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Goog-Moto: The Patent Angle

8/15/2011 10:25 AM

Google agreed to buy Motorola Mobility in a deal worth somewhere around $735,000 per patent (see Google To Acquire Motorola Mobility For $12.5 Billion In Cash).

That’s not what the headlines said — but reading between the lines, it’s clear that Motorola Mobility’s portfolio of approximately 17,000 patents (with another 7,500 pending) was a big factor in Google’s decision to buy the company.

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies,” Google CEO Larry Page wrote in a blog post Monday discussing the proposed deal.

On July 11, a bankruptcy court approved the $4.5 billion sale of Nortel Networks’ approximately 6,000 patents to group of six companies: Apple, Microsoft, Research In Motion, EMC, Ericsson and Sony.

Previously, Google had offered $900 million in a “stalking horse” bid for the patents.

According to Page, “companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to ‘protect competition and innovation in the open source software community’ and it is currently looking into the results of the Nortel auction.”

Recall that the Nortel patent deal spurred Carl Icahn to publicly complain that Motorola Mobility should do something to extract value from its own patent holdings.

As for what Google will do with Motorola Mobility’s Home business — the biggest supplier of set-tops in North America — Page had this to say: “Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.”

Pending approvals by regulatory bodies and Motorola Mobility shareholders, the companies expect the deal to close by the end of 2011 or in early 2012.

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