Three makes it a party: Samsung is also considering a bid for Interdigital, the mobile patent-holding company that is being courted by Google (NSDQ: GOOG) and Apple (NSDQ: AAPL) for the thousands of patents held by the company. The mobile patent arms race may be only beginning.
Interdigital, having realized just how much money it could make from its arsenal of nearly 10,000 patents around the world in the wake of the $4.5 billion Nortel patent deal, announced last month that it was “considering strategic alternatives.” That’s business code for “we’re for sale.” Since then, Google and Apple have been reported as potential bidders for the company, and now Bloomberg says that Samsung has joined the crowd at Interdigital’s open house.
Google probably needs the patents the most, having been shut out of the Nortel auction by a consortium including Apple, Microsoft (NSDQ: MSFT), and Research in Motion (NSDQ: RIMM) and therefore denied patent cover for Android. It recently purchased over 1,000 patents from IBM, although it’s not clear how many of those pertain to mobile technologies. But its Android partners are on the front lines of the mobile industry patent disputes, with Apple and Microsoft targeting Android vendors like Samsung and HTC instead of going after Google directly.
Samsung will have to deal with an International Trade Commission investigation filed on Apple’s behalf after that group decided earlier this week to hear Apple out. It’s also reportedly facing demands from Microsoft for $15 in royalty fees for each Android handset it has sold, which could get quite expensive considering Samsung’s strong growth over the past year.
Interdigital filed suit against Nokia (NYSE: NOK), Huawei, and ZTE last month asserting a few of the patents in its arsenal, and it is now valued with a market capitalization of $3.1 billion, up over 60 percent since it announced its plans to seek strategic alternatives. In Interdigital’s second-quarter financial results released last week (PDF), it said Samsung actually accounts for the single-largest portion of Interdigital’s revenue, contributing 37 percent of the $69.9 million in revenue the company took in during the quarter.
But it will have to pay a lot more than $100 million a year if Samsung wants the Interdigital patents: experts quoted by Bloomberg suggest the company might go for more than $5 billion, and considering the fierce bidding that took place during the Nortel auction, that may not be far-fetched.