The current patent war in the mobile phone space is absurd and obscene (this cool chart visualizes that everyone is suing everyone).

I am all for innovation, but we are living in a world in which Microsoft earns more from Android phones than they do from Windows phones.

Now Google has agreed to buy the mobile phone division from Motorola for $12.5 billions (yes BILLIONS). The main reason they are doing so is to get access to the vast patent portfolio that Motorola has. That gives GOOG ammunition to defend itself and Android manufacturers from others that are aggressively building patent portfolios in this area.

Interestingly enough, the Motorola CEO had announced just 4 days ago that they might be using their patent portfolio in a more offensive manner against Android rivals. A move to increase the sales price? Most likely.

Google, which had only around 660 patents or so until recently, many of them search-related, had been attempting to gather a patent portfolio for quite some time. They unsuccessfully bid for the patents of bankrupt Nortel (in typically geeky manner, they bid odd sums that represent weird constants, eg. the number π in billion dollars).
A portfolio of around nearly 800 patents from Novell had already gone to a Microsoft-Apple-EMC-Oracle consortium and the 6,000 Nortel patents went for $4.5bn to a consortium of Apple, Microsoft, RIM, and Sony (among others).

Google had complained about unfair market dominance in the first deal already and the anti-trust agencies had modified the conditions of the deal. The Nortel patent deal increased the pressure from Apple and Microsoft on Google to build up their own portfolio. It is said that Android handset makers are already paying between $5 and $15 per handset to Microsoft, and possibly to other patent holders too.

Patents are supposed to stimulate innovation. But a world in which a 5-year old can patent a way to swing on a swing, is clearly insane and patents fail to work. Academics that are real patent experts, such as Jim Bessen, who have done studies on this agree.

P.S. Why in the world does everyone and his dog has to cite Florian Mueller (I’m not linking there) as the patent expert uncovering important issues. I know that activists and lobbyists can be experts too, but the clear lack of transparency and obvious bias is unsettling.

P.P.S. This deal will make Google the largest supplier of TV set-top boxes.