My Advice to Google – Keep Acquiring Patents

Whenever a company name is splashed through the headlines regarding some big deal, unsolicited advice is never far behind. Cocktail party chatter and water-cooler insight all include some sage observation. I cannot resist, even if I am a little late to the party.

Firstly, well done. Buying Motorola Mobility was an excellent move. No one ever said Google (NASDAQ: GOOG) had to be a pure play on or in anything in particular. If it wants to integrate laterally/vertically, good. Google is well funded and can leverage Motorola know-how into many spaces. Next up, HPs moribund computer biz.

Why shouldn’t Google consider HP? There would be huge synergies. 15 years ago a cell phone was just a phone; a laptop was just a portable computer; a tablet was a reader; and, a camera/video recorder was always by itself. Now, features off of each are blended like a smoothie. Heck, grab Kodak while you’re at it along with any ATM Bank stuff. I mean, pretty soon your wallet will be like your watch: gone.

Now, the patent thing. Patents are not what many people think. Despite lots of breathless pronouncements, in most industries they are what they have always been: to wit, a useful lever to gain momentary advantage. Typically a 5-10% advantage. I expect them to return to that role soon in tech as well. In pharma and bio, patents will always play an outsized role owing to the FDA interplay. For the rest of us; not so much. MRI machines; lasers; telephony; etc. come along once in a generation.

Well what about trolls? It is a business model. Period. In trolling, it is not patents that make it worth doing, it is the total unpredictability of the legal system that makes it worth doing. If you like to gamble with the odds in your favor, trolling is for you. Legislation needs to be put in place to lessen odds of a windfall (patent specialty courts) and increase the odds of paying opposing counsel fees in selected technologies. That would put a cork in the gambling. But, even so, despite the hue and cry about all the trouble patents cause, the rate of advance and innovation in the “troubled” areas continues to accelerate.

So what are patents, really? More than 90% of patents never see a courtroom or license arrangement. Many of the Motorola patents are old tech by now and many are doubtless design patents on old Razors, etc. That is, short lived in the first place, and no longer even sold. Hence, the patent packet bought by Google, or any other “brain trust”, is no different in terms of this nearly universal 90% factor.

Most patents are obtained simply on the “refrigeration theory” as I call it. Just like if you are in food service you won’t get far without the preserving effects of refrigeration. Everything spoils unless eaten immediately. Likewise in technology; without the coverage of a patent, everything spoils unless consumed forthwith (first mover advantage). The decision is simple: if it is worth doing, i.e., putting resources into, it is worth patenting. Just don’t break the bank. Break ideas into $5,000 to $10,000 chunks and file. Remember the 90% rule; some will be worth a bunch, most will not.

The more difficult job for Google will be integrating the big picture of all this brain power, ambition, and technology into value. Ford did it years and years ago. Cows, logs, and iron ore went in one end, cars came out the other. Brilliant. Same with GE, GM for a short while (long ago), and others. What is frustrating is, it never seems to last. I expect Google can pull it off if they remain motivated and imaginative.

Good luck.


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One comment so far.

  • [Avatar for patent enforcement]
    patent enforcement
    September 5, 2011 04:35 pm

    I agree (and have said for a while) that the best solution at hand in dealing with the patent troll situation lies in providing a financial disincentive. Both the unpredictability of patent legislation and the fact that, on average, trolls’ winnings are 3 times the amount of damage awards received by practicing entities make the patent troll business model especially appealing. Remove those factors and reduce troll activity.