The enterprise market for patents is starting to remind me of the consumer market for housing. Inflated prices, possibly irrational buying behavior and cutthroat tactics could lead us into bubble territory.
In the past few months a group including Microsoft, Research In Motion (RIM), Sony, Ericsson and EMC paid $4.5 billion for patents from Nortel and Google agreed to pay $12.5 billion for Motorola Mobility, a purchase apparently driven by the desire for Motorola Mobility's patent portfolio. Google also acquired more than 1,000 patents from IBM.
Now Kodak could become the latest company to trigger a patent bidding war. Kodak's market value shrunk dramatically during the last decade as people began eschewing digital cameras and using the cameras on their smartphones. But it's sitting on a pile of patents that could be highly desirable for Microsoft, Samsung or other companies playing in the mobile space. Financial analysts believe Kodak's digital-imaging patents could be worth as much as $3 billion, Bloomberg reports.
Bloomberg cites a Kodak announcement that the company is pursuing "strategic alternatives" for more than 1,100 of its patents, including some for processing, editing and storing digital images. The story also includes a comment from Walter Todd, who helps manage $950 million at Greenwood Capital: "This whole patent area has become really hot." Um, yeah.
The Kodak patents up for sale may include one that protects image-preview technology used in cameras. Interestingly, Kodak has claimed Apple and Research In Motion infringed that same intellectual property and is seeking $1 billion in licensing fees from those companies. Apple, which is embroiled in several patent suits, has filed a countersuit with the International Trade Commission.
As PCMag.com points out, many patent buyers are probably planning to use them to protect themselves from litigation, not to create any new products or services. It lists seven companies that could attract patent purchasers, including HP, Nokia and RIM.