Google tried to present its $12.5b acquisition of Motorola as an opportunity to “supercharge the Android ecosystem,” but it’s clear that the deal was equally prompted out of desire to protect Android from further patent lawsuits using Motorola’s strong patent portfolio. From all appearances, it actually seems like Google was first interested in somehow licensing or buying Motorola’s patents, and then decided it would be nice to spend a little more and just buy the whole damn company. Of course, that raises the question: what’s going to happen now? The smartphone landscape is awash in patent suits, most targeted at Android OEMs, and Google’s clearly looking to have an impact. What’s the strategy?
• First, as Google general counsel David Drummond noted on the conference call announcing the deal, nothing can really happen until the deal closes. That’s going to take some time, since the acquisition needs to be approved by regulators in the US and Europe. Until then, Motorola’s on its own, although I’d imagine the lines of communication between the two companies will be wide open.
• Once the deal closes, Motorola will be run as a separate business, but it sounds like Google will take formal possession (called an “assignation”) of Motorola’s 12.5k issued patents and 7500 patent applications. That’ll give the company the right to sue others with them and/or license them out.
• There are three major cases that this acquisition will affect, and Google will have to negotiate each one individually. The end goal for Google in each case will be to acquire a broad patent license that covers the entire Android ecosystem and then indemnify all of its partners against further patent lawsuits, which could be quite challenging — and potentially quite expensive. Let’s look at the outstanding cases.
Motorola vs. Apple: Motorola actually sued Apple first, asking the court to declare Moto smartphones clear of Apple’s patents, and then Apple sued back. The Google acquisition really only changes the balance insofar as Google has plenty of money and patience to keep fighting, while Motorola Mobility was still getting itself steady as an independent company following the spinoff. Whatever threat Motorola’s patents posed to Apple doesn’t seem to have prompted Cupertino to enter into substantive negotiations about a settlement and cross-license, and now Google will now have to convince Apple to enter into an agreement that covers the entire Android ecosystem. That doesn’t seem easy.
Microsoft vs. Motorola: Microsoft sued Moto first, and then Moto sued back. What’s interesting is that these two are actually former partners, and both seem somewhat willing to enter into patent licensing agreements — Microsoft is already collecting patent royalties from HTC on Android phones, for example. That might make Google’s task easier, but don’t underestimate Ballmer’s desire to beat out his competitors in Mountain View at all costs — Google will have to pose a significant threat to Microsoft before the Redmond boys will do anything to make Android more appealing to OEMs than Windows Phone 7.
Oracle vs. Google: Here’s where it gets interesting. The Oracle case is probably the most significant to the Android ecosystem right now, and it’s also the one in which Google is doing the most poorly — internal Google emails showing that the company decided to use Java without a proper license have recently been revealed. That means Google’s probably motivated to settle, and Motorola’s patents give it a great opportunity: Oracle obviously doesn’t make phones or mobile operating systems, but Motorola owns plenty of patents on networking and video encoding as well. That’s the sort of easy cross-license that makes sense, but it all depends on whether Oracle decides it stands more to gain from collecting license fees from Android or more to lose from a Motorola patent lawsuit. Look for this one to be affected first — probably by a Google countersuit as soon as the Motorola acquisition closes.
Other lawsuits like Apple vs. Samsung, Apple vs. HTC, or the various Lodsys cases won’t be affected directly in the short term — Google’s not a named party to any of those, and it’ll probably stay mostly on the sidelines unless it can somehow leverage Motorola’s patents into ecosystem-wide licenses.
All that said, it’s still curious why Google spent the full $12.5b on Motorola, instead of a smaller amount acquiring the rights to Moto’s patents — or the rights to litigate with those patents. (Or even something more like the Microsoft / Nokia deal, which involved patent cross-licensing and joint development by the two companies.) It’s easy to see why Google and Motorola joined forces to make the most out of Moto’s patents — but now they’ve got to explain how they’ll make the most out of what actually matters: Motorola’s products.