Google Inc. (GOOG)’s number of patents may rival Apple Inc. (AAPL)’s collection after the $12.5 billion purchase of Motorola Mobility Holdings Inc., according to MDB Capital Group, an investment bank specializing in intellectual property.
Google’s “real” number of patents in the U.S. will more than triple and exceed 7,500 after the Motorola purchase, according to MDB’s estimates. That’s similar to the size of Apple’s portfolio when including the rights to use all of Nortel Networks Corp.’s intellectual property, according to the Santa Monica, California-based bank.
The estimates help illustrate why the Mountain View, California-based developer of the Android smartphone software is paying a premium of 63 percent over the stock’s last closing price for a company that’s dropped off from the list of the world’s five largest handset manufacturers. The purchase, subject to regulatory approval, would give Google ammunition to defend against lawsuits as it battles against Apple for supremacy in the wireless market.
“They’re roughly the same size,” Erin-Michael Gill, managing director and chief intellectual property officer at MDB, said in an interview. “Now comes the exciting part: They’ve built the army. How are they going to use it?”
Spokesmen at Google and Apple declined to comment on MDB’s estimates.
MDB’s estimates focus on so-called “in-force” patents granted in the U.S. because they help eliminate double counting, irregularities on the types of applications filed in different countries and the potential for counting patents that have expired or been abandoned, Gill said.
Motorola Mobility estimates it has more than 17,000 patents. MDB estimates the company has 5,327 “real” patents.
Before Google’s offer -- the largest in the wireless equipment industry in at least a decade, according to data compiled by Bloomberg -- a group led by Apple and Microsoft Corp. in June won an auction of patents owned by Nortel Networks after bidding up the price to $4.5 billion, beating out Google.
Antitrust regulators in the U.S. and the European Union may give conditional approval for the $12.5 billion deal, with strings attached to ensure that Google doesn’t use any of Motorola’s patents to hurt competition in the smartphone market, analysts and lawyers said.
U.S., EU Probes
In the EU, “the competition debate will be mainly about patents, whether there is any potential for abuse of patents in future,” Michael Juergen Werner, a partner at law firm Norton Rose LLP in Brussels, said in a phone interview.
The European Commission, which is already investigating whether Google is abusing its dominance of search, will have 25 working days to decide whether to open an in-depth probe once Google formally seeks approval for the transaction. That can add a further 90 working days to the approval process.
“Motorola is definitely one of the smaller players,” said Werner. If the bid is “well prepared, well argued, if it’s properly thought through with regard to conditions, then most likely only a first-phase discussion will be needed.”
Securing antitrust EU approval “won’t be very problematic or difficult,” said Simon Hirsbrunner, a lawyer in the Brussels-based office of law firm Heuking Kuehn Lueer Wojtek. “But the devil is in the detail.”
Cristina Arigho, a spokeswoman for the Brussels-based regulator, declined to comment on the EU review.
Al Verney, a spokesman for Google in Brussels, declined to comment beyond confirming that the deal will require clearance in the U.S. and Europe.
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