Patent acquisitions and litigation dominated the wireless industry in 2011, and it looks like we should expect more of the same going forward. If anything, Mobilizepanelists Efrat Kasznik, president of Foresight Valuation Group, and Brian Hinman, VP of intellectual property and licensing at InterDigital, seem to think it’s only going to get worse for anyone wanting to be taken seriously as a mobile player.
Hinman calls it a “fascinating environment that we’re in right now,” which is far removed from the wireless industry of 10 years ago. Now, he said, companies that don’t have a strong portfolio of wireless patents can’t really be taken seriously as market leaders because they’ll be buried in lawsuits if they try. That’s why Google is on the patent warpath buying up IP from Motorola, IBM and trying to get its hands on some of Nortel’s bankruptcy auction items.
Where this all leads, Hinman thinks, is a series of no-dollar-value agreements between parties that recognize “mutually assured destruction.” Essentially, he predicted, mobile companies will all have such large caches of patents that they’ll agree to disagree and to not sue each other in order to save the inevitable counterclaims that would accompany any lawsuit.
All the legal action and IP acquisition has led to talk of a patent bubble, but Kasznik doesn’t think that’s necessarily the case. Google bidding $900 million for Nortel’s patents or buying Motorola for $12.5 billion might seem high, but the amount of work Nortel put into developing its IP and Motorola’s status as an operating business have to be taken into consideration when evaluating those prices.
And with patent warfare continuing to be the norm, she said startups and their VC backers have to change the way they think about patents. “The time to start thinking about IP is now,” she explained, because as soon as you become successful, someone’s going to come after you. It’s not just large companies such as Apple or Google that will do it either, but, Kasznik said, also non-practicing entities (read: “patent trolls”) that have accumulated IP as a result of the telecommunications bust.
Hinman makes one more suggestion that wireless companies should heed, even though it’ll be painful: Think outside of the United States Patent and Trademark Office. It’ll be expensive and time-consuming to protect IP by obtaining patent protection across the globe, but it’s probably necessary. Already, he noted, Apple and Samsung are battling in the courts of various countries, and patent filings are piling up in China as companies look to ensure they’re able to maximize their IP investment in what should be a hotbed of industry growth.