How Google’s Motorola Purchase Changes The Patent Balance Of Power


Google’s $12.5 billion purchase of Motorola (NYSE: MMI) has turned the search company-overnight-into one of the nation’s biggest patent-holders. That will help solve some of the company’s biggest legal problems-but not all of them.

Google’s partners selling Android phones have been subject to legal attacks by competitors-attacks which Google (NSDQ: GOOG) recently complained loudly about. By acquiring Motorola with its stash of more than 17,000 patents, the company will get a huge pile of ammunition that can be used to resist those attacks. This is what Google was seeking, but did not get, from its failed bid to buy Nortel patents.

How will Moto’s patents help? When it comes to fighting back against patent aggressors, the best defense is a good offense. After being sued for patent infringement, it’s normal for defendants to file a counter-claim saying the patents are invalid. But even if the defendant wins by invalidating the patent, that barely hurts the patent-holder; patents cost around $25,000 or $30,000 to acquire, and invalidating even one can cost millions in court fees.

So the smart thing for a defendant to do is to counter-sue the attacker’s own products, saying they infringe the defendant’s patents. That gives leverage that a patent invalidation can’t offer. The patent aggressor-the plaintiff-now knows that it could be on the hook for a huge patent damages claim, putting it in the same risky situation as the defendant.

Tellingly, in the biggest patent attack of all against Android-Oracle’s direct lawsuit against Google, which says the search company should pay it up to $6 billion in damages-Google has not filed a counter-suit. That may be because Google-which has hundreds of patents in its technology area but nowhere near the giant patent portfolio of a Microsoft (NSDQ: MSFT) or an Apple-doesn’t have patents that are suited to the task, because they aren’t focused on technology areas that Oracle is operating in (mainly enterprise software.)

Buried somewhere in Motorola’s trove of 17,000 patents, there’s likely to be a patent that Google can use for a counter-attack in almost any situation. Motorola, like most big companies with large patent portfolios, has likely been patenting heavily not only in areas it operates but in nearby technology areas that it’s even considering getting into.

Google could also give out patents to its partners for counter-suits, or use them itself on their behalf.

Other patent attacks against Android. Microsoft has said that Android requires a license to its patents, and has used its patents to go after HTC-which is now paying royalties to Microsoft for each Android phone it sells-and Motorola, which is still battling Microsoft in court. The company has also sued Barnes & Noble (NYSE: BKS), saying that its Android-powered Nook e-reader infringes Microsoft patents.

Apple (NSDQ: AAPL), meanwhile, has said that Android-powered devices sold by Motorola, Samsung, and HTC all infringe Apple patents.

A problem the Moto patents can’t solve. Like most tech companies, Google is hit every month with a patent lawsuit-or several suits-brought by “patent trolls,” that is, tiny companies with no business other than filing patent suits. Google’s purchase of Motorola won’t help combat those lawsuits; because patent trolls usually have no business other than litigation-and thus no revenue stream to threaten with a counter-suit.

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