Last summer, a small company called Space Data sued Alphabet’s ‘moonshot’ X division. At issue was its effort to deliver internet access to remote areas by balloon, known as Project Loon.

At first, not much happened. Space Data alleged patent infringement, misappropriation of trade secrets, and breach of contract related to a failed acquisition bid in 2008. But last month, Space Data pulled off something big: It convinced the US Patent and Trademark Office to cancel most of one of Project Loon’s foundational patents, and say that Space Data came up with the idea first. Loon’s patent for changing a balloon’s direction by adjusting its altitude—a core feature of both systems—is now legally back in Space Data’s hands.

For Alphabet, the outcome is an unfortunate first. It has never before had any of its 36,000 patents change hands because of “interference,” the term for when a patent describes the same invention as an earlier filing from another company. Worse still for Alphabet, Space Data will now go to trial against it armed with a patent the multinational was relying on.

Mark Harris is a freelance journalist reporting on technology from Seattle. Sign up to get Backchannel's weekly newsletter.

“This changes the dynamic of the case,” says Brian Love, co-director of the High Tech Law Institute at the Santa Clara University School of Law. With the loss of this key patent, Alphabet now finds itself knee-deep in a court case in which it can no longer argue that the central invention was its own.

While the world focuses on the epic legal struggle between Uber and Alphabet over self-driving car technology, this parallel battle flips the roles, putting Alphabet on the defensive against claims that it stole trade secrets—and then tried to patent them as its own. Project Loon, a program that was meant to highlight Google’s generosity in bringing internet access to the world, could end up looking like just another example of Silicon Valley trampling over existing industries for personal gain.

When Project Loon launched publicly in 2013, with a video showing a sheep farmer in New Zealand going online via wifi beamed from balloons 20 kilometers overhead, Google heralded its technology “a breakthrough.” Astro Teller, the X division’s Captain of Moonshots, wrote: “Back in 2011, we had a hunch that balloons flying freely on the winds could be controlled just enough to act like floating cell phone towers in the sky. We’d pump air out of or into the balloon to make it lighter or heavier, and then move up or down to catch winds traveling in the direction we wanted to travel.”

At a TED talk in 2014, Google’s then-CEO Larry Page said: “We did some weather simulations which probably hadn't really been done before, and if you control the altitude of the balloons, which you can do by pumping air into them and other ways, you can actually control roughly where they go.”

Both men were describing the engineering feat that Space Data had sought to patent more than a decade earlier. Filings with the Federal Communications Commission (FCC) show that in 2000, Space Data began experimenting with a nationwide paging service from high-altitude balloons. Space Data filed its key patent application in 2001, and quickly went on to test text messages in 2002, phone calls in 2006, and 4G LTE data by 2012—a year before Google’s splashy launch.

Space Data has been providing commercial wireless services from balloon constellations since 2004, and it operates a radio repeater platform used by the US Army and Marine Corps, utilizing cheap weather balloons. Larry Page likely knew all this. After all, he very nearly bought Space Data in 2008.

Back in 2007, Google was in a pickle. It had participated in an FCC auction of radio spectrum solely to force another bidder, Verizon, to hit a minimum bid that would open up the frequencies to all users—including Google. But if Google accidentally won the auction, it would have had to build out coverage for 40 percent of Americans within four years. That promised to be an expensive proposition using existing technology.