Google’s announcement this morning that it had agreed to purchase Motorola Mobility for $12.5Billion sent MMI’s stock price soaring and set off another conversation about software patents and the smart-phone ecosystem.
Larry Page himself emphasized the patent angle of the merger in the corporate blog post:
We recently explained how 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. 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.
Android-users already faced several patent lawsuits, and after a coalition of Google’s opponents, including Microsoft, Apple, and Oracle, purchased Nortel’s patent portfolio for $4.5 Billion, Google and its Android partners (including HTC and Motorola) had reason to fear a deepening thicket. Without many patents of its own, Google couldn’t make the traditional counter-strike of suing its attackers for infringement. Motorola’s mobile portfolio (17,000 issued patents and 7,500 pending applications) adds to Android’s arsenal.
Of course Motorola also makes hardware — smartphones that run Android — but few analysts are emphasizing that point. There, the acquisition raises strategic questions for Google: Can it convincingly offer the Android platform to others with whom it now competes? Even if Google maintains Motorola as a separate business, as Page says it intends, will now-competing vendors such as HTC, Samsung, and Acer be reassured of Google+Motorola’s neutrality among them?
Owning a handset maker could improve Android, if it shortens the feedback loop for problem-reporting and new ideas, but it could hurt the platform — and its end-users — more if it scared off competing hardware vendors, shrinking the base to which new applications are written and reducing the diversity of options available to end-users. As proprietor of an open, multi-sided market, Google needs to serve Android’s hardware vendors, app developers, and end-users well enough that a good-sized group of each continue to bring it value — and so the end-users watch the ads whose sale puts money into Google’s pocket from it all. (Oh, and maybe the acquisition will revitalize GoogleTV, as Lauren Weinstein points out.)
The patent motivations are more straightforward. As we know, it doesn’t take deliberate copying to infringe a patent, and patents are granted on small enough increments of software advance that an independently developed application may incorporate dozens to hundreds of elements on which others claim patents, and at millions of dollars a lawsuit, it’s expensive to disprove them. At least if those others are also making phones or software, Google is now more likely to have patents on what they are doing too, paving the way for a cross-license rather than a lawsuit.
Wouldn’t we all be better off skipping those patent threats and cross-licensing transaction costs? As Google’s pre-Motorola travails showed, it’s almost* impossible to opt-out of the patent system by choosing to publish and not patent your own inventions. Unlike in copyright, where you can share under Creative Commons, for example, and just have to prove you never accessed another’s work if accused of infringement, you can only save yourself from patent claims by assuring that every bit of technology you use was published more than 17-20 years ago! (*Rare but not impossible: Richard Hipp of SQLite says he only uses 17-year old, published algorithms to keep his code free of patent clouds.)
In work-in-progress, I argue that patent’s incentives aren’t working right for software, because they come at too early a stage in development. Patents for software motivate lawsuits more than they induce or reward product development. Google+Motorola may prove to have non-patent benefits too, but its early indications shine a spotlight on the thorny thickets of the patent landscape.