Now it’s personal. The ever escalating patent war between Apple and Google is not just entertaining to watch, it’s actually driving up the cost of intellectual property across the industry. At this point, the stakes have become so high that companies are stockpiling patents to protect themselves from what appears like the unavoidable patent infringement claims that will be thrown their way. Currently, Apple is suing Google over patent infringement as it relates to Google’s Android operating system and it’s getting nasty. Things are to the point now, that companies like Apple and Google are collecting patent stockpiles for almost everything they can in an attempt to be able to countersue anyone that is bold enough to come after them. As a business strategy I understand this, but it’s creating an inflated market that I don’t think is good for the industry overall.
A recent report by Bloomberg highlighted a company called InterDigital, which owns several patents related to high-speed mobile phone networks. The company recently hired banks to explore the possibility of a sale and since that point the company has gained a whopping $1.4 billion dollars in value to $3.2 billion. If that isn’t ridiculous enough, if the company is ultimately acquired by Google, Apple, Microsoft or some other big tech company it might end up selling for well over $5 billion. The company currently owns more than 8,800 patents and if company’s like Google feel like there is a patent war coming they might be willing to pay premium and a big one for a company like InterDigital. We also saw what happened with the Nortel Networks’ patents that sold for $4.5 billion to a consortium of companies led by Apple and Microsoft. It was widely believed that the companies came together to squeeze out Google and you and you can be sure that Google hasn’t forgotten that. At the time, the Nortel deal was the biggest patent deal in history and with what some believe is an even more attractive patent portfolio(data transfer on mobile phones, 4G wireless, etc) an InterDigital deal could easily beat that.
For our part we agree with Google’s general counsel, Kent Walker, who said that he believes patents are “government-granted monopolies” that stifle innovation. At this point, how is any supposed to do anything truly innovative when the likelihood that you will somehow infringe on someone else’s patents is so high? At this point, I don’t know what the answer is, companies need to protect their intellectual property but not at the cost of moving the industry forward and fostering innovation. The FCC looks long and hard at company mergers like the AT&T/T-Mobile deal deciding whether it will negatively affect the market and consumers. I think that times are changing and they need to start looking at this stockpiling of patents in order to block competitors from developing new and possibly superior products and start bringing some sanity to this thing before it gets out of control.