Google is now the proud owner of 1,030 IBM software patents. The search giant did not disclose the purchase price, but based on a separate bidding war earlier this month, we're guessing it was high. In that episode, Nortel sold over 6,000 patents to Microsoft, Apple and a few other giants for a cool $4.5 billion in cash, while Google lost the war after an attention-getting bid of pi billion dollars ($3.14159 billion).
We wondered then, and we're wondering again: What the heck are those patents for? And why did they cost as much as a small island nation? Google's a big, rich company, but their bid for the Nortel patents is almost equal to their entire research and development budget in 2010. This seems even more remarkable because based on the comments from their top lawyer, Google doesn't want patents to build new products. They want them to be a sort of litigation shield.
Kent Walker, Google's senior vice president and general counsel, wrote on the company blog in April that they were engaging in the bidding war to "create a disincentive for others to sue Google." Walker explained:
The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation. …
But as things stand today, one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services. Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories.
With Friday's IBM purchase, they're a little bit safer against future lawsuits, but as many have said since then, the patent laws that have enabled the explosion in litigation threaten to stifle technological innovation.