Think what Google could do with $6 billion. Think of the research that would spawn new products, advance innovation, and create who knows how many thousands of good jobs up and down the technology food chain. Instead, that money is going to buy patents.
Worse, not only will those jobs not be created, existing jobs will be lost as the patent arms race goes nuclear and more and more companies are acquired for their patent portfolios and then discarded -- along with their employees.
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The patent wars go nuclear -- with costs to match
When I say Google is wasting $6 billion, I'm being charitable. Google actually is paying $12.5 billion to buy Motorola Mobility. There's absolutely no doubt that the major, if not the only, reason it's making that gargantuan purchase is to defend the Android platform from patent-related legal attacks from Apple and others. Some analysts have suggested that Motorola's big patent portfolio represents roughly half the value of the company. If you do the math, each patent works out to $400,000 to $500,000.
Not coincidentally, that's more or less what the Microsoft consortium paid for Novell patents. Late last year, a group of companies led by Microsoft paid $450 million for 882 Novell patents. That works out to $510,204 per patent. In July, Apple and Microsoft led a consortium of technology companies in a $4.5 billion purchase of roughly 6,000 patents from Nortel Networks, for an even richer price of about $750,000 each.
I'd never argue that companies shouldn't protect their investment in intellectual property. That's exactly why we have a patent system. But $750,000 for one patent? It's crazy. But remember the context: The patent system is so broken that any bozo with money to spend can buy a portfolio of patents, do nothing with them, then sue a company that actually is creating value.
Google isn't defending itself from the noxious little creatures we call patent trolls, of course. It's fighting with the likes of Apple, Microsoft, and Oracle, who are in turn fighting with the likes of Samsung and HTC. Our broken patent system has touched off a war, and your job could be the collateral damage.
More patent buyouts are on the way
Everyone knows what an arms race is. One side builds a new weapon, and the other side has to match it. Then the first side builds an even more powerful weapon, prompting the other guy to build more and so on. Remember how well that worked out for the Soviet Union?
Now there's an arms race in the technology industry, with patents playing the role of ICBMs. "Patents are emerging as a new currency," Alexander I. Poltorak, chief executive of the patent licensing and enforcement firm General Patent, told the New York Times. "I've recently received several calls from financial analysts and bankers who want to know how to value patents and what does it mean."