Wednesday, July 25, 2012

Google's SEC Form 10-Q Blurs Patent Valuation: Motorola Patents and Developed Technology Valued at $5.5 Billion

When Google announced its intent to buy Motorola Mobility in 2011, Larry Page stated Motorola had a strong patent portfolio capable of protecting Android. The speculation immediately arose Google was acquiring Motorola primarily for its patents to fight the patent infringement suits that Apple had filed against Android hardware manufacturers Samsung and HTC.

Google's Form 10-Q indicates this speculation was not off-base. In the Form 10-Q, Google notes it acquired Motorola expecting it would protect and advance the Android ecosystem. The "it would protect" suggests defensive use of the Motorola patents. One problem is Motorola's SEP will be fairly limited protection as any damages will be subject to FRAND and any injunctions would be unlikely.

Although it's a preliminary valuation, the Form 10-Q attributes $5.5 billion of $12.4 billion Google paid for Motorola to "patents and developed technology." The media somehow has converted this to Google paid $5.5 billion for the patents, but developed technology is not the same as patents. I am not certain why they are lumped together but it does blur the valuation of the patents. If you don't put an exact value on the patents, however, it makes it more difficult to evaluate the ROI, which in turn would allow Google more space with respect to investors to limit the Motorola patents to counterclaims to protect the Android ecosystem. Still Google should consider if a "Microsoft type patent licensing program" is in its own long term interest.

Copyright © 2012 Robert Moll. All rights reserved.