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Tuesday, July 26, 2011, 06:35 am PT (09:35 am ET)

'Apple-Google patent rush' could drive acquisition price up 50%

Apple and Google's interest in securing wireless patents has driven up the cost of intellectual property so much that one potential acquisition is projected to command a 50 percent premium.

One high-profile acquisition target profiled by Bloomberg on Tuesdsay is InterDigital, which owns patents related to high-speed mobile phone networks. Last week, the company said it has hired banks to explore a potential sale, and since then it has gained $1.4 billion in value to $3.2 billion.

But an acquisition of the Pennsylvania-based company may cost more than $5 billion, and potential buyers could pay a 50 percent premium to secure the company's portfolio of 8,800 patents.

InterDigital is seen as the next major target after Apple led a consortium of companies, including Microsoft and Research in Motion, to buy Nortel Networks' patent portfolio for $4.5 billion. Apple paid the lion's share of that sum, contributing $2.6 billion in the acquisition.

The final $4.5 billion selling price was a fivefold increase from the initial bid made by Google. Officials with the search giant have declined to say whether they plan to bid on InterDigital, but the company's general counsel, Kent Walker, said on Monday that he believes patents are "government-granted monopolies" that stifle innovation.

At $4.5 billion, the Nortel patents sale was the biggest in history, Walker said. If InterDigital were to hit its projected, inflated $5 billion selling price, it would be an even larger sale.

InterDigital


Bloomberg said about 15 percent of InterDigital's patents are related to data transfer on mobile phones. Some believe the patents could be more valuable than those auctioned off by Nortel, because InterDigital's portfolio reportedly has more 4G-related wireless patents.

Patent ownership has become a major concern in the wireless industry as lawsuits between competitors have continued to mount. Earlier this month, a judge with the U.S. International Trade Commission made a preliminary ruling in favor of Apple against rival HTC. The presumed violation of two patents has been projected to earn Apple a high royalty rate from the sale of Android-powered devices.

Apple and Finnish handset maker Nokia also had an ongoing legal battle with the ITC, in which the commission's staff sided with Nokia in a preliminary review. Apple and Nokia opted to settle out of court, and Apple is now a licensee of Nokia's patents for an undisclosed ongoing fee.