Yesterday's announcement that Google will acquire Motorola Mobility for approximately $12.5 billion is less about becoming a major player in the handset space than it is about acquiring valuable intellectual property from the wireless communications giant.
From a patent perspective, the Motorola acquisition provides a sizable portfolio of both issued and pending patents. A quick review reveals a portfolio of over 17,000 Motorola patents that are still in good standing (along with another 7,500 pending applications). Combined with Google's existing stable of patents the search engine giant will cast its own awesome shadow across the wireless communications IP landscape leading toward an eventual détente among adversaries based on the cross-licensing model that became commonplace in the semiconductor industry in the early '80s.
At TechInsights, our experience shows that typically 3% of a large patent portfolio will have significant value; as such we can assume that Google has acquired roughly 500 high-value patents (possibly essential to industry standards). This indicates Google has paid an average of $24.5 million for each high-value patent independent of any of value associated with the Motorola operation. This is one third the rate (per patent family) for the same type of patent in the Nortel auction they recently lost to a consortium of other firms.
As a relatively young company, Google hasn't had the benefit of time to build out a developed patent portfolio in comparison to its competitors and, as such, have left themselves open to litigation. By acquiring Motorola Mobility's patents (and their recent purchase of over 1,000 IBM patents), Google has bolstered their ability to protect themselves and the Android ecosystem from litigation. Further, I expect Google to make good use of Motorola's IP team, who has plenty of experience dealing with patent licensing and defensive litigation in the wireless space, an arena they are relatively unfamiliar with.
This is not Google's first foray into acquiring intellectual property. TechInsights has watched Google increasingly demonstrate an aggressive patent acquisition strategy in the past focusing on areas key to the vendor's long-term growth strategies. With this acquisition, Google not only strengthens its own patent portfolio, it also acquires the physical assets and engineers of Motorola.
Google isn't out of the woods yet. With the purchase of Motorola;s IP, patents and assets, it likely makes this combined entity a more direct target.
--Mike McLean, VP Intellectual Property Rights