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Google and Motorola - A match made in patent heaven?

-September 16, 2011

Within the context of the purchase, Google's move to acquire Motorola Mobility for approximately $12.5 billion is as much about acquiring valuable intellectual property as it is about becoming a major player in the handset market.

From a patent perspective, the Motorola acquisition provides a sizable portfolio of both issued and pending patents. A quick review reveals a portfolio of more than 17,000 Motorola patents that are still in good standing with another 7,500 in application. Using the rule of thumb that typically 3% of patents in any portfolio feature real value, one can assume that Google has acquired more than 500 high-value (possibly essential to standard) patents. Google has demonstrated an aggressive patent acquisition strategy in the past, just recently coming up short in a bid to acquire Nortel's patent portfolio to a consortium of industry leaders such as Microsoft, Apple, RIM, Sony, and others. With this recent acquisition, Google strengthens its own patent portfolio while acquiring the assets and engineers of Motorola, albeit at a cost much higher than the bids it submitted to Nortel.

As a relatively young company, Google hasn't had the benefit of time to build out a developed patent portfolio in comparison to its competitors and as such, has left itself open to litigation. In acquiring Motorola Mobility's patents and its recent purchase of more than 1,000 IBM patents, Google is arming itself to not only protect its business, but placing it in a position to be on the offensive. Motorola's IP team has plenty of experience dealing with patent assertion in the wireless space and one would expect Google to make good use of that team in an arena it has recently become all too familiar with - the court room.

Another benefit of this acquisition is Google is now in a much better position to negotiate with the traditional cell phone companies. However that is dependent on any existing licenses Motorola may have had with them and how those licenses were structured to deal with a change in control. With respect to the trouble that non-practicing entities (NPE) have been causing Google, the purchase of Motorola's mobile group doesn't help it. In fact, the purchase likely makes Google a larger, more direct target. It also remains to be seen how owning Motorola Mobility positions Google with Apple and Microsoft, given that both companies have ongoing litigation with Motorola.

 
Why is Google purchasing patents?

One must also remember that even though Google is an established company, built from the popularity of its search engine, it is a relative newcomer to the product introduction space, needing to play catch-up in matching the patent positions of the earlier entrants and established companies that have built a library of patents from their innovation. Google is now finding itself in the classic buy-versus-build decisions dictated by the time and resources available that many established companies have already faced. Google fits the mold of a company at which revenue growth has outpaced its ability to generate its own patents and therefore has been forced to buy aggressively until its internal efforts catch up. This could explain its recent aggressive strategy to acquire Nortel's patent portfolio and the acquisitions of IBM and Motorola Mobility patents.

It remains to be seen what fruit will be produced from Google's acquisition of Motorola's mobile division. But from an outsider's perspective, it will be far more interesting to see how established smartphone manufacturers -- especially those that use the Android platform as their operating system like HTC and Samsung -- react to this latest disruption from the Internet giant.

About the author
Mike McLean is the vice president of intellectual property rights and professional services at UBM TechInsights, a sister company of UBM Electronics, the publishers of EDN. McLean has worked extensively with the technology practices of major law firms, the in-house corporate counsel teams of key technology companies, and external licensing agencies. McLean was recently honored as one of IAM magazine's leading IP strategists through its IAM Strategy 250 listing.





 

 

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