Last month the big news in the patent space was the $4.5 billion winning bid for Nortel’s portfolio of 6,000 patents. This week it was obviously Google’s purchase of Motorola Mobility for $12.5 billion, which includes their portfolio of 17,000 patents and 7,500 additional patents that are waiting to be approved, that showed us yet again how important it is for companies to have a vast stockpile of patents in order to defend themselves from potential litigation. Next month we’re going to have yet another huge patent acquisition story to report, the 8,800 or so patents owned by InterDigital. According to Reuters, Apple, Nokia, and Qualcomm are said to be in the bid for InterDigital’s extensive patent portfolio which include “crucial 3G and 4G/LTE patents”. If we had to take a guess as to how much money will change hands in this deal, we’d say around $5.5 billion, a number we arrived at using this forumla: (((4.5 billion / 6,000) + (12.5 billion / 24,500)) / 2) x 8,800
Assuming we’re right on the money, that’s $5.5 billion + $4.5 billion + $12.5 billion = $22.5 billion that could have been spent hiring talented engineers, designers, or better yet thrown at the folks working in the research and development divisions at these companies on technology that isn’t going to hit the consumer market for another 5 to 10 years. Instead, it’s all paper. That upsets us to no extent, but there’s not much you can do at this point. As Nilay Patel from This is my next recently said in his widely read criticism of the current patent system: “There is a fundamental problem with patents in the United States. It is us.”
We’re abusing a system that has otherwise worked perfectly since the birth of the United States, because software patents are difficult to classify. Companies like Motorola, Qualcomm, and Nokia, who did the hard work of inventing much of the radio technology that powers our devices today, undeniably deserve the patents they have. Apple patenting how you point at icons on a screen? Not so much.
But who are we to say that?