Who determines the Value of Patents? / Google Highlights Value of Patents in Motorola Sale to Lenovo

CTN Issue: July 2014 IEEE Spectrum

Once an invention is made, the next important step is to ascertain what sort of intellectual property protection (patent, copyright, trademark, etc.) is warranted so that the inventor can pursue commercialization of the technology with a business model that is sustainable in the long-term. In Today’s knowledge-based economy this protection of inventions is a must, and not an easy step. Most likely there is a need to bring legal expertise and ‘teach’ them about the ‘novel’ invention, its claims, and business plans if applicable. All this requires time and money which are always scare resources, and more so in a startup situation. How/When should be decided to spend time and money protecting inventions has no single answer. How/When to claim the value of the inventions has no single answer either. Every case, every technology, every country is different. However, the high profile examples of the selected articles in this section exhibit some common themes applicable across our entire industry.

Most industries work by protecting single inventions with single patents to recuperate development costs while protecting market share; and example would be the pharmaceutical industry that works to protect drug inventions with single patents. By contrast, in the communications technology industry the most common case involves a very large number of patents cross-licensed to quickly address changing market needs of complex systems and products. This is the case of today’s most popular communications device, the smartphone, where global multi-player cross-licensing agreements are the norm.

The referenced articles detail well-known industry players – Google, Kodak, Motorola and Nortel among others – and discuss their prominent patent and intellectual property portfolios, their valuation, and the protection that these portfolios provide them. Analyzing the articles one sees that the patenting behavior of startup firms and of large corporations depends on the strategic and monetary value that can be asserted from these patents. The articles point to how the value of the patents is related to the number of existing IP rights holders and is heavily influenced by the amount of dispersion (number of patent holders) of those rights, particularly in rapidly evolving semiconductors, digital communications, and mobile telecommunications sectors. Firms file and trade more and higher quality patents in technology areas with higher number of existing IP rights holders, and in our industry this means that patents have a high profile.



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