by Tim Carmody (excerpted)
The intellectual property hustle used to be so simple: purer, even. Patent holders extracted licensing fees, lump-sum settlements or cross-licensing agreements from nonholders, who paid up to avoid messy lawsuits or injunctions. It was a drag for almost everyone involved, but the stakes were comparatively small. Now, multibillion-dollar portfolio sales have put blood in the water, attracting an entirely different kind of shark.
We’ve already seen this play out once with Motorola. It’s easy to forget now that just a few weeks before Google stepped in to buy the company, investor Carl Icahn publicly and privately urged Motorola to sell off its patents, either for cash or by (again) splitting up the company.
This put both Motorola and Google in an awkward spot: If Motorola couldn’t find a buyer, the company could be torn apart; if Google didn’t step in, they risked losing another patent bidding war. In the end, Motorola was able to negotiate a premium price, and Icahn now stands to pocket millions of dollars.
Right now, it looks like a seller’s market. Because nobody seems to be kicking the tires to see exactly what they’re buying, the conventional wisdom is to sell. Like Motorola a few weeks ago, RIM is in a tough spot, so this pressure is hard to resist. If RIM were to publicly announce that it wasn’t for sale, its already-weakened stock, temporarily buoyant from acquisition rumors, would fall to the ground.
It’s even harder for Kodak, which really does have a substantial patent portfolio and is in an even weaker market position. On Wednesday, Bloomberg ran an analyst-driven story titled “Kodak Worth Five Times More in Breakup With $3 Billion Patents“:
Kodak’s stock jumped 16 percent overnight, fueled by rumors of a Motorola-style takeover or patent sell-off.
Steve Lohr’s “A Bull Market in Tech Patents,” published Wednesday in The New York Times, begins by detailing the broader downside of the patent craze: billions of dollars to purchase or defend existing patents is money companies like Apple or Google don’t have to spend on new products or research.
But that money doesn’t simply evaporate. “It’s a transfer of wealth from innovators to bondholders and stockholders who have no motivation to innovate,” Harvard Business School economist Josh Lerner tells the NYT. “It’s disturbing.”
Read more:
The intellectual property hustle used to be so simple: purer, even. Patent holders extracted licensing fees, lump-sum settlements or cross-licensing agreements from nonholders, who paid up to avoid messy lawsuits or injunctions. It was a drag for almost everyone involved, but the stakes were comparatively small. Now, multibillion-dollar portfolio sales have put blood in the water, attracting an entirely different kind of shark. We’ve already seen this play out once with Motorola. It’s easy to forget now that just a few weeks before Google stepped in to buy the company, investor Carl Icahn publicly and privately urged Motorola to sell off its patents, either for cash or by (again) splitting up the company.
This put both Motorola and Google in an awkward spot: If Motorola couldn’t find a buyer, the company could be torn apart; if Google didn’t step in, they risked losing another patent bidding war. In the end, Motorola was able to negotiate a premium price, and Icahn now stands to pocket millions of dollars.
Right now, it looks like a seller’s market. Because nobody seems to be kicking the tires to see exactly what they’re buying, the conventional wisdom is to sell. Like Motorola a few weeks ago, RIM is in a tough spot, so this pressure is hard to resist. If RIM were to publicly announce that it wasn’t for sale, its already-weakened stock, temporarily buoyant from acquisition rumors, would fall to the ground.
It’s even harder for Kodak, which really does have a substantial patent portfolio and is in an even weaker market position. On Wednesday, Bloomberg ran an analyst-driven story titled “Kodak Worth Five Times More in Breakup With $3 Billion Patents“:
Kodak’s stock jumped 16 percent overnight, fueled by rumors of a Motorola-style takeover or patent sell-off.
Steve Lohr’s “A Bull Market in Tech Patents,” published Wednesday in The New York Times, begins by detailing the broader downside of the patent craze: billions of dollars to purchase or defend existing patents is money companies like Apple or Google don’t have to spend on new products or research.
But that money doesn’t simply evaporate. “It’s a transfer of wealth from innovators to bondholders and stockholders who have no motivation to innovate,” Harvard Business School economist Josh Lerner tells the NYT. “It’s disturbing.”
Read more:
