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Technology companies fought hard in court all through the year, defending themselves against patent infringements, illegal actions, dishonoring agreements, wage-fixing charges and regulatory pressure.

HP-Autonomy

In 2011, Hewlett-Packard Company (HPQ - Analyst Report) bought British company Autonomy, which makes software that can search through unstructured corporate data files with great accuracy, for $11 billion. But the following year, it wrote down $8.8 billion, claiming that Autonomy had inflated sales figures (through fake deals, subsidized transactions and misclassified sales), which it claimed made it impossible for H-P to realize the synergies and growth it expected at the time of sale. So it took the case to the SEC, FBI and Britain’s Serious Fraud Office.

Investors smelled a rat and sued the company and insiders for breach of fiduciary duty. In the increasingly public display of antagonism that ensued, three possibilities came to light: first, that Autonomy had inflated sales figures and misrepresented the situation to H-P executives; second, that H-P insiders were hand in glove with Autonomy executives with both making a profit; and third, that Autonomy insiders weren’t involved in any wrongdoing and H-P was spinning a story to reduce the amount it needed to pay the aggrieved shareholders.

The increasingly illustrious and influential Mike Lynch, who is now advising the British Parliament on technology and meeting with the Queen of England, is the former Autonomy CEO. Lynch has recently given a public statement to the effect that documents gleaned from inside H-P showed that its own investigations revealed no fraud but instead pointed to differences in accounting practices in the U.S. and U.K.

He reiterated that the write-down was necessitated by H-P’s own miscalculations and mismanagement. H-P responded by saying he had a “fertile imagination” and would benefit from spending more time with the authorities.

In June, H-P proposed a settlement with the concerned shareholders according to which it agreed to pay the shareholder leading the lawsuit $25,000 and the two law firms representing the shareholders $18 million as retainer fees. It was also agreed that if the law firms agreed to lead H-P to a victory in its legal battle with Autonomy, they could earn up to $30 million from the proceeds thus generated.

The settlement was challenged by executives on the Autonomy side on clauses that limited their legal rights, and earlier this month, U.S. District Judge Charles Breyer agreed that it was too lenient on H-P executives while the huge payment to attorneys (in excess of the amount proposed to be paid to shareholders) aroused further suspicions.

Apple-Samsung

Apple (AAPL - Analyst Report) and Samsung have spent many hours in court suing and counter-suing each other as the Korean phone maker rose to become the leading smartphone maker in the world. Samsung blatantly copied Apple technology and then came out with new alternatives every time Apple took it to court. It also brought fresh charges against Apple most of which were found to be without merit.

This year started on the same note, but in April, Apple finally asked for $2 billion in damages with respect to patents that were related to the Android OS instead of Samsung hardware. Samsung produced email messages in court that showed that Google (GOOGL - Analyst Report) was indemnifying it for a couple of the patents in question. With Google directly entering the picture, so did the consortium Rockstar. Apple was the leading player behind the creation of Rockstar, which also included Microsoft, Ericsson and Sony (SNE).

The group got together to buy the Nortel patents when Nortel went bankrupt with sole intention of preventing Android from taking share in smartphones. So it went about suing not just Samsung, but also other Android licensees like HTC and Huawei. But 2014 saw Google settling and Rockstar being wound down, so all could finally be well.

Microsoft-Samsung

Back in August, Microsoft (MSFT - Analyst Report) sued Samsung for not paying interest on delayed royalties related to Android. Samsung had agreed to pay royalties in 2011 and also agreed to make Windows phones and share sensitive business information. But Microsoft’s Nokia acquisition made it a direct Samsung competitor, disrupting this relationship. Samsung initially refused to pay but was later persuaded after the matter was dragged to court.

However, it still hasn’t paid the interest accrued due to the delay, for which Microsoft sued yet again in October. Samsung then called on the Hong Kong office of the International Court of Arbitration of the International Chamber of Commerce in an attempt to stay proceedings versus Microsoft until its request was considered by the arbitration court. The court denied Samsung’s request in November.

Google-Oracle

For the last four years, Google and Oracle (ORCL) have been battling in court over a few lines of Java code that Google had used to build Android. The code belonged to Sun Microsystems that Oracle later acquired for a hefty sum, probably in the hopes of gleaning something from Google. But after the second phase of the trial, Google was exonerated on the “fair use” principle, following which a federal circuit judge overturned the ruling in Oracle’s favor. In October, Google decided to take the matter to the U.S. Supreme Court.

GTAT-Apple

Apple agreed to pay GTAT $578 million for the development of sapphire technology last year, of which $439 million was paid as a first installment. The remaining $139 million was to be paid only if GTAT met certain criteria, which aren’t public. GTAT said the terms of the agreement were “burdensome and oppressive.”

First, it filed for Chapter 11 protection, then it requested court permission to wind down the sapphire crystal operations in Arizona and keep the terms of its agreement with Apple undisclosed because it could be required to pay $50 million in damages per disclosure. After that, it filed another document asking the court to end its agreement with Apple because it was an unnecessary drain on its resources.

Apple either didn’t pay the $139 million or didn’t use what GTAT was making in its devices, which was the reason for the problem. But it said that it was focused on preserving jobs in Arizona and would continue to work with state and local officials as it considered its next steps.

In October, GTAT and Apple came to a truce even as the bankruptcy court allowed the startup to wind down its sapphire manufacturing operations and pay incentives to some employees. The two companies subsequently filed an agreement, according to which GTAT got to stop sapphire production, retain its intellectual property and sell its manufacturing equipment and technology to third parties.

Apple could recover the $439 million it invested in the company without interest although losing its exclusivity status and agreed that the two companies could do business in the future if the technology reached marketable standards. GTAT, Apple and other creditors continue to ask for confidentiality with respect to the details of the original agreement.

Class Action Lawsuit For Wage Fixing

There were developments in the case between technology giants Apple, Google, Intel (INTC - Analyst Report) and Adobe (ADBE - Analyst Report) and 64,000 employees belonging to these companies. Originally filed in 2011, the employees claimed that no-poaching agreements between these technology companies reduced opportunities for technology workers and contained wage rates across the industry. They are claiming damages of up to $3 billion, which could be tripled in accordance with anti-trust law.

The companies proposed a settlement of around $325 million, which was denied by the court on its being too small an amount and not comparable to what was earlier paid by Intuit and Pixar (the compensation needs to be around $380 million to be on par with what the other settlers paid).

While all the colluding companies have not been sued, documents showed that such agreements existed between most big technology companies including Microsoft, IBM, Oracle, Dell (DELL), AOL (AOL), PayPal and Comcast (CMCSA), as well as advertising giants WPP and Ogilvy. Facebook (FB), being a younger company, was not part of these deals and it has made statements to that effect. Yahoo (YHOO) is another notable exception.

EU Investigating Google

Google’s problems in Europe are primarily related to its dominance in the search market, the increasing penetration of its Android OS and its data collection practices.

Being the dominant search engine with more than 90% market share, Google has the ability to doctor its algorithms to raise certain results in search rankings, thus playing a big role in the performance of companies. It has been alleged that Google was showing undue preference for Google-branded products and services, such as its PLAs, thus using its position in a way that could be against public interest.

Google tried to settle these anti-trust claims a number of times. But in July, some members of the EU said that Google’s settlement with the EU by the departing anti-trust chief Joaquin Almunia was negotiated without consulting them. In September, Google’s third settlement offer was rejected.

That same month, German justice minister Heiko Maas said that Google should be forced to reveal its search algorithm so government agencies could determine fair play, but Google naturally didn’t comply because disclosing its business secrets would be nothing short of suicidal and the service could also be jeopardized by spammers.

In November, the pressure increased further, with the European Parliament passing a resolution to break up Google, or possibly to create pressure on the new Competition Commission chief Margrethe Vestager. While the search market leader has not been mentioned by name, the call is for separation of Internet search companies from “other commercial services.”

Google’s data collection practices have also been questioned in the past, but this year saw France, Spain, the UK, the Netherlands and Italy requiring compliance with state laws (for instance, the prior permission of users before creating profiles and letting them know that their data would be used for commercial purposes) and also, in some cases, fines.

Google had notable problems in the UK where Apple customers sued the company for exploiting security loopholes to track them without their permission. A similar case was filed in the U.S., where Google paid compensation.

The matter takes a new light in the UK however, where Google might be in breach of the Data Protection Act. And if it is not, there is a precedent that could work against it: in January, the High Court ruled that use of data generated through search could be deemed a misuse of personal data (since Google was making so much money from it), thus giving rise to more actionable claims.

The information commissioner Christopher Graham is also calling for a more comprehensive definition of damage. He is asserting the assumption that the data generated by search is personal and raising a question as to whether personal damage can include non-monetary damage as well.

Google’s problems with publishers arose primarily in Germany and Spain. In Germany, a new law required search engines and aggregators to pay for the snippets and extracts from content created by them. Google said that it would remove the extracts rather than pay for them, simply displaying the titles and links in the search results instead. But this resulted in significant losses for the publishers challenging Google forcing them to revert to the old practice.

Competition authorities in the EU have also formally asked Yandex (YNDX), the most popular search engine provider in Russia, to provide information in support of a new anti-trust case against Google for the bundling of Google Mobile Services (GMS) with Android. GMS is the closed platform that most Android apps are currently built on and is responsible to a very great extent for the Android experience (Google Play, Maps, Gmail, Drive, YouTube, Hangouts and Chrome).

Yandex has its own services that it would like to bundle with its own popular search engine. But creating a forked version of Android becomes a problem because Android and GMS are so closely integrated that taking Android without GMS significantly detracts from the experience. GigaOm contributor David Meyer writes that according to his sources, even large Google partners operating in important Russian speaking countries were forced to use Google search as default. They were also prevented from pre-installing Yandex search on the home screen and were later banned from pre-installing any Yandex services at all.

EU Cracking Down on Tax Evasion

The European Commission said in October that Apple had an understanding with the Irish government that allowed it to reverse engineer its books in order to minimize the tax bill. The EU thinks that the Irish government was motivated by job creation (Apple employs 4,000 people in the country) and its support to Apple would amount to state aid. While there is no legal prohibition on state aid, actions that proffer competitive advantages to any player are considered illegal by the EU. Apple denied wrongdoing.

Also in October, the European Commission announced that it would start a formal probe into allegations that Amazon (AMZN - Analyst Report) had used its Luxembourg unit to illegally minimize the taxes it pays in Europe. Amazon leases its technology licenses to a tax-exempt partnership in Luxembourg, which then operates in Europe on its behalf. Amazon received a favorable tax ruling in 2003, which limited its total tax to less than 1% of its European income. If it is found that Amazon gained competitive advantage as a result of this mechanism, it may be required to pay off the resultant gains over the past 10 years.

FCC on Net Neutrality

The problem of net neutrality arose because broadband Internet providers such as AT&T (T), Comcast and Verizon (VZ) are saddled with the huge cost of providing infrastructure for burgeoning traffic that content providers avail of in order to grow. The carriers want in on content provider profits, or put another way, they want to transfer some of their costs to content providers (Google, Netflix NFLX, etc). They argue that network innovation needs to be incentivized and so they want to try out differential pricing models.

Unsurprisingly, the Internet Association -- representing Amazon, Facebook, Google, Twitter (TWTR) and other Internet companies -- have said that "Segregation of the Internet into fast lanes and slow lanes will distort the market, discourage innovation and harm Internet users." Those Internet users will have to pay more for services, if the broadband providers charge more for fast lanes.

Since there is a conflict of interest between the ISPs and content providers, the FCC is in the process of formulating rules that should be ready sometime in early 2015. Its previous rules were tossed out by the Columbia Court of Appeals in January, after which it drafted fresh rules in May, wherein the government’s control was minimal.

At the time, President Obama thought that the government should have more control and in November even advocated that the Internet be treated as a regulated public utility. The FCC, which is controlled by Congress, didn’t immediately adopt the President’s recommendations but sought comments from interested parties. Four million comments later, the FCC has finally decided on the new rules for a hybrid system to be published next year in an attempt to please all (according to media reports). Since this will most certainly be impossible, there should be some lawsuits next year.

>> Continue to Part 6: The Final Scorecard