T would be able to raise prices for its GSM network, and put pressure on Verizon to charge more for roaming on its own CDMA network.

Kirkland, WA’s Clearwire (NASDAQ: CLWR), the troubled broadband provider majority-owned by Sprint, also gets a shout-out (but not in a good way). Sprint says that if AT&T is allowed to buy up T-Mobile spectrum that already has been developed for the market, it will put holders of new spectrum at a disadvantage and shift the cost of developing those assets to companies like Sprint.

“Lightsquared and Clearwire have spectrum but need development partners to build a network and provide the other attributes necessary to be able to offer wireless service,” Sprint wrote. “The transaction would eliminate T-Mobile as an independent carrier that could license spectrum or otherwise purchase network services.”

The case has been assigned to U.S. District Judge Ellen Huvelle, the same judge who has the U.S. government’s case against AT&T. Cases that are so closely related can often be consolidated, but that hasn’t happened in this instance—Sprint’s filing just hit the courts today.

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A new front has been opened in the longstanding legal war between two Massachusetts speech technology powerhouses.

On Thursday, Cambridge, MA-based Vlingo filed a lawsuit in U.S. District Court of Massachusetts charging its much bigger archrival with unfair competition, commercial bribery, breach of contract, and intentional interference with prospective business relationships. Among its chief allegations is that Burlington, MA-based Nuance Communications (NASDAQ: NUAN), out to drive up Vlingo’s costs and force it to agree to an acquisition or technology partnership, filed a baseless patent infringement lawsuit against the smaller company. The complaint also charges Nuance with interfering with Vlingo’s efforts to negotiate deals with AT&T and Nokia, in the latter case by hiring a key Nokia executive who had confidential knowledge of Vlingo’s patent portfolio and patent strategy, and says Nuance CEO Paul Ricci attempted to bribe three key Vlingo executives by offering them $5 million apiece if they could convince their board of directors to sell to Nuance.

“The bottom line is we’ve really got a case against Nuance now for illegal acts in terms of interfering with our business,” said Vlingo CEO Dave Grannan during a phone interview about the lawsuit. “They’ve really tried to destroy or buy our business anyway they can.”

(Disclosure: Xconomy Boston editor Gregory Huang is a brother-in-law of Vlingo co-founder and CTO Michael Phillips. He was not involved in the reporting, writing, or editing of this story and saw no part of it before publication.)

This is just the latest in a string of legal disputes between the two firms. Indeed, Grannan says the companies are now involved in seven open lawsuits—five brought by Nuance, two by Vlingo—covering patent infringement claims on both sides, a false advertising suit brought by Nuance against Vlingo, an investor rights case also lodged by Nuance, and last week’s unfair competition complaint filed against Nuance by Vlingo. (This is all despite the fact that Nuance is an investor in Vlingo, having led the company’s $25 million Series C financing round in October 2009 and contributed $15 million to the round.) The firms have settled one other case, and just last month, a jury in a federal court in Boston determined that Vlingo did not infringe on Nuance’s so-called ’295 patent, ending a suit that was filed by Nuance in June 2008.

The new complaint (click here to view the PDF), filed on the heels of Vlingo’s success in the ’295 patent case, tells a fascinating story of this complicated relationship and the long-running tension between the two speech recognition leaders, which dates back almost to Vlingo’s founding in mid-2006. Keep in mind that it only gives Vlingo’s view of events. In response to my request for comment, Nuance only provided this statement from senior vice president and general counsel Jo-Anne Sinclair: “Nuance strongly believed, and continues to believe today, that Vlingo ran afoul of Nuance patents. We dismiss the recent claims as a distraction from the one principle that matters most—that Vlingo is infringing upon Nuance’s deep, long-standing investments in innovation and intellectual property.”

Long-Spurned Suitor

“Nuance has been aware of Vlingo since Vlingo’s inception as Mobeus, Inc. in June 2006 and, since that time, has coveted Vlingo’s innovative, cutting-edge technology,” last week’s filing asserts. Just a few months after Vlingo’s formation, it says, the company presented prototype products to a Nuance sales representative for evaluation, leading to an invitation from Nuance to take part in its annual users group conference in Orlando. Nuance’s “excitement” about Vlingo at that event, the complaint says, led Ricci to invite Vlingo co-founder Mike Phillips to lunch.

That meeting took place on October 24, 2006, according to the filing, and apparently marked … Next Page »

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—The federal government’s surprise lawsuit to block the $39 billion merger of AT&T and T-Mobile dominated the region’s tech headlines last week, and the fallout will continue to turn heads for the rest of the year (and maybe beyond). I deconstructed the Justice Department’s arguments in this post, which is kind of a Cliff’s Notes to the lawsuit filing for those who don’t want to plow through the whole thing. Expect more to come—AT&T is reportedly ready to make some concessions, but it might be too late for all of that.

—As a follow-up, we featured this guest column from state House member and wireless industry veteran Reuven Carlyle, which was adapted from an earlier post on his own blog. It’s a long read, but worth the time as Carlyle—a Democrat—argues against the Obama administration’s deal-blocking lawsuit because, in his view, consolidation is inevitable and the only real way the U.S. can build massive, utility-grade wireless networks that will spark innovation.

—I profiled Decide, the interesting new gadget-shopping startup from the ubiquitous Oren Etzioni and friends. Decide uses the same breed of price-prediction technologies that built Farecast (acquired by Microsoft), but adds some new elements that help shoppers decide (get it?) when they should buy a new TV, laptop, or camera. But it’s about way more than saving money on tech gadgets: Decide’s methods of extracting searchable information from written text, used as a way to track new-model rumors, points to the future of all search.

—The pre-Labor Day Thursday was ripe with tidbits, so here’s a roundup-within-a-roundup—New HTC phones running the “Mango” version of Windows Phone; Microsoft sued over allegedly tracking locations through WP camera software; Expedia‘s CFO stepping down, but not until the TripAdvisor spinoff is complete; and Harebrained Schemes‘ “Crimson Steam Pirates” debuts for the iPad, via Bungie Aerospace and Moai.

—Finally, in a startup profile by way of an SEC filing, we chatted about Viableware, a company featuring some tech and restaurant industry veterans who are targeting the suddenly busy market for next-generation payment devices and systems for dining out. Viableware’s device is called the Rail, and mimics a traditional bill folio. The idea is to save money on transaction fees and labor, cut out the potential for fraud, and—probably most importantly—build a new platform for ads and loyalty programs

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Fresh Mangoes: HTC, the handset maker with North American headquarters in Bellevue, WA, has unveiled its first phones running on Microsoft’s new “Mango” version of the Windows Phone operating system.

The phones are named the Titan and the Radar—guess which one is bigger—and gadget geeks can check out a thorough demo via Engadget, which features a hands-on video tour. The phones are headed for the overseas markets first, starting next month. Windows Phone VP Joe Belfiore was particularly excited about one feature:

Unfollow: Meanwhile, Microsoft (NASDAQ: MSFT) has been sued in federal court here in Seattle by a Michigan resident who claims the company tracks Windows Phone users’ locations through a phone’s camera software, even after consumers explicity reject sharing of that data. The lawsuit is seeking class-action status, but a judge has made no ruling on that request yet. Microsoft has declined comment to various media outlets, which is standard procedure in legal cases, especially fresh ones.

Traveling On: Expedia (NASDAQ: EXPE) chief financial officer Michael Adler plans to step down after six years minding the company’s numbers. In a news release, Expedia said senior vice president of corporate development Mark Okerstrom would take over the CFO’s job. Expedia said Adler would remain during a transition that includes completing its spin-off of Newton, MA-based TripAdvisor into a separate public company.

Game Ahoy: Bungie Aerospace, the iconic console game developer’s new mobile and social imprint, has released its first title: “Crimson Steam Pirates.” The game was developed by industry veteran Jordan Weisman’s Harebrained Schemes, and built using Moai, the mobile platform from Seattle startup Zipline Games.

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The federal government has put its foot on AT&T’s proposed $39 billion buyout of Bellevue, WA-based T-Mobile USA, filing a lawsuit today that yanks the merger away from regulators at the Federal Communications Comission and puts the whole thing in the court system. If the Justice Department has its way, that’s where the story will end. AT&T, for its part, says it didn’t see the lawsuit coming and will fight for the deal.

Killing the deal would prompt AT&T to pay T-Mobile’s parent company, Deutsche Telekom, a hefty breakup fee of cash and spectrum valued at about $7 billion. Interestingly, DT had been looking to unload T-Mobile and get out of the U.S. market because it apparently wasn’t interested in spending the money to build out a next-generation network. Could the breakup package, if it comes to that, make T-Mobile an attractive unit again for the German company? Or would it still try a spin-off or some other change?

The Justice Department’s antitrust lawsuit emphasizes three big points: Consumers will inevitably pay more when they have fewer wireless carriers to choose from, business and government contracts will have fewer bidders, and the market is so well-established nationally that nobody else is likely to charge in and fill the No. 4 spot behind AT&T, Verizon, and Sprint.

You can check out the entire complaint here, where the DOJ has uploaded its filing as a PDF. Skip the cover sheet, read pages two and three for an overview, and jump down to the bottom of page 12 to get to the actual meat of the complaint—everything in between is a recitation of facts and court procedure.

CONSUMERS
The lawsuit devotes most of its attention to this topic. The lawsuit’s argument leans in several places on T-Mobile’s previous marketing and promotional materials positioning itself as the challenger to the other big three carriers, a low-cost competitor, and an innovator—even though some of those innovations are pretty stale, such as the introduction of the Sidekick phone and BlackBerry e-mail.

The lawsuit returns a couple of times to the fact that T-Mobile competes on wireless plan price and has targeted millions of people who don’t have smartphones yet. The DOJ says AT&T wouldn’t keep those lower-end plans alive post-merger, driving up costs for consumers.

One interesting tidbit is the DOJ’s citation of an internal AT&T document from early 2010, analyzing broadband rollouts by competitors, which is quoted as saying “the more immediate threat to AT&T is T-Mobile … The one-two punch of an advanced network and the backhaul required to support the additional data demands should be taken seriously.”

The feds also say that AT&T, Sprint and Verizon would be far more likely to fix prices and otherwise cheat consumers—or as the lawyers call it, “an enhanced risk of anticompetitive coordination.”

“Certain aspects of mobile wireless telecommunications services markets, including transparent pricing, little buyer­side market power, and high barriers to entry and expansion, make them particularly conducive to coordination. Any anti-competitive coordination at a national level would result in higher nationwide prices (or other nationwide harm) by the remaining national providers, Verizon, Sprint, and the merged entity,” the lawsuit says on page 16.

The DOJ adds that there is plenty of evidence that T-Mobile is not just an inconsequential small player, but actually competes head-to-head with AT&T—and there’s even a shout-out to the marketers who came up with the magenta-dress-wearing gal who pokes fun at AT&T in those ubiquitous TV commercials.

“Documents produced by AT&T and T -Mobile establish that a significant portion of customers who ‘chum’ from AT&T switch to T-Mobile, and vice versa. This shows a significant degree of head-to-head competition between the two companies, as demonstrated by T-Mobile’s recent television ads directly targeting AT&T,” the complaint says on page 18.

BUSINESS & GOVERNMENT
The DOJ also points out that reducing the number of carriers could lead to higher prices on bids for big business and government contracts. The feds acknowledge that this hasn’t been a big area for T-Mobile, but says that it was poised for change, and would have expected it to continue competing on price.

“In the past, enterprise and government customers were not a primary focus for T-Mobile. As part of its 2011 business plan, however, T-Mobile re-dedicated itself to becoming a bigger player with the stated goal of growing enterprise revenues substantially by 2013,” the complaint says on page 19.

BARRIERS TO ENTRY
Finally, the DOJ points out that national wireless carriers have grown to the point where it’s essentially a closed market for new competitors—the government made the point several times in the filing that local or regional carriers are just bit players, and “none is as effective a constraint as is T-Mobile on AT&T, Verizon, and Sprint.”

“To replace the competition that would be lost from AT&T’ s elimination of T-Mobile as an independent competitor … a new entrant would need to have nationwide spectrum, a national network, scale economies that arise from having tens of millions of customers, and a strong brand,” the DOJ writes on page 20. “Therefore, entry in response to a small but significant price increase for mobile wireless telecommunications services would not be likely, timely, and sufficient to thwart the competitive harm resulting from AT&T’ s proposed acquisition of T-Mobile, if it were consummated.”

NOT CONVINCED
AT&T’s main stated justification for buying T-Mobile is its spectrum, which is becoming increasingly valuable as more consumers adopt bandwidth-gobbling smartphones and tablets. Of course, AT&T would get millions more subscribers to boot. The DOJ’s lawsuit brushes aside the spectrum argument thusly: “The Defendants cannot demonstrate merger-specific, cognizable efficiencies sufficient to reverse the acquisition’s anti competitive effects.”

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Intellectual Ventures, the Bellevue, WA-based patent licensing and invention firm, has responded on its blog to a recent report by the influential public radio program “This American Life” that delved into the controversy around intellectual property rights—and specifically, the accusation that IV is a massive “patent troll” that uses its trove of intellectual property to extract money rather than adding anything constructive to the world.

It’s a very thoroughly reported take on this overall story, which is not a new one to the tech community, but will definitely have legs because of its detail, cast of characters, bombastic accusations, and secretive legal arrangements.

First, there’s no question that IV is a massive “non-practicing entity” for a lot of the patents it holds. It’s not making flash memory or mobile backup software, but holds intellectual property for those kinds of products and makes money by licensing the patents to others. And quite a bit of money, too—co-founder Nathan Myhrvold has said IV’s more than 30,000 patents have brought in $2 billion in revenue, with some $700 million last year alone.

Being an “NPE” is, of course, a pretty classic definition of a patent troll. And the “This American Life” reporters do a really good job of talking to patent experts about the history of the American patent system, particularly in software, where you can often find patents that claim ownership of the most basic behaviors in the Internet age.

This point gets to the main conflict at hand: overbroad patent claims and demands for licensing money pitted against the democratic strain in coder culture that values showing your work and sharing knowledge.

Intellectual Ventures has been pretty consistent in how it responds to these kinds of allegations, saying that it’s doing something very different in the field by trying to create a more robust, efficient, liquid market for intellectual property. Where a few big tech firms and lots of patent lawyers once ruled, IV sees itself as establishing a new middleman class that can essentially move around patent rights like so many other commodities.

That’s the tone conveyed in IV’s blog response to the “This American Life” piece. Under the headline “Disruption Invites Controversy,” IV says some of the characterizations in the public radio piece veered into absurdity, and missed the theme that IV sees underlying its existence: the shift to a dramatically different market for patents.

“Many of the world’s leading technology companies are now beginning to recognize that patents are actually strategic assets that can be worth billions of dollars,” IV wrote. “This evolution in perspective is another crucial step toward an efficient market for inventions, and we are proud to have contributed to it.”

It was pretty easy to pinpoint the exact spot where IV got into real hot water with this particular report. The public radio reporters asked IV for an example of some inventor that the firm has helped, to buttress the company’s do-gooder claims. Intellectual Ventures offered up … Next Page »

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[Updated at 2:30 pm with details of ITC complaint] Now it’s really getting serious. Intellectual Ventures, the Bellevue, WA-based intellectual property and invention firm, is stepping up its fight against a pair of Asian memory manufacturers with a complaint to the International Trade Commission seeking to block the companies’ products from being imported to the U.S. A related federal lawsuit was filed in Seattle yesterday.

Intellectual Ventures also targets a bunch of companies that make, market, and sell products with the Asian companies’ memory devices—including such household names as Dell, Hewlett-Packard, Best Buy and Wal-Mart. Those companies aren’t IV’s main adversaries; the firm is mainly going after Korea-based Hynix Semiconductor and Japan-based Elpida Memory. On its website this afternoon, Intellectual Ventures said that “ITC requirements” led it to include ”several companies whose products contain infringing Elpida and Hynix memory devices.”

The lawsuit represents the second time overall that IV has gone to court to enforce its considerable patent holdings, but the ITC is a new level of seriousness. Hynix and Elpida (along with their American branches) also were targets in that first round of civil suits, filed in Delaware at the end of last year. In its blog post, IV says the ITC complaint is the next step in its legal moves against Hynix and Elpida. Intellectual Ventures lawyer Melissa Finocchio is quoted saying that the two manufacturers were “clearly” infringing on IV’s patents, but refused to make a licensing deal.

“We can file a patent infringement suit seeking money damages, which we did in December, and we can file a complaint with the ITC requesting an order barring importation of the infringing products into the U.S.,” Finnoccio said. “In the case of Elpida and Hynix, we see both courses of action as necessary to protect the value of our invention rights.”

Hynix and Elpida both make DRAM, a kind of memory used in computers and servers. Hynix also makes NAND Flash memory, which is used in things like iPods. Just as it did in its previous suit against the two companies, IV lays out a history of trying unsuccessfully to cut licensing agreements with the two firms over a set of patents.

Intellectual Ventures, co-founded by former Microsoft CTO Nathan Myhrvold, takes a two-pronged approach to building what it calls an “invention capital” company. The serious money is made by buying up and licensing patents—an approach that IV’s leaders have said is their attempt to establish a large, competitive market for patents as financial commodities. Intellectual Ventures says it has … Next Page »

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The patent litigation between Burlington, MA-based Nuance Communications (NASDAQ: NUAN) and Cambridge, MA-based Vlingo is nothing new.

A false advertising lawsuit is, though. Earlier this week, Nuance filed such a lawsuit against Vlingo in Suffolk County Superior Court. The suit asserts that Vlingo, on its website and elsewhere, “makes numerous false and misleading representations of fact to induce consumers to purchase or use Vlingo products and services,” according to court documents provided to Xconomy by Vlingo.

[Disclosure: the brother-in-law of Xconomy Boston editor Greg Huang is a co-founder of Vlingo. Mr. Huang was not involved in the planning, directing, reporting, or editing of this story.]

These allegedly false and misleading claims include the statement that Vlingo’s technology achieves unprecedented accuracy, that it applies “automatic adaptation” to pronunciation and vocabulary, that it learns for example, “over time that a particular user tends to ask for Mexican food,” and that the adaptation process is “new technology.” Nuance calls these claims unfair and deceptive—for instance, at one point the suit says “Vlingo claims that certain technology is ‘new’ when in fact it is not”—and has sought unspecified monetary damages for the harm Vlingo has caused it as a result. Nuance also states that the claims “harm the consuming public and are contrary to the public interest.”

A representative from Nuance said that the company does not comment on matters of litigation.

Here is the PDF of Nuance’s false advertising complaint against Vlingo and supporting documents.

Nuance says in its suit that it became aware of the false advertising as part of the discovery process—specifically when it deposed key Vlingo employees—in one of the pending patent infringement cases. Nuance says a protective order issued in that case prevents it from using at least some of the information in the new false advertising suit at this time, but that it is seeking ways to do so.

“To me it looks like a real sign of desperation,” Vlingo CEO Dave Grannan told me on a call Thursday. “It’s just a measure of the fact that they’re trying to increase our legal expenses and create some sense of uncertainty and doubt against our customer base.

“It’s continued to be part of the Nuance strategy to compete in the courtroom rather than in the market,” he says.

Vlingo offers a mobile app that consumers can buy themselves and also powers voice recognition features for device makers like Samsung. Grannan says his company has recently inked some big customer deals —which he didn’t name—in which it went head to head with Nuance. “Every time we have a market victory, they sue us again,” he says.

The false advertising lawsuit is the latest step in the three-year legal wranglings between the two software companies. Earlier this month, Nuance hit Vlingo with … Next Page »

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It’s no secret that some big West Coast players have shown interest in Boston’s homegrown mobile technology lately. In the past few weeks, San Jose, CA-based eBay (NASDAQ: EBAY) has bought Where, a location-based mobile advertising and recommendations provider, and mobile payments startup Fig Card, to roll into its PayPal division.

But Boston-based Skyhook Wireless has a slightly different relationship with a Bay Area Internet giant. It’s been wrestling in court with Mountain View, CA-based search engine giant Google (NASDAQ: GOOG), around its location-finding technology for mobile phones. Skyhook has sued Google for alleged patent infringement, as well as alleged interference by Google with deals Skyhook had inked with Motorola and Samsung for devices running on Google’s Android smartphone platform. (You can read more about the lawsuits here and here.)

It looks like there’s still a long way to go for that case to be resolved—last week lawyers from both sides met before a Suffolk County Superior Court. Google’s lawyers asked for the judge to throw out the case, on the basis that Google had pre-existing agreements with device makers, in which some of its standard apps automatically collected location data. Meanwhile, Skyhook’s lawyers re-emphasized their claim that Google road-blocked Motorola and Samsung from following through on agreements to ship smartphones with Skyhook’s XPS software, which determines a user’s location using WiFi, cellular, and GPS access points.

Yesterday, the judge denied both Google’s motion to dismiss the case and for a summary judgment, court documents show. The case will now to go into full discovery to gather the necessary documents and depositions, a period that could take six months—a timetable suggested by Google lawyers last week.

So it’s a small victory for Skyhook, but its legal work is just beginning. “Their goal is to try and bleed us out and our goal is to try and make sure we get the facts brought to light,” Skyhook CEO Ted Morgan told me this week.

Meanwhile, Skyhook has been nabbing some bigger victories out of the courtroom. This week it announced that MapQuest, the San Francisco-based mapping division of AOL, will use Skyhook’s technology in an upcoming turn-by-turn navigation app for Android phones. Skyhook has inked similar deals with UberMedia, Citysearch, and Priceline over the past few months.

“In the meantime what we’re doing is going after all the top Android apps that offer location,” Morgan says. “That way we’ll get on every Android device, but it will be through the apps instead of device makers.”

Google’s and Apple’s impending appearances before a U.S. Senate committee also shed some positive light onto Skyhook’s technology, he says. Lawmakers have expressed concern over reports that Apple logs user location data on mobile devices. Google, which has claimed that … Next Page »

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Quick, which Boston- and San Francisco-area venture firm has invested hundreds of millions of dollars into the burgeoning—and controversial—market of intellectual property and patent protection over the past five years?

If you said Charles River Ventures, you are correct. In fact, CRV is the only big venture investor behind Intellectual Ventures, the Bellevue, WA-based firm known for its unique (and often criticized) approach to the business of invention. Charles River says that, together with its limited partners, it has poured some $300 million into the company since 2006.

That’s an astounding figure, and it shows that Charles River is betting on intellectual property in a huge way—perhaps more so than anything else in its portfolio. Besides Intellectual Ventures, the VC firm is also invested in RPX, a San Francisco-based defensive patent aggregation firm, which filed for an IPO in January and plans to go public today—more on that coming in a separate story. (Kleiner Perkins Caufield & Byers and Index Ventures are also investors in RPX, which was co-founded by two former employees of Intellectual Ventures.) Yet most venture firms still treat the field of intellectual property as a bit of a scourge—or, at best, a fringe area—even though it has great ramifications for VCs and their startups. So why did CRV decide to take the plunge?

The story goes back to 2001, the year after Intellectual Ventures was formed, when Nathan Myhrvold, the company’s polymath, founder, and CEO (and Microsoft’s former chief technology officer), came to Boston and met with Izhar Armony, a partner at Charles River Ventures. After some intensive Myhrvold-speak—for example, “invention is the essence of innovation”—he drilled down to his main point. Venture firms, Myhrvold argued, spend almost all their money on things that are essentially commodities—engineers, business people, infrastructure for startups—but what’s actually unique, and arguably most valuable, is invention.

Many would disagree—people and execution are pretty essential to businesses, after all—but the seed was planted. “Nathan helped open my eyes to the notion that IP [intellectual property] is a very important market—it’s actually a very big market in tech,” Armony says. He adds that there’s a $50 billion-plus market in IP rights and licensing, versus a $6 billion litigation market based on legal fees.

So in 2003 he led CRV’s investment in Intellectual Ventures’ “invention science fund,” which aimed to create new inventions across a wide range of fields, in part by bringing together renowned scientists and inventors and brainstorming ideas in a structured way. Such “invention sessions” have led to major projects and spinouts such as TerraPower, the Bellevue, WA-based nuclear-reactor firm (in which CRV also became an investor). In total, CRV committed $39 million to the invention science fund, co-investing with the likes of Bill Gates and Microsoft.

But the really big business opportunity came along in 2006, when CRV and its limited partners decided to commit an additional $300 million—I’ll say it again, $300 million—to Intellectual Ventures’ … Next Page »

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New England biotechs made news this week with approvals from FDA advisory panels, licensing deals, collaboration agreements, and lawsuits.

—An FDA advisory panel unanimously recommended the FDA approve telaprevir, the thrice-daily pill for hepatitis C from Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX). The FDA, which usually takes the recommendations of these panels, is scheduled to make its final decision on the drug on May 23.The NASDAQ halted trading of Vertex’s common stock on Thursday while the advisory committed reviewed the application. The day before, an FDA panel voted unanimously to approve Merck’s (NYSE: MRK) rival hepatitis C pill, boceprevir.

—Proteostasis Therapeutics, a Cambridge-based developer of technology to fight neurodegenerative diseases by keeping proteins in balance, said it obtained two exclusive licenses from Harvard, pertaining to the ubiquitin-proteosome pathway. It did not disclose financial terms.

—Cambridge-based Dyax (NASDAQ: DYAX)  said it will collaborate with South San Francisco-based FivePrime to discover new antibody drugs. Dyax will get technology license fees and research support and is eligible for milestone payments and royalties if FivePrime successfully develops drugs using Dyax’s phage display technology.

—My colleague Ryan wrote about KEW Group, the new Concord, MA-based cancer care startup that’s been in the formative stages for about a year and is working on raising venture money. KEW is led by Boston biotech veterans and Harvard scientists, and is working to open up a network of oncology clinics that make IT and evidence-based medicine, like genetic testing, more accessible to patients get treated at community clinics.

—Genzyme, the Cambridge-based biotech now owned by Sanofi-Aventis (NYSE: SNY), amended its patent infringement lawsuit against Anika Therapeutics (NASDAQ: ANIK) surrounding Anika’s osteoarthritis treatment, Monovis. Genzyme also filed a new complaint in U.S. District Court in Boston that includes a newly issued patent.

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