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Searching For Google’s Motive

Google’s office in Sorrento Valley gives no clues as to the nature of its San Diego operations. Google acquired San Diego-based Lumedyne Technologies Inc. in 2014 for a reported million.

Google has sparked a mystery of sorts by apparently shelving the project that brought it to San Diego in the first place.

The tech giant recently terminated a series of Navy license agreements it acquired in 2014 when it bought Lumedyne Technologies Inc., a local company that was developing sensor technology invented at San Diego’s Space and Naval Warfare Systems Command, or SPAWAR.

The move seems to have attracted notice: On Feb. 15, SPAWAR said it was contacted by a separate company interested in using the same patents Google walked away from. The agency declined to identify the company.

Here’s the twist: Google has retained related patents that Lumedyne developed apart from the Navy. People familiar with the matter say that without access to both sets of intellectual property, it may be hard for anyone — Google or any other company — to commercialize the technology. Mountain View-based Google isn’t saying what it might do next, but there may be clues. It has asked SPAWAR to notify the company if anyone expresses interest in the Lumedyne technology, because it may want to license its patents. Also intriguing is a help-wanted ad Google posted online Feb. 8 for a sensor hardware engineer in San Diego.

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Google has vacated Lumedyne’s former offices along Sky Park Court, and recently moved into a four-story building in Sorrento Valley, though it is unclear from outside the building or the reception area what work goes on there. The famously secretive company did not respond to repeated requests for comment.

Buy and Drop?

The situation has raised a number of questions, including what were Google’s intentions when it bought Lumedyne for a reported $85 million, as well as what else the company may be doing locally besides reportedly pursuing a high-speed internet initiative.

Lumedyne co-founder Richard Waters, who left Google in July after spending two years there post-acquisition, said his understanding from speaking with people still at the Mountain View company is that development work on the sensor project has halted.

Waters said he’s still perplexed why Google would buy a company only to basically drop it.

“After spending that kind of money,” he asked, “why would a company cancel a project after only a year and a half, but at the same time, continue pursuing patent applications that, on their own, aren’t any good?”

One explanation is that Google balked at public disclosure requirements and other strings typically attached to government license agreements, said Randy Berholtz, a Thomas Jefferson School of Law adjunct professor who has often dealt with government patent licenses. Or, he said, the company may have settled on an alternative technology it deems superior to the Navy’s.

Less likely, he said, is the possibility that Google is sitting on valuable technology just so others can’t use it.

“If it had value for (Google), they would use it,” he said.

Finding a Market

Lumedyne was founded in 2006 by Waters and former SPAWAR engineer Brad Chisum. Through the agency, the company was able to secure rights to two kinds of sensors. One was an energy harvester that could have been used to transmit remote temperature readings — unfortunately, at substantial setup costs. Chisum now downplays that concept’s commercial potential.

The other sensor is the one Google was more interested in. It is an accelerometer that tracks directional changes with exceptional accuracy, making it superior to GPS-based navigation systems, especially in the absence of a satellite signal.

There were potential applications in at least three fields: oil and gas, defense, and consumer technology. Lumedyne capitalized on them in that order, and scored its first success, a multimillion-dollar contract with an oil field tech company, on Feb. 11, 2009.

That work, combined with defense contracts, provided Lumedyne’s early revenue. It was easier than pursuing applications in consumer electronics, Chisum said, because it didn’t require mass production and manufacturing refinements.

But when Lumedyne received an investment from a Taiwanese semiconductor company, it shifted its focus to consumer products. By the time of the purchase in 2014, Lumedyne had not produced any products geared toward consumers.

Quick Acquisition

Observers have speculated Google probably wanted Lumedyne’s sensors for use in a self-driving car or for Smartphone navigation. Chisum said Google never specified its precise intentions when it bought Lumedyne.

Whatever the reason, Google wanted the company badly, he said. At a time when Lumedyne was being courted by several potential buyers, Google went from initially contacting Lumedyne in June or July 2014, to presenting a term sheet in August.

“When they decide they want something, they don’t mess around,” he said, adding that at the time of the acquisition, Google had no other operations in the San Diego area.

Neither of Lumedyne’s founders were able to offer much insight on what Google is doing in San Diego since the two of them left the company last summer, though Chisum said Google’s local employees work on a variety of projects.

‘Business Decision’

Waters said Lumedyne’s work was going well as recently as summer, when he completed a successful demonstration of the technology.

He and Chisum downplayed the idea that Google’s recent San Diego job posting suggests it is looking for someone to continue development of the Lumedyne technology. They said refining the sensors would probably take a person with skills different from those advertised.

Martin Machniak, science and technology manager at SPAWAR Systems Center, said Google representatives told him initially that the company’s original goal was to buy Lumedyne and mature its technology.

When that eventually changed, he said, it was not because of personal factors.

“It’s a business decision,” Machniak said. “There’s not an issue among us,” he said, referring to Google, Lumedyne and its founders’ relationship with the Navy.

‘Very Odd and Strange’

Brian Suh, a former SPAWAR technology transfer specialist who worked with Chisum and Berholtz on patents the Navy licensed to Lumedyne, noted Congress has mandated that military technology developed using taxpayer money be commercialized, if possible.

But Google faces no such requirement, Suh emphasized.

“As a company, you know, they could do what they want with an IP,” he said, using an acronym for intellectual property such as patents. He noted that he left the agency for a position at the University of California, Riverside when the Navy agreement with Lumedyne was still in place, and that he has never spoken with anyone at Google.

Suh added that he doesn’t know why Google would try to shut down development of intellectual property it pays to maintain.

“I would think that would be very odd and strange, and why they would invest so much money and do that,” he said. “It would be confusing to me.”

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