Today’s IP wars have spiraled so out of control that the patents that many tech companies hold are worth more than the businesses themselves.

The $450 million purchase of Novell’s 882 patents by a tech consortium in December 2010 was, at the time, unprecedented—working out to $510,204.08 per patent. This puts Google’s weekend purchase of Motorola Mobility (and its 24,500 patents and patents pending) into extremely relevant perspective. Some prescient math by industry analysts Frost & Sullivan shows that the merger was probably just about the patents, because at $510,204.08 per patent times 24,500 patents, you get exactly the $12.5 billion purchase price settled on—down to eight digits.

Or, as the report says, “In the Motorola acquisition, Google bought a patent portfolio and got a mobile phone business thrown in for free.”

7 replies on “The Skyrocketing Price of Wireless Patents”

  3. What Fnarf said (as always) is right as rain. Planet Money did a piece on the whole software-patents-as-an-employment-tool-for-patent-lawyers scam a couple weeks back.

    Now while someone on Slog recently dissed the Planet Money folks for being conventional-wisdom shills, they report on interesting things I’d probably never hear otherwise. The software patent podcast was fascinating. Billions and billions of dollars are changing hands as companies arm themselves by purchasing giant suites of patents in order to forestall lawsuits. It was an intriguing tale with acres of shell corporations renting cheap (and empty) office spaces in Texas in order to have the ability to amass thousands of patents. The Planet Money folks directly compared it to the way the Mafia shakes down ordinary businesses for protection money. Except this is legal.

    The guy that spawned the term ‘patent trolls’ actually threw his lot in with them, and now runs a patent troll company that harvests patents, then sues other companies for infringement. They typically settle out-of-court rather than go to trial, with the defendants quietly paying thousands of dollars to avoid trial.

    Is this what we’ve come to, America? Do nothing productive, produce nothing, just patent the shit out of nothing, then enrich the lawyers?

  4. Are we saying that patents discourage the making, buying and using of all these patented high tech thingies I’ve been blog-commenting with instead of working? Maybe I need to brush up on it then.

  5. @4, no, we’re saying that software patents discourage the making of those things BETTER. Because they are so laughably vague — there are guys with a “patent” on “clicking on a button to buy a pair of shoes” who come out of the woodwork to sue anybody who tries to sell shoes on the internet — a case they probably couldn’t win in a courtroom but which is too expensive to fight there, especially in certain patent-troll-friendly environments like the Texas district @3 mentions (which is why those companies have offices there). So these “patents” just become extortion mechanisms. And that’s all money that doesn’t go towards developing better products.

  7. I think patents generally help advance technology. Even now, it’s better to advance and pay the patentroll-mafia than to not advance. That said, something needs to be done to address two problems:

    1) Patents should more difficult to obtain. I think too many obvious patents are granted.
    – One reason I heard why this occurs – and why people pay the patent trolls – is that these corps don’t want to lose their own patents. If the standard changes, the “winning” corp may actually help create a standard or precident that causes them to lose millions in “valuable” patents. And by valuable, I mean enforceable.

    2) A suit regarding patent infringment should be easier to defend (at least at the initial stages), or there should be worse consequences for a frivolous or bad faith suit that is filed.

    Also: why isn’t my little red-underliney-spell-check thing working? urgh.

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