Financial analysts this week are aflutter with opinions regarding the announced US$12.5 billion acquisition of Motorola Mobility Holdings, Inc. (MMI) by Google, Inc. (GOOG). Unlike most billion dollar acquisitions, the deal is seemingly focused on one asset class: patents. According to the Wall Street Journal, Google will gain ownership of Motorola Mobility’s approximately 17,500 patents and 7,500 applications, teaching telecommunications technologies, notably relating to the popular Android mobile operating system. To comprehend this deal, many analysts are focused little beyond the quantity of these assets, unfortunately ignoring the fact quality trumps quantity as a driver of IP value.
Analyzing patent quality is an intensive exercise. Patents must be grouped; read; analyzed for value indicators, such as claim depth, age, and jurisdiction; and considered in respect to the relative IP landscape. In addition, patent histories, including results of patent litigation and assignment changes, must be considered. Working with publicly available information, analysts likely find these tasks daunting when considering Motorola Mobility’s portfolio, especially given the number of assets and recent split of Motorola, Inc. Fortunately, a number of public indicators can guide these tasks, shedding light on the innovations supporting the value of Motorola Mobility’s portfolio.
1. Patent Power Scorecards by the Institute of Electrical and Electronics Engineers (IEEE), a global association focused on the advancement of technology, provide an interesting perspective of patent quality. These scorecards measure the relative innovative nature of patent portfolios in certain technology sectors. In a 2010 study, Motorola, Inc. ranked third, behind Cisco Systems, Inc. and Alcatel-Lucent in the Telecom/Communications Equipment category.
2. Boliven.com, an online service of Cambridge IP, an UK-based consultancy, allows users to review Motorola, Inc.’s patent portfolio characteristics. Interestingly, the number of grants has trended down throughout the 2000’s.
3. Freepatentsonline.com, a provider of patent information database, allows readers to gain an understanding of the non-US issued Motorola Mobility patents. Upon recent review, the company appears to have access to several thousand European Patent office issued assets. Additionally, a read of freepatentsonline’s non-patent literature collection for key terms relating to Motorola may shed some light on how the company’s innovations are utilized and considered in technical fields.
A reflection of these sources, in conjunction with Motorola Mobility’s financial statements, begs the question: Is Motorola Mobility worth $12.5 billion, considering the price represents a premium of 63% to the closing price of its shares on Friday, August 12, 2011? Perhaps only time will tell; however, in the interim, I look forward to your answers and additional reports and analyses examining Motorola Mobility IP assets. Hopefully these texts will add to Wall Street’s understanding of how quality drives IP value.