Further adventures in America’s dynamic, entrepreneurial free market economy:
News that Google had competition for a bundle of patents being sold by bankrupt Nortel Networks surfaced a week ago, and now it’s official; a consortium of companies including Apple, EMC, Ericsson, Microsoft, RIM, and Sony won the multi-day auction with a bid of $4.5 billion. According to Reuters, RIM contributed $770 million to the effort while Ericsson is on the hook for $340 million when the deal closes, which is expected to be in the third quarter of this year. What they’ll do with the over 6,000 patents and patent applications covering everything from wireless to optical to semiconductors isn’t immediately clear, but what won’t happen is Google using them as leverage to stave off the patent-trolling hordes.
I think the basic dynamic to keep in mind here is that insofar as rich high tech companies dedicate resources to hiring engineers to compete with one another buy building better products, the consumer ends up winning. But insofar as rich high tech companies dedicate resources to hiring patent lawyers to sue each other or hire investment bankers to help evaluate patent-based acquisition strategies, almost all the surplus is accruing to the lawyers and bankers.