Samsung may join a slate of competitors in bidding for InterDigital’s patents, in a move to boost its position in its high-stakes legal battle with Apple.
The world’s second-largest mobile phone maker is looking at InterDigital’s patent portfolio after being approached to make a bid, according to Bloomberg, citing two sources familiar with the matter.
Samsung joins Apple, Google and other potential bidders for the software copyrights, which pertain to mobile technology used to transfer information. InterDigital developed some of the high-speed mobile phone network technology now used by major phone makers around the world, and its patents may fetch up to $5 billion, according to analysts at Algorithm Capital and Dougherty and Co.
The King of Prussia, Penn.-based company said last month it hired bankers as it mulls over the sale.
Samsung’s addition to the list of possible bidders indicates the value of InterDigital’s patents. The increased competition may fuel the auction to record highs, possibly exceeding the $4.5 billion bid for Nortel’s patents by a consortium of tech companies like Apple and Research In Motion.
Patent holdings have become especially valuable as a web of patent-related lawsuits tangles nearly every major technology company. Apple and HTC are currently locked in a legal battle with one another, Google and Oracle are wrangling in a multi-billion dollar suit, and Microsoft has targeted numerous device makers that use Android OS.
The stakes are often high in these cases, which may find companies paying out lucrative licensing fees or royalty agreements as part of settlements. Microsoft, for example, nets $5 in revenue for every HTC handset it sells that carries its patents.
As a result, Samsung may be keen on bidding for InterDigital’s patents, which could strengthen the company’s ongoing legal feud with Apple. The Cupertino, Calif.-based company in April alleged Samsung “slavishly” copied the design and technology of its iOS devices and the two have been in a legal battle ever since.
“InterDigital has a lot of key patents,” said Lee Seung Woo, analyst at Shinyoung Securities Co., to Bloomberg. “The fight between Apple and Samsung is getting serious, so if the assets go to Apple, it could be pretty risky for Samsung. To hedge the risk, Samsung could go ahead with bidding, although they may have to pay a big premium.”
Samsung may have fierce competition for InterDigital’s patents, however. Google’s Android OS is increasingly vulnerable to intellectual property lawsuits, and the company is aiming to ramp up its patent portfolio to better protect it in court. Apple, too, plans to build up its arsenal as it proceeds with its various lawsuits.
The industry-wide patent litigation escalation may therefore spark a gold rush in terms of patent sales, as companies look to build up their patent stores to better protect themselves in court. Eastman Kodak is considering selling of some of its patents, including an image-preview one that may hold special interest for Apple. Since Kodak’s holdings are in high demand, it knows it can set the minimum bid fairly high.
As smartphones and other mobile technology increasingly rely on strong software platforms, companies find themselves forced either to continually innovate or buy patents to ensure no one copies their systems. InterDigital may see quite a few more companies bid for its intellectual property, but the sale may be among the first of many to come.