Call it a high-tech arms race: Smartphone companies are spending billions of dollars to stockpile their wireless patent arsenals. In July, Google was locked in a contentious battle with a consortium of rivals over a portfolio of patents held by bankrupt Nortel Networks. Google was outbid, but undaunted. In August the search engine giant shelled out a staggering $12.5 billion for Motorola Mobility Holdings — a company with a treasure chest of more than 17,000 patents — in an attempt to stave off competitors.
Google isn’t alone. In the past year, smartphone heavyweights such as Apple, HTC, and others have gobbled up wireless patents in order to protect themselves from litigation or to use them as ammunition and bring suits against competitors. The stakes are high. “They buy these patents for competitive leverage,” says Ronald Laurie, a former IP partner at Skadden, Arps, Slate, Meagher & Flom who now heads Inflexion Point Strategy, a patent advisory firm. “It’s a very strategic move aimed at wiping out competition.” The last company standing could end up dominating the multibillion-dollar wireless market for decades, similar to the way that Microsoft holds the upper hand in personal computer software.
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