In light of the ever increasing, expanding and confusing smartphone patent litigation and licensing landscape, we have put together a three part series to apprise you of the current developments. Hopefully part one begins to untangle the mess for you.
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As we reported earlier, on August 15, 2011, Google announced that it would be spending $12.5 billion to purchase Motorola Mobility, a company that currently designs and manufactures smartphones, tablets, Bluetooth accessories, set-tops, DVRs, and other communication devices for its parent company, Motorola. Although the research and manufacturing capacity of Motorola Mobility is by itself very valuable and no doubt was an appealing target for Google, a consensus has developed that this purchase was equally motivated by something that has recently become very important to the search giant: Motorola Mobility owns a suite of more than 17,000 issued patents relating to mobile devices and smartphone technology.
This purchase is simply the latest step in Google's scramble to defend itself in the increasingly hostile smartphone marketplace. Unlike most of its competitors, before the Motorola Mobility acquisition Google's patent holdings were relatively sparse. This was not much of a problem for Google until the last few years, when the huge increase in the value of the smartphone market has led to a corresponding explosion in the number of lawsuits related to the technology.
This extensive litigation has led to a growing list of seeming absurdities. For instance, for every Android-enabled phone that it sells in the United States, HTC, a large smartphone manufacturer, must pay a licensing fee not to Google, but to its competitor Microsoft, due to a patent-licensing agreement. Recently, Microsoft announced that, according to its estimation, companies that account for more than 50% of Android-enabled phones worldwide are involved in some sort of patent-licensing agreement with Microsoft. It is beginning to become clear that the current strategies being employed in this technology space are inefficient almost to the point of unsustainability.
In the next installment, we will take a look at an alternative to this unstable IP landscape called patent pooling, as well as some of the reasons why such a solution was not able to take root here.
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