After multi-billion dollar legal verdicts, 'frenemies' consorting to gain advantage and everyone in the tech world plotting intellectual property strategy, the early signs in the new year are that MAD (mutual assured destruction) has now had the same effect it did in geopolitical brinksmanship: stasis.
The vast sums invested and the armies of lawyers deployed succeeded in...well, creating the legal equivalent of World War I's Western Front: miles of deeply entrenched adversaries, none of whom have been able to gain long term strategic advantage. Apple 'beat' Samsung - but the latter is winning the mobile market share battle. Google and Amazon and Microsoft and Facebook are all beavering away to claw some sort of intellectual high ground from each other - but while they were doing so - or perhaps, precisely because they were doing so - the site of the battlefield shifted.
The nature of latter-day success in tech has always been collaborative. Sharing credit and profit was always the optimal strategy because the advances were cumulative, iterative and cooperative. The components were spread across a vast economy, the brains working on them simultaneously were never in isolation and the economic benefits to sharing always outweighed those to going it alone. Even Apple, the Lone Ranger of the tech border wars, was more than occasionally forced to buy a company or technology it hadnt been able to create itself.
The last time this sort of 'patent whatever thought first pops into your head as you wake up' mania hit was at the peak of the dotcom bubble. Ten or twelve years later, Apple's stock is collapsing, Dell is considering going private (again) and RIM may actually be stabilizing. This suggests that whatever gains are to be realized have been achieved for the immediate future. Venture funds are consolidating. Apps are cheap and so is access. Like any gold rush asset, intellectual property will return to its role as an obscure but important, if not sexy, corner of the global economy. Where it probably belongs. JL
Theresa Poletti reports in MarketWatch:
There are some signs that wireless patents are losing steam as both legal weapons and valuation boosters. Last week, a U.S. bankruptcy-court judge approved a deal by Eastman Kodak to sell its portfolio of digital-imaging patents for $527 million to a group of tech companies, including Apple Inc., Google Inc. and Microsoft Corp. The sum, about 20% to 25% of Kodak’s initial asking price, will be paid to the bankrupt Kodak in about 45 days. Read: Judge approves sale of Kodak patents.
In addition, Google’s /quotes/zigman/93888/quotes/nls/goog GOOG -2.26% deal with the Federal Trade Commission earlier this month included an agreement to allow its competitors access “on fair, reasonable and nondiscriminatory terms” to hundreds of patents deemed essential to standards in mobile technologies — patents acquired as part of its $12.5 billion deal to buy Motorola Mobility Inc. Google also will drop its patent-infringement lawsuits related to those patents.
That acquisition in August last year arguably represented the peak of what many took to calling the “patent bubble,” with Google shelling out billions to buy a money-losing handset maker that had racked up a huge number of patents over its long history in wireless. Federal filings showed that Google initially wanted to buy just the patents, before Motorola convinced it to pursue a full-out acquisition.
Well, maybe not quite the end.
Apple’s large, multiple-jurisdiction battle with Samsung is still going, with Samsung appealing a $1.05 billion jury verdict against it. But an appeals court also chose not to block Samsung’s infringing products from the market, as Apple had sought. Then there’s Apple’s suit against the Nexus phone over different patents in question.
The recent events, featuring fierce rivals joining together to buy patents in a group, signals that those patents are worth less than some investors had hoped. It could also mean that they are bowing to the notion that patents that are sort of technology standards that must be licensed on fair terms, as Google is acknowledging in its deal with federal regulators.
“My sense is that it is being way overdone, and our economy is being inhibited by patents rather than being enabled by them,” commented Roger Kay, principal analyst at Endpoint Technologies.
Kay said he believed there has been a tendency among many companies to “patent everything under the sun,” and that some “ridiculous” patents have been issued. “Maybe the high tide has come for that sort of competitive patenting,” he added.
One effect of the popping of the so-called patent bubble will likely be felt in the market values of companies who hold broad intellectual-property portfolios, such as Research In Motion Ltd. /quotes/zigman/18534/quotes/nls/rimm RIMM +10.25% /quotes/zigman/18555 CA:RIM +10.44% and Nokia Corp. /quotes/zigman/162154/quotes/nls/nok NOK -1.70% Bernstein’s Ferragu wrote last month that the abating of these patent wars was a negative for troubled firms like RIM, Nokia and Alcatel Lucent SA /quotes/zigman/163221/quotes/nls/alu ALU +4.97% — all of which are valued by investors primarily for their patent and IP assets.
Indeed, Kay said that the whole point of the current “arms race” was mutually assured destruction. “The assured philosophy is get a big enough patent portfolio, threaten everyone and then lay down your arms and agree to cross-license.”
It looks like this may be finally starting to happen in certain cases. Perhaps Apple is realizing that the threat from co-founder Steve Jobs to go “thermonuclear” on Google’s Android is too much of a distraction, at least with certain companies able to pay lawyers to fight back. Perhaps other firms are finding that the patents they once prized are now quickly becoming outdated by new developments.
How all this will shake out for companies valued mostly for their patents is hard to say, but the recent deals seem to be putting some dents in their armor.
0 comments:
Post a Comment