The Need For Patents Drives Google Acquisition of Motorola Mobility

Several weeks ago, I noted that patents were being associated with big money --make that really big money -- in several important events.  That trend continues this week with Google's announcement that it is seeking to acquire Motorola Mobility in a transaction valued at $12.5 Bil.  (This comes about a month after Google came up short in the $4.5 Bil Nortel patent auction.)  It is well understood that a strong patent portfolio can serve as a deterrent to litigation from a competitor that fears a counterclaim, or as a tool to settle patent litigation through cross-licensing deals.  It is no secret that a significant driving force behind this move is Google's need to strengthen its patent portfolio, especially in the wireless area.  (It is being reported that Motorola's active patent portfolio includes over 14,000 issued patents, and a pipeline of thousands of pending applications.)   As noted by Larry Page (on Google's blog) "[o]ur acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."

Motorola has a long history of investing in technology and supporting that investment with patent protection.  If there was ever any doubt that a strong intellectual property program contributes to the core value of an enterprise, those doubts should be dispelled in view of the large premium (more than 60% over Friday's closing price) being offered by Google in this deal.  In the fiercely competitive cell phone handset and tablet market, Google needs to strengthen its defensive patent position to compete effectively and is looking to do so by gaining access to a patent portfolio developed over the years by an enterprise that has long recognized the value in protecting its innovation.