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IP, IP Asset, Patent

Google Patent Blunder: Country’s Best Legal Department Green-Lights World’s Worst Patent Acquisition

The publication Corporate Counsel has, for the past six years (who knew?), been rating in-house legal departments on a variety of ambiguous criteria.  This year’s winner of the prestigious “Best Legal Department” award is none other than Google, Inc.  The ALM-owned publication likes the search engine’s legal staff because they’re “disruptive” and evidently like to “test the limits” of what’s legal.

Right on top of this news, comes the announcement that Google will pay $4.9 Million to acquire the IP portfolio of bankrupt Israeli cell phone maker Modu.  I would presume that any transaction of this size would have to clear hurdles with Google’s ‘maverick‘ legal team, and, since this news is now public, in-house IP staff has at least given a provisional green light to the deal.  But what is Google getting for its $5 Million?

First of all, the portfolio (shown here on Patent Tools) consists of less than 70 US patent and pending patent assets, heavily weighted toward the “pending” side.  Less than 20% of the US portfolio represents issued utility patents, with a handful of design patents and pending applications filling out the rest.  The only patent that appears even remotely interesting is USP 7,433,712, which appears to broadly describe a method for accessing a file stored on a telephone (useful, but not exactly a revenue generator) and includes the peculiar step of “automatically changing access privileges to at least part of a storage area on said telephone responsive to said attachment [to a host computer].”  The technology plot thickens with revelation of the next Modu patent, USP 7,693,548.  This patent discusses a mobile phone with solid-state non-volatile memory storage “wherein attachment of said storage system to a host limits access of said telephone to said storage system.”

Obviously, Modu’s focus, at least in part, was on smartphones with internal data storage.  However, given that all of their issued patents were filed in 2003 or later, the claimed inventions are actually quite narrow.  Not only will Google have difficulty monetizing these patents (due to their relative lack of breadth), but they aren’t particularly useful or desirable to productize.  Sure, my iPhone temporarily becomes unavailable while syncing with my laptop, but I’m not sure I’d be happy if attaching it to the computer meant that overall access to the phone was curtailed entirely.

This is not the first questionable patent play from Google. Not too long ago, they were awarded the stalking horse bid of $900 Million for the Nortel patent portfolio.  Of course, the value of this portfolio is so far off that no respected IP monetization outfit is even considering buying a stake. Google’s legal prowess may be savvy when it comes to endangering privacy or making improper copyright deals, but their patent analytical skills could use some help.

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Discussion

6 thoughts on “Google Patent Blunder: Country’s Best Legal Department Green-Lights World’s Worst Patent Acquisition

  1. Interesting thoughts. In regards to the Modu patent acquisition, perhaps the ‘maverick team’ is trying to beef up the quantity of patents to appear more intimidating to NPEs or competitors. Previous to this year, they didn’t necessarily strike fear in the hearts of many. I also heard that RPX was interested in the Nortel portfolio, but this may merely mean that both companies are over-estimating the value. What are some ways that you’ve found to properly estimate the value of a unique patent?

    Posted by Trent | May 24, 2011, 11:25 am
    • Trent,

      Thanks for the comment. RPX appears to be bidding for a syndicated acquisition, which means that some client (most likely Apple) is pursuing the portfolio for defensive reasons. While RPX stands to profit from the deal, this is not something that their entire client base would be entitled to benefit from.

      Patent value is in the eye of the beholder, and lack of value is much easier to spot than positive value. In general, a patent will have some “non-zero” value only if someone either does–or wants to–make a product covered by one or more claims of the patent.

      I’ve been meaning to follow up and explain more about why Modu is overvalued at $5 M, as well as address patent valuation more generally.

      Posted by Patrick | May 24, 2011, 11:31 am
  2. This was a defensive purchase to keep them out of the hands of NPEs. It’s the nuisance cost of a law suit or two.

    Posted by Visitor | May 25, 2011, 12:05 am

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  1. Pingback: The Inexact Science Of Patent Valuation « Gametime IP - May 27, 2011

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