Everyone appears to be in agreement that Google’s planned US$12.5 billion acquisition of Motorola Mobility announced on Monday was prompted by the search giant’s need to bolster its patents portfolio to defend its Android ecosystem. We can only speculate what the price tag would have been if Motorola was valued purely on its current standing in the industry – as a boutique smartphone maker with a single-digit market share – rather than as an industry stalwart that has been around long enough to own much of the IP used to power today’s smartphones.

Let’s assume for a second that the US$12.5 billion valuation was based purely on the patents – with the devices business merely included as a sweetener. We can now attribute a specific value to each of the 24,500 Motorola patents (and patent applications) that Google has acquired. A simple calculation of US$12.5 billion/24,500 works out at US$510,204.08 per patent. Remember that figure because it may be the EXACT market rate for a technology patent.

Don’t believe me? Then let’s look at another recent tech patents deal: Novell’s sale of 882 patents to a Microsoft-led consortium late last year for US$450 million. As before, a simple sum of US$450 million/882 comes in at US$510,204.08 per patent. Grab a calculator and do the sums yourself; it values the patents at exactly the same rate as the Moto-Google deal down to the last cent.

I should at this juncture credit Frost & Sullivan’s Craig Cartier for unearthing this gem. It could be a spooky coincidence; it could be that Google and Moto thrashed out terms using the Novell sale as a precise benchmark; it could be an ancient number used by the Illuminati to signify that the end of days is upon us. I don’t dare investigate further.

It does, however, give us a market rate on which to track the value of the deals being done in the current patents arms race. Prior to Moto-Google, the largest patents sale was the US$4.5 billion paid by an Apple-led consortium for Nortel’s 7,000-strong patents portfolio. This equates to US$750,000 per patent, a hefty 50 percent premium on this market rate. By contrast, up-for-sale IP firm InterDigital, which owns some 8,800 patents and has a market cap of US$3.16 billion (as of Thursday this week), would be a snip for any future purchaser at just US$359,090 per patent.

If all this number crunching sounds like a bit of fun, remember that this is exactly how companies are being valued in the current climate. Take, for example, the iconic photography firm, Kodak, which is set to be the next company set to cash in on the patents land-grab. The 118-year old firm missed the boat as the photography market was siphoned off by camera–enabled smartphones and is worth a fraction of the value it was at its peak in the 1990s. But an investment bank this week estimated that the digital-imaging patents owned by Kodak may now be worth US$3 billion in a sale – some five times more than the company itself. Microsoft and Samsung are thought to be interested.

If Kodak’s IP is acquired, attention will surely turn to Nokia, which – following the Moto sale – is now the last of the old-guard standing. Nokia has some 9,000 patents registered in the US alone and its total portfolio is thought to be even more valuable than Motorola’s – possibly coming with a price tag north of EUR15 billion. Despite its alarming decline in market share as it transitions to Microsoft’s Windows Phone platform, Nokia is still shifting enough devices to be considered more than just an IP shop. But – as with Moto-Google – we may not be far away from Nokia being bought for its patents with its handset manufacturing unit thrown in as an extra.

Matt Ablott

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members