Patent mania shows no sign of abating as tech giants eye the prizes

Just days after Google announced its US$12.5 billion buy-out of Motorola itself the biggest single acquisition in Google’s corporate history (and the largest disclosed tech purchase of the year dwarfing even Microsoft’s mega-acquisition of Skype in May for US$8.5 billion) the commentators competitors and the market itself would appear to be hugely divided on the wisdom of the move.

But that isn’t stopping a number of potential bidders jostling for position on another round of patent sell-offs amid new concerns that the tech bubble of 2011 isn’t simply inflated by over-hyped startup valuations — but overvalued patent bundles.

Patent bundles pose bundles of concerns.

The next most-prized intellectual property catalogue belongs to wireless technology maker InterDigital who is thought to possess some 8800 mobile patents. InterDigital’s share price has yo-yoed dramatically this week first dropping suddenly after Google purchased Motorola (as the market perceived this as an indication the search giant was no longer a potential buyer of the firm) and then rebounding amid speculation that companies including Apple Nokia and Qualcomm were lining up for the company’s newly postponed auction.   

And now Kodak said to have lost a stunning 97% of its stock value in the past thirteen years is seeking to offload its own IP and in today’s market stands to reap the benefits of the current defensive mindset holding sway over top-tier tech bidders in which accumulating and ever-strengthening patent portfolios has come to be seen as a virtual proxy for future market control (or at least significantly more industry leverage).   

But amid the escalating speculations (and valuations) the wisdom of publicly paying top-dollar premiums to acquire patented-up but perhaps ill-suited and under-performing businesses (with semi-conflicting business models) is very much being called into question.

In Google’s case upsetting the Android partner apple cart by snapping up Motorola has been a major concern and despite eerily similar public assurances to the contrary you’d imagine relations among that alliance have become a little more strained this week. Nokia CEO Stephen Elop at least has wasted no time in saying so and financial analysts too have some doubts over the viability of the deal.

Of course the strategy of aligning yourself with anybody in the 2011 bearpit is probably a good idea. Microsoft has Nokia Google now has Motorola and Apple might just have enough reality distortion not to be too bothered at the moment. But as has been pointed out elsewhere RIM is looking particularly undefended right now.