Bucking the Trend

These articles originally appeared in the Sept. 2011 issue of Next Gen Mobility

Patently Important

Interest in patent ownership is clearly building in the world of communications and over-the-top service providers. That became clear earlier this year when we witnessed the battle royale for the patents of now-defunct telecommunications equipment provider Nortel. And last month Google announced plans to spend $12.5 billion – its biggest-ever acquisition – for Motorola Mobility.

While the Motorola Mobility acquisition will give Google ownership of a wireless handset business and TV set-top box assets, which would both seem to be good matches in their own right for the search giant, this deal is really about intellectual property. Specifically, it’s a move by Google to protect its Android (News - Alert) mobile operating system, which has become a key initiative for the company.

“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies,” says Google CEO Larry Page. “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

The move comes shortly after Google was on the losing end of a fight for Nortel’s wireless assets. Apple, Microsoft, EMC, Ericsson (News - Alert), Research in Motion and Sony were the victors in that case, collectively winning something like 6,000 patent assets for $4.5 billion. Google, which in April made a $900 million stalking-horse bid for the patents – some of which relate to LTE (News - Alert) – lost out on this treasure trove of intellectual property.

In the wake of the Nortel patent fight, the search giant snagged about 1,000 patents from IBM. And last month Google added Suzanne Michel, a top patent lawyer at the Federal Trade Commission, to its legal team. An FTC employee for more than 11 years, Michels wrote a recent patent examining the U.S. patent system and how it could help promote innovation.

Elsewhere on the intellectual property front, the DoJ has been examining the sale of the above-mentioned Nortel patents to decide whether it will adversely affect competition in the smartphone space; Google and Oracle continue to spar over whether the former company’s Android operating system infringes on Oracle’s Java patents; and Rovi has sued Hulu for patent infringement.

While companies can clearly leverage patents in new product development, the primary driver of this patent ownership rush is companies’ desire to have stronger arsenals of intellectual property to fight lawsuits on this front.

As Kent Walker, Google’s general counsel, wrote earlier this year: “The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents.”

P.B.

Greenbacks

The U.S. economy and stock market continued their rollercoaster rides throughout the spring and, especially, the summer. But amid all the uncertainty, investment in wireless and social networking companies remained robust – at least through the end of July before the stock market plummeted.

OnAsset Intelligence Inc. in late spring announced that it had secured funding from Main Street Capital Corp. and an investment entity controlled by Roy W. Haley. The machine-to-machine wireless asset tracking, sensing, and control solutions company plans to use the money to accelerate its growth and expand its sales, marketing and manufacturing capabilities. 

“We feel as though we’re in the right place at the right time – offering patented and award winning technology to large and profitable companies that see the value and the ROI that our solutions provide,” Adam Crossno, president and CEO of OnAsset, said at the time.

Of course, things really got exciting in May with the wildly successful IPO of LinkedIn. The social networking site’s shares soared more than 80 percent, reaching a high of $92.99 a share. The per-share IPO price was $45, valuing the company at about $4.3 billion.

Following that, many other tech companies, particularly social networking types, snapped into action. By late summer there was a full pipeline of tech IPOs, including Groupon and LivingSocial, and Zynga. And there were plenty of reports that IPOs for social networking giants Facebook (News - Alert) and Twitter might soon be in the offing.

But rather than announcing IPO plans, Twitter Inc. early last month revealed a "significant" new round of funding led by Russia’s Digital Sky Technologies. The social networking outfit didn’t disclose the actual dollars and cents, but The Wall Street Journal said a source suggested it amounted to $800 million, valuing Twitter at $8.4 billion.

In other recent private funding news, in late June content discovery outfit Hitlantis announced it had closed an over-subscribed angel investment of $1.5 million targeted to accelerating development and expansion of the company in key territories. Participating investors included private investments from senior Nokia executives, JSH Capital Oy, Hasan & Partners, PM Ruukki Oy, Notion Oy, Rock Island Investment Oy, and T&T Enterprises Oy, among other private individuals from the media and telecom sectors.

Of course, when it comes to investing, timing is everything. And by July a lot of folks were wondering out loud whether the window of opportunity for highly successful IPOs had again closed for the time being.

Multi-screen video equipment provider Envivio (News - Alert), which in April filed an S-1, in July told me they had pulled that back.

And a June 3 article in The Wall Street Journal titled “Groupon IPO: 3 Reasons to Worry,” ends on this not particularly uplifting note:

“A month ago, this IPO had a great shot at being an unqualified home run. But now, the housing market is tanking, the market scribblers are expecting a big slowdown in U.S. economic growth and the stock market is on track for its fifth straight week of losses. That’s not the sweetest conditions pitch investors on an IPO.

“Oh, and one more headache outside of Groupon’s control: Several of the other big tech IPOs of recent months are having a tough time. For example, shares of LinkedIn and RenRen are at or near their lowest points since their May initial public offerings. Conditions could improve by the time Groupon actually goes public. Or the market and economic backdrop could be even worse.”

On Aug. 2, as federal lawmakers and the administration came to terms on the debt ceiling, which many thought would be greeted positively by Wall Street, the Dow Jones Industrial Average lost 266 points and the Standard & Poor's 500-stock index sunk to a 2011 low. A few days later the stock market had recovered most of its losses, but the wild gyrations of the stock market left everyone wondering what else might lie ahead.

P.B.