Welcome to the patent valuation bubble

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.

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TOPICS: Legal
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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

Topic: Legal

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22 comments
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  • RE: Welcome to the patent valuation bubble

    Patents have become just a big blobs of something. It is impossible not to infringe on one but if your blob is big enough you are safe.
    paul2011
    • It was a nightmare looking for a sleeping head to invade.

      It wasn't hard to see, even a few years ago that this is probably where things were heading in the high tech patents world. How many times right here on this website has it been reported that some company X is suing some company Y over some ridiculous patent. Or that some company Z had just been awarded a patent for the banana peeling by hand method. Drawings included.

      It seems to me that anyone who has had an opportunity to talk to anyone in the know in the tech field can tell you that far far too many patents are handed out for things which are somewhat less then highly inventive, and in fact are often nothing more then "the most convenient way" of doing something.

      Its one thing to hand out a patent for something truly unique, a solution to a difficult problem that had NO obvious answer and in fact took considerable effort to come up with a solution at all, a solution not easily arrived at by anyone trained in the art so to speak. Its quite another to hand out a patent for something for little more reason than someone came to the patent office with the idea first. Thats pure nonsense and as such, like all pure nonsense, if you use that pure nonsense to build a foundation for anything its going to be a foundation of errors and its going to lead to trouble eventually.

      With all the years of ridiculous patent squabbles it was clear that if something didn't happen to straighten things out it would eventually lead to an all out patent war. And while wars may be won by men, its fought with weapons and in a patent war the patents are the weapons and its not hard to spot the arsenal stockpiles building up.
      Cayble
      • RE: Welcome to the patent valuation bubble

        @Cayble

        Wouldn't it be grand if AFTER all the major parties involved spent even more billions of dollars buying up any company that had some IP, the entire IP patent system was abolished? I would LOL!
        mlashinsky@...
  • Thanks to Google?

    This BS has been ramping up for 20 years, ever since congress decided by fiat that software was patentable. I know it's just a blog, but a little research would be nice.
    tkejlboom
    • Congress didn't do it

      @tkejlboom
      The Federal Circuit did. Then Congress did nothing.
      John L. Ries
      • RE: Welcome to the patent valuation bubble

        @John L. Ries
        +1. precisely
        Ram U
    • As a legislative body, it is impossible for congress

      to declare anything by fiat.
      baggins_z
      • RE: Welcome to the patent valuation bubble

        @baggins_z SCORE!
        big red one
  • RE: Welcome to the patent valuation bubble

    You are looking at the next round of how wealth is extracted from the economy in <b>totally unproductive</b> ways.

    The "dot-co<s>m</s><b>n</b>" bubble was one other fine example.

    The mortgage meltdown mess is a more recent example.

    As long as <s>sheisters</s>lawyers, and <s>"wet behind the ears" MBA wanna-bes</s>business school graduates ru<i>i</i>n businesses; this stupidity will not stop.

    Hang on, the ride is going to get bumpy.
    fatman65535
    • RE: Welcome to the patent valuation bubble

      @fatman65535
      Yes.
      There seems to be a pattern there.

      In due course the patent bubble will bust too.
      There is going to be a LOT of re-evaluation of companies' assets then.
      Pretty suddenly almost all the "value" tied up in "patents" will disappear.
      It is going to look very ugly.
      hkommedal
  • RE: Welcome to the patent valuation bubble

    It is the new Technology methodology.. Create something new and innovative, rest on your laurels in your little niche or sue the competition back to the stone age.
    My first run in with this mentality was working for a company that developed PCI Bus Expansions.. Developed a cardbus system and guess what? Someone had a patent for any box with a connector at either end to connect two devices together. Seriously. So the cardbus interface (PCMCIA to some out there) required a license and royalties per each unit. They did not design anything we used.. not even the box dimensions.. from Cardbus to a shoebox in size, it all counted.. now how STUPID is the patent system? (no need to answer, that was rhetorical.)
    Putertechn
    • RE: Welcome to the patent valuation bubble

      @Putertechn
      "now how STUPID is the patent system?"

      Expensively stupid.
      When it collapses, and it will, a whole lot of otherwise well founded companies will end up in deep trouble.
      hkommedal
  • RE: Welcome to the patent valuation bubble

    I'm sending in a picture of my fingerprint and applying for a patent on "Any pattern on the end of fingers and toes." If any of you then use these extremities I shall sue all all 7 billion of you thieves. Of course, you can avoid my lawyers's wrath by licensing my fingerprint technology and paying me a royalty. I'll provide an offshore account number for you to deposit my money and you shall be given a certification that you are allowed to use your fingertips again.
    idenchasy
    • RE: Welcome to the patent valuation bubble

      @idenchasy
      Sorry, I sent in that patent yesterday ;)
      athaki
    • RE: Welcome to the patent valuation bubble

      @idenchasy Actually, we don't use fingerprints just to do stuff. You need to sue the city, county, state and federal officials that acquire fingerprints, store fingerprints, compare fingerprints and present evidence in court. I'm sure they'd be happy to license that from you - retroactively, of course.
      big red one
  • zwhat's wrong with the selling companies?

    Once they sell their "overvalued" patents, then what? Say Kodak or Motorola has "issues" and selling these patents solves cash flow issues. The underlying problems aren't gone, and once they burn through the money they sold the patents for, then what? Oops, out of business...
    WindowWasher
  • RE: Welcome to the patent valuation bubble

    I'm curious what happens when these companies sell their patents, what they do after that. I would suspect that they sell them with some kind of license for life deal. That's great for their current business but what happens when in the future some company claims they violated their patents. They don't have a pile of patents to counter-sue with, so what then? They just cough up the cash to settle for future patent law suits? Given the climate today of patent lawsuits I think that is stupid and stock holders should be screaming bloody murder and throwing out the boards that do this for intentionally devaluing the stock.
    tim.w.jung@...
    • RE: Welcome to the patent valuation bubble

      @tim.w.jung@...
      The "patent bubble" is already set to burst.

      Already many Asian producers sell different products to what is classed as SAFE MARKETS.
      Obviously the US market is not one of them.
      This will more and more lead to higher prices and lower availability of high tech in the "UNSAFE" markets, where US type of "patents" apply.

      This will in turn force the US to scrap its current patent system to regain the high tech lead it is now well on its way to lose.

      The US cannot afford to keep this "patent monster" much longer.
      hkommedal
  • RE: Welcome to the patent valuation bubble

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