TECHNOLOGY PATENTS AND M&A

There have been quite a few patent deals in the technology sector as of late. Facebook purchased 750 patents from IBM in March, and the company announced last week that it was acquiring approximately 650 patents from Microsoft for $550 million. Just last month, AOL sold 800 patents to Microsoft for $1 billion. Microsoft, since it was focused on a small selection of those patents, decided in turn to sell most of them and was able to come to an agreement with Facebook.

The threat of litigation centered on intellectual property is a key factor driving this M&A activity. For example, Facebook is involved in an ongoing legal dispute against Yahoo, which is accusing the social network of patent infringement.

Berkery Noyes, in its Information Industry press release at the end of 2011, noted that tech companies have been expanding their IP holdings through acquisition. We highlighted Nortel’s $4.5 billion sale of more than 6,000 patents to a consortium that included Apple and Microsoft. Strong competition, especially from Intel and Google, led to a higher valuation of Nortel’s patents than many expected. Although not a member of that consortium, Google made a number of its own patent acquisitions in 2011, particularly from IBM. Likewise, one of the main purposes behind Google’s announced acquisition of Motorola Mobility Holdings is the tech giant’s interest in wireless patents.

INFORMATION INDUSTRY M&A FOR 2011

The Information Industry trends report is defined by Berkery Noyes as covering Media, Software, and Online & Mobile companies.

"Large tech players were heavily involved in intellectual property M&A," said James Berkery, Chief Information Officer at Berkery Noyes. "Strong strategic interest in the sector was evident in 2011. For instance, Nortel sold 6,000 wireless patents in July 2011 for $4.5 billion to a consortium that included Microsoft, Research In Motion, Sony, Ericsson, EMC, and Apple."