Guest post by patent specialist Dale Halling
Google agreed to acquire Motorola Mobility for $12.5 billion. Most people believe the main motivation for Google was to acquire Motorola’s patent portfolio of over 17,000 patents and patent applications. The comments on this deal encompass all the insanity around the Patent Wars. Below I will discuss some of these issues
Is this a good deal for Google? Does it make economic sense? In buying Motorola, Google gets a company that has been in the forefront of mobile communications since its inception.
The biggest risk is that Motorola is a bit bureaucratic. They were slow to develop CDMA phones in the 90s and never completely recovered. Motorola has been hardware focused, when the industry is clearly being driven by software advances now.
The main reason for acquiring Motorola is to get their patents and leverage them into freedom of action in the Android market space.
Innovation and Paying for Patents
There are numerous people complaining that Google’s $12.5 billion is being spent on patents instead of being spent on engineers and products. Actually, spending money on patents IS spending money on engineers. Engineers created the inventions and the patents just provide legal title to the inventions. When companies spend money acquiring patents they are spending money for the development of inventions and therefore engineers.
If inventions are not protectable, companies do not spend more on engineers they spend less. They just take other people’s inventions, rather than paying for internal or external development.
In fact, you can trace engineering salaries and employment to strong patent laws. Countries with weak patent laws either have very few engineers or their salaries are fairly low or both.
New products are the result of inventions. Increases in our level of technology are what make us wealthy. When people pay for patents (inventions) it does not discourage innovation, instead it encourages other people to innovate.
Too Many Overly Broad Patents being Issued?
There has been a lot of wailing about too many over broad patents being issued. This whining is coming from the same people who complained about Amazon’s one click patent, which was upheld after numerous challenges. Why did Barnes and Noble get a 10x increase in online sales (after copying Amazon’s one-click technology) if the one click patent was not innovative?
All objective measures of patent quality have been increasing for years. For instance, the metrics of GDP-per-patent, R&D-dollars-per-patent, and number-of-citations-per-patent have all been on the increase. For more information see my post Patent Quality Nonsense.
Do some bad patents get issued? Absolutely and some of my clients have been affected by this. However, most people making the claim that there are too many bad or overly broad patents do not even know that the scope of a patent is determined by its claims. They do not know that claims cannot be read like prose, they have to be read like an equation where every word has to be given meaning.
Many people see this acquisition as just another outgrowth of the numerous frivolous patent cases being filed. However, the facts do not support this point of view. Judge Michel, former head of the CAFC, the court which hears all patent appeals, points out that the number of patent suits filed each year has remained constant at less than three thousand. Only about 100 of these suits ever go to trial. In a technology based, $14.5 trillion economy with over 300 million people and 1 million active patents- THIS IS A TRIVIAL NUMBER.
Are there any problems with our patent system? Absolutely. The underfunding of the patent office causes inventors to wait years and even up to a decade to receive their patent.
But, more specifically to the Google/Motorola case, the wireless smart phone space needs a more efficient method of clearing patent rights. I suggest a non-profit entity similar to ASCAP, which clears copyrights for musicians and composers. For more information see my post Patent Wars a Market Solution.
Finally, for those worried about the poor, small company who had a great idea for an app and are now scared they may find themselves embroiled in a patent lawsuit- GET A PATENT CLEARANCE OPINION before you develop.
Dale Halling is an American patent attorney and entrepreneur, and the author of the book The Decline and Fall of the American Entrepreneur: How Little Known Laws are Killing Innovation.
Read his regular thoughts at his State of Innovation blog, and his other Guest Posts here.