As patent lawsuits become a dialy feature, companies are building up their portfolios in an effect to protect themselves from litigation. Google is no stranger to this practice, as it confirmed on Friday it a new patent deal with IBM, which is in line with Google's focus on snapping up patent portfolios left and right in creating a "disincentive for others to sue Google", as noted on their official blog back in April.
In the current deal, Google bought 1,030 granted patents from IBM cover varied technologies, including: "the fabrication and architecture of memory and microprocessing chips" plus other areas of computer architecture which "include servers and routers", in addition to "relational databases, object oriented programming, and a wide array of business processes".
Terms of the deal were not disclosed.
It is not immediately clear how the acquired patents relate to Android, but a Google spokesperson took this jab at Apple, telling CNET:
"Like many tech companies, at times we'll acquire patents that are relevant to our business needs. Bad software patent litigation is a wasteful war that no one will win."
Florian Mueller of the FOSS Patents blog explains how Google could use some of the patents to defend Android from litigation:
Google could sell some of those patents to embattled Android device makers such as HTC. HTC could then, for example, use them in countersuits or counterclaims against Apple, possibly with an obligation to sell the patents back to Google after the dispute.
Google's attempted purchase of Nortel's intellectual property was meant to "create a disincentive for others to sue Google," he said at the time. "In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners." It's likely that Google is employing a similar strategy with the IBM buy.
It could also take another big step into patent ownership with the acquisition of a patent-holding company, InterDigital. That company makes no products, but owns and licenses thousands of patents. InterDigital is involved in patent litigation with Nokia, Samsung, and several other companies over various wireless technologies including 3G.
Apple is also said to be interested in InterDigital as well, meaning Google very well could be thwarted by the suits in Cupertino once again when it comes to building their patent portfolio.
According to Bernstein's Toni Sacconaghi, Apple is going to "push its legal claims hard and unrelentingly", he tells Fortune. He foresees huge, positive financial implications for Apple should the company prevail in its anti-Android legal crusade.
The analyst wrote in a note to clients:
"We note that a 10 percentage point shift in smartphone market share from Android to Apple (the current run-rate smartphone market share is 46% for Android vs. 18% for Apple) in 2013 is worth an estimated $30B+ in annual revenue and $10+ in annual EPS to Apple".
He also noted Apple ships a much higher value of smartphones than any other player, as seen in the below chart accompanying his note.