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Will Apple Snag InterDigital in Hot Patent Pursuit?

By John P. Mello Jr. MacNewsWorld ECT News Network
Aug 19, 2011 5:00 AM PT

An arms race appears to have broken out over high-tech patent acquisitions with companies jockeying to pad their intellectual property stores or risk paying a price in legal fees or royalties. That's why speculation abounds about how Apple may react to Google's move to acquire Motorola Mobility and its 17,000 cellphone patents.

Will Apple Snag InterDigital in Hot Patent Pursuit?

Apple may have gained a leg up in the patent wars when it -- along with Ericsson, EMC, Microsoft, Research In Motion and Sony -- outbid Google for Nortel's patent pool, which included some 6,000 patents and patent applications in telecommunications, Internet search and social networking.

Google had offered $900 million for Nortel's IP; the consortium paid $4.5 billion for it. But the search giant's latest acquisition may level the playing field again.

"It's an arms race," said Chris Versace, director of research at Think 20/20 and publisher of The Thematic Investor. The current climate in the patent market is comparable to the arms race between the United States and the Soviet Union in the '70s and '80s, he told MacNewsWorld.

"We would move further -- they would catch up; then they'd move ahead, and we'd have to catch up," Versace explained. "There was a constant move of one-upmanship."

Shrinking Patent Pool

Unlike the resources to produce weapons, quality patent pools in the mobile communications area are drying up, according to Versace.

"The availability of good wireless patent pools has been shrinking," he said.

Patent hunters surveying the landscape see Palm's patents scooped up by HP, Nortel's gobbled up by Apple and others, and now Motorola's gone to Google.

"You're looking around the room trying to figure out what chair you're going to get when the music stops, because the number of chairs is shrinking," Versace said.

One of those chairs still available is InterDigital, which has some 1,300 mobile patents, including a treasure trove of intellectual property in the 3G and 4G area. What's more, the company is ready to cash out on them.

Last month, the concern issued a statement saying its board of directors had "initiated a process to explore and evaluate potential strategic alternatives for the company, which may include a sale or other transaction." To help the company with that process, it was hiring Evercore Partners and Barclays Capital.

The announcement sent InterDigital's stock into orbit; since its release, per share prices have risen 70 percent to hover around $70.

More Than an Auction?

Reportedly, the "process" was to culminate in an auction next week, with bidders to include Apple, Samsung, Nokia and Qualcomm. However, Reuters reported on Wednesday that the event had been postponed until after Labor Day.

When asked to comment, Jack Indekeu, marketing director for InterDigital, told MacNewsWorld that "regretfully, we cannot comment on the timing of the process."

That process could be more than a patent auction, though, he added.

"It's not just about the patents," said Indekeu. "We're looking at what we can do with the entire company. That includes the patents, but also its engineering resources and licensing fees."

Apple did not respond to MacNewsWorld's requests for comment on its interest in InterDigital.

Cold War Strategy

While InterDigital's patent portfolio -- especially its 3G and 4G patents -- is attractive to patent hunters, it will take more than just patents alone to motivate Apple to scarf up the company, suggested Gartner analyst Michael Gartenberg.

"Apple is far more focused on creating competitive products and distinguishing themselves in the marketplace through those products, rather than making patent efforts a core point of their strategic approach," he told MacNewsWorld.

Patents aren't as crucial to survival as they're often made out to be, he maintained. "To some degree, these patent issues are somewhat of a cold war. They're serious, but no company has really won or lost in the market because of their patents. In the end of the day, most of these things just get resolved."

"Given the way that Apple typically works," added Gartenberg, "you wouldn't see Apple going out and buying a company just for patents."

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