Patents equal real strategic value, right? It was only last week that Google, one of the world's largest technology companies, purchased Motorola Mobility in a deal worth $12.5bn, writes Haydn Evans.
The deal reinforces the importance of a strong patent portfolio as one of the key pillars underpinning company value in today's technology-driven market.
Motorola Mobility has a portfolio of around 24,000 patents, of which approximately 17,000 are granted and a further 7,000 pending grant. Many of these patents are viewed as key to defending the Android mobile operating system (developed by the Open Handset Alliance, led by Google) against attack from smartphone rivals
Google's move to get its hands on the Motorola patents follows its unsuccessful $900m bid for Nortel Networks' 6,000-strong patent portfolio. This was subsequently bought by a consortium of techno-giants, comprising Apple, RIM (Blackberry), Microsoft, Sony, EMC and Ericsson, for $4.6bn last month.
A heightened awareness of the importance of optimising valuable patent portfolios - coupled with opportunities for additional value generated by making a company's less important, non-core IP work harder (through licensing to third parties or through sale of these assets) - is now commonplace among leading players in telecommunications/digital technologies. In short, it's an effective solution for companies in need of fast cash.
This wave of turning IP assets in to cash (IP monetisation) is no more apparent than in the case of Kodak which, last month, announced it was considering selling over 1,000 patents in the digital imaging field, representing around 10% of its portfolio. Investment bank Lazard Ltd is exploring strategic alternatives for the patents. Kodak has, in the past, used licensing fees, royalties and negotiations through the IP courts to monetise its portfolio which has generated an estimated $2 billion.
Through a comprehensive patent portfolio review process, companies can gain important insights into their IP assets and make informed strategic decisions about how best to protect and leverage their patents, addressing such questions as:
- Which of my patents are currently business critical and need to be protected?
- Which patents are potential future strategic assets that may become more valuable to the company over time?
- Which patents can I sell or license for profit?
- Which patents in my portfolio should be pruned?
Armed with the answers to these questions, companies are able to evaluate how they can:
- Better protect their prized IP assets (current and future) to safeguard and enhance the company's competitive position.
- Enable the monetisation of non-critical assets to generate revenue.
- Reduce costs associated with maintaining patents that are no longer of use or of little value to the company.
Every business with an IP portfolio of any substance should be conducting an annual patent portfolio review, assessing what they've got, what they need and what they can do with their assets.
It also helps to know what the competition is up to. Making an assessment of competitors' patents will help companies ringfence their innovations, benchmark against the market, track the evolution of fledgling inventions and identify potentially lucrative opportunities for monetising patents.
Haydn Evans is vice-president of IP outsourcing (Europe) at IP management specialist CPA Global.
This was first published in August 2011