Welcome to the patent valuation bubble

Summary:In this patent bizarro world, Kodak looks like a screaming buy and no-names like InterDigital get tech giants to drool. You can thank Google's Motorola Mobility purchase and the Nortel patent auction for this nonsense.

If the bidding for Nortel's 6,000 patents---$4.5 billion in cold hard cash---and Google's patent-happy $12.5 billion purchase of Motorola Mobility stretched intellectual property valuations just wait for what's in store.

Simply put, any company with a significant technology patent portfolio will be in play. The patent arms race is on and now the valuation for patents has been set at "ridiculous" cash-rich companies have the go-ahead to gobble up portfolios that would have tanked stocks just a few years ago.

Let's round up the latest indications that we're in a patent valuation bubble.

And I thought HTC's $300 million purchase of S3 was a bit of a stretch. Silly me.

Kodak's claim to fame is a bevy of digital imaging patents. These patents are at play in every smartphone given that the devices double as cameras. From Kodak's perspective, the patent valuation bubble couldn't have been better timed. The company wants to monetize its patents to cover its cash flow burn.

At this point everything patent looks great as technology companies stock up on intellectual property that could be used to sue or fend off a lawsuit. This frenzy would be comical if it weren't such as waste of the balance sheet.

Related patent items: Software patents: Lots of whining, but reform unlikely

Topics: Legal

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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