Google-Motorola Deal: the Patent Portfolio Factor

So we’ve all heard how Google recently bought Motorola for a hefty $12.5 billion on Monday. Aside from the synergies Google gains from end-to-end control, as Google now has hardware, software and service arms to create their mobile products, perhaps just as importantly, Google has also purchased one of the largest patent portfolios of its kind in the mobile industry.

As explained in a post by Google CEO Larry Page on Google’s company blog, after singing Motorola’s praises, mentioning its extensive history and leading role in Android’s explosive growth, Page also points to what many believe to be one of the leading factors behind the deal: patents.

“We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android,” the CEO wrote. “The U.S. Department of Justice had to intervene in the results of one recent patent auction to ‘protect competition and innovation in the open source software community’ and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”

With the patent war currently raging in the mobile industry, we will see whether Google will use its newest acquisition as a sword or a shield. Page claims a more defensive purpose. And in a CBC analysis on Google’s Motorola purchase, Prof Katz pointed out that amassing a large patent portfolio can be done for offensive or defensive purposes.

“On one hand, companies amass as many patents as possible so that, if they have a competitor or if they have others who use their technology, they can be in a position to go after them. [But] even if they don’t want to play this [offensive] game, they might still feel they must amass and create a large portfolio in a defensive manner.”

With so many companies loading up on patents these days, I see a parallel to the mutually assured destruction strategy. Large patent portfolios could be likened to weapons of mass destruction. Each side COULD continue to endlessly drop lawsuits on the other for patent infringement, losing a lot of time and money in the process. Or as I see it, eventually, they could call it square, cross-license and leave things at “I won’t sue you if you don’t sue me”. In such a state, like the cold war deterrent of years past, neither side, once armed, has any incentive to disarm. So Google’s newly acquired patents could be considered a shield, but mainly because it is also potentially a really big sword.

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