Patents morph into assets with price tag - Singapore Law Watch

THE wireless mobility sector is witnessing a major battle among industry leaders. The battleground is not on store shelves but at law courts around the world and the weapon of choice is IP (intellectual property) patents.

Companies promoting the Android mobile operating system (OS) are facing a number of patent-infringement cases. Google has been sued by Microsoft and Oracle. Apple has gone after HTC and Samsung, while in turn it has been sued by HTC. At the centre of all these court cases is the desire to either protect market share or deny the same to competitors. Apple has temporarily denied Samsung the opportunity to sell its highly anticipated 10.1-inch media tablet in Australia and Germany on the grounds that it infringes Apple-owned IP that goes into the iPad. However, as one IP expert noted, almost all innovation in the Internet and mobile-phone space has been patented and so any new incumbent, such as Google with its Android OS, can be a target for IP-infringement action.

Irrespective of the merits of these cases, it is useful to remember that the system of IP patents has been put in place to protect innovation and to ensure that the patent owner is rewarded for the time and effort put into innovation. This system has, by and large, worked well.

What we are now seeing is the morphing of patents into physical assets to be bought and sold among companies for strategic requirements, including at times the need to deny competitors the advantages of incremental innovations which build on existing state of the art. Companies are paying hard cash to enlarge their patent treasure trove, all in the name of protecting market share.

Earlier this year, when the Canadian telecom equipment supplier Nortel Networks put up its 6,000 patents for sale, Google made an initial bid of US$900 million. However, a consortium comprising Apple, Microsoft and other technology giants eventually grabbed them for as much as US$4.5 billion in cash. This suggests that the premium they paid was as much to deny Google access to the technology as to enrich their patent portfolio. Undeterred, Google has recently bought 1,000 patents from IBM. More recently, Google's CEO Larry Page has admitted that one of the reasons the company is paying US$12.5 billion for Motorola Mobility is to get access to its huge trove of patents - 17,000 approved and 7,500 pending approval.

The lesson here for Singapore companies is that patents have evolved from being just a legal means to protect innovation to an asset that can be acquired inorganically and used for competitive advantage. Judicious investment could ensure that patents become assets with immense appreciation potential. There are a number of technology companies that could be good buys for their hoard of patents. Also, firms with valuable patents should also make sure they make effort to monetise the intrinsic value of these patents.

Source: Business Times ? Singapore Press Holdings Ltd. Permission required for reproduction.

Source: http://www.singaporelawwatch.sg/remweb/legal/ln2/rss/legalnews/72939.html?utm_source=rss%20subscription&utm_medium=rss

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