In the past few years, technology companies have spent ludicrous amounts of money to buy patents. But they're discovering, as the drawn-out lawsuits over intellectual property play out, that owning the rights to old inventions may not be worth as much as actually inventing and selling new things.
The tech world's fiery passion for patents in finally starting to simmer, Michel Combes, chief executive officer at Alcatel-Lucent, said last week. "There's less hype in the patent area than two years ago, when new players were extremely keen to get as many patents as they could -- in the mobile space especially."
The Franco-American company, based in Paris at the foot of the Eiffel tower, knows what innovation is worth. It owns Bell Labs, the Nobel Prize-winning telecoms research center credited with inventing the transistor, the laser, and crucial programming languages and operating systems that underlie many of today's gadgets.
Alcatel-Lucent has been looking to license some of the 30,000 or so patents it owns and the 15,000 others pending approval. They cover everything from voice recognition to video conferencing. After an agreement with licensing syndicate RPX proved insufficient, Alcatel-Lucent began setting up its own structure to do licensing work internally, it said about a year ago. Still, the company has yet to generate any significant revenue from patent licensing.
The bidding wars for patents, which tech companies were amassing to defend themselves against intellectual-property suits, was short-lived. Google acquired Motorola Mobility for $12.5 billion in 2011 as part of a move to get its hands on 17,000 patents and 7,000 more that had been filed. The deal would strengthen Google's patent portfolio and help it "protect Android from anti-competitive threats from Microsoft, Apple and other companies," CEO Larry Page said then.
A group of tech giants, including Apple, BlackBerry, Microsoft and Sony, outbid Google earlier that year for Nortel Networks' portfolio of more than 6,000 patents. The price was a whopping $4.5 billion -- just for the patents, mind you. "Since 2011, we haven't seen any transaction that size in the industry," said Yann Magnan, managing director at Duff & Phelps, which helps clients evaluate intangible assets.
Last year, AOL sold some patents and began licensing others to Microsoft in a deal valued at $1.06 billion. Facebook joined in by paying $550 million for some of Microsoft's newly acquired patents. These were among the last blockbuster patent deals in the tech industry.
PricewaterhouseCoopers called 2012 a "banner year" for patent-infringement litigation. Apple v. Samsung Electronics, Oracle v. Google, Yahoo! v. Facebook, and so on.
The Apple-Samsung showdown has been a sloppy fight. During about a year of courtroom flip-flopping, Apple went from winning $1.05 billion in damages owed by Samsung to the threat of having some of its products banned from being sold. The Obama administration swooped in over the weekend to overturn the U.S. import ban.
The case, along with other recent high-profile lawsuits, demonstrates that the murky patent-litigation process may be more trouble than it's worth for tech companies.