Amid the patent wars raging in the booming smartphone industry, it has become fashionable to brag about the sheer weight of numbers.
The more certified inventions a company can call to its defence, according to this thinking, the greater its chances of fighting off a legal challenge, or of mounting a counter-attack that turns the tables on an adversary.
Seen from that perspective, Google’s agreement this week to pay $12.5bn for Motorola Mobility, owner of one of the wireless communications industry’s biggest patent portfolios, has been widely welcomed among its allies in the mobile world as a much-needed defensive move.
Yet the deterrent value of any body of patents depends greatly on both the nature and quality of the patents themselves, as well as the particular competitive position of the company that holds them and the legal strategy they adopt, according to intellectual property experts.
That makes Google’s patent gambit, at its heart, a game of bluff, with results that are hard to judge. As one Google arch-rival points out, Motorola’s patents were enough of a deterrent to prevent both Microsoft and Apple from mounting legal attacks against the handset maker, so why should Google’s ownership of them make a difference?
For their part, the handset makers that rely on Google’s Android operating system are counting heavily on the search company coming to their aid.
In the clash of mobile and personal computing worlds that has resulted from the rise of smartphones, two rival intellectual property camps have emerged.
On one side is Microsoft, which began amassing patents in earnest more than a decade ago after a switch in its legal strategy, and Apple, which has been moving to boost its own holdings, most recently by leading a successful $4.5bn bid for the IP of Nortel, the bankrupt Canadian equipment maker.
When it comes to IP in the mobile industry, meanwhile, Motorola is a traditional power. Its successful legal attack when Nokia first entered the sector led the Finnish company to vow to build its own arsenal of patents.
Asian manufacturers such as Samsung and HTC, as well as newcomers such as Google, whose shorter history has left it with fewer patents, have been left out in the cold by this.
With little to fall back on, HTC agreed a licensing deal with Microsoft last year that guaranteed the US software company $5 for each handset – a concession that has come to be seen as a deeply unwelcome precedent by others in the Android world.
Microsoft is now seeking $12.50 a handset from other manufacturers, according to an analyst at Citigroup, while others in the industry say it has pressed Samsung to pay as much as $15 for each device. With Android sales soaring – and set to reach 430m a year by 2015, according to IDC – that could amount to a sizeable IP tax.
Whether Google’s ownership of Motorola’s patents will change the dynamics of negotiations like these is hard to judge.
The company would be able to lend out individual patents to allies, allowing them to use them to counter-sue adversaries or as bargaining chips in reaching better licensing terms.
The Motorola portfolio has two potential flaws, according to experts who have studied the patents. The IP is mainly concentrated in the US and, to a lesser degree, in Europe, said David Martin, chairman of M. Cam, which advises companies on the use of their IP. That weakens its value in global product markets.
A second weakness, he adds, is that many of Motorola’s patents are in areas where many others have rival patents, and a review of the filings shows that the patents often make no mention of this rival technology.
That could turn out to be a key failure, added Janal Kalis, a US intellectual property lawyer. “Failing to cite material ‘prior art’ is a death sentence for a patent,” he said.
Further questions surround how Google would try to assert the Motorola IP. It has shied away from licensing, preferring to give away its technology and make money from advertising, but will in future find itself in the position of having to enforce its rights, said Al Hilwa at IDC.
That is already presenting the company with uncomfortable compromises. This month, David Drummond, Google’s chief legal officer, accused Microsoft, Apple and others of “waging war with bogus patents” – including those being sold by Nortel. Yet, as Microsoft pointed out in the war of words that followed, Google had tried to buy the same body of patents for its own legal strategy.
With handset makers relying on it to fend off legal attacks, Google might have little choice but put its qualms aside and start fighting dirty.