LG Signs Deal With Intellectual Ventures
LG has joined companies including Samsung, HTC and Research In Motion in deciding to sign a deal with patent licensing company Intellectual Ventures.
Among mobile phone manufacturers, Pantech, the Korean phone maker, has also agreed to license the patents, but Motorola is instead fighting Intellectual Ventures in court.
As part of the agreement, LG has access to Intellectual Venture's portfolio of 35,000 patents. Intellectual Ventures argues that such deals help the licensee defend itself from litigation.
Most handset makers, when approached by a company like Intellectual Ventures about such a licensing deal, weigh the costs of litigation against the cost of the license and consider what they might gain in either scenario, said Jack Gold, an analyst with Jack Gold Associates. A CEO of a handset maker is thinking, "If I fight it and spend $20 million and 30 years, what do I gain?" he said. "If I'm diverting resources to it, shouldn't I instead go out and do what I'm good at, which is building phones?"
When the licensing cost is reasonable, the answer is often clear. "Sometimes it's easier to pay them to go away than to fight it," Gold said.
Motorola is so far the biggest name in mobile phones to publicly fight Intellectual Ventures rather than sign a licensing agreement.
In October, Intellectual Ventures charged Motorola with infringing six patents. It said it approached Motorola in January about taking licenses but the phone maker refused. That dispute is notable because Google, which is planning to acquire Motorola, is an investor in an arm of Intellectual Ventures.
Companies that have been around for years may be able to leverage their own large patent portfolios in their attempts to resist signing up for a licensing agreement.
Samsung and HTC announced that they'd signed with Intellectual Ventures last year and RIM followed in March.
The mobile phone market has become increasingly litigious, with every major phone maker involved in at least one dispute over patents. Apple and Microsoft have both either sued a number of phone makers or pressured them to sign licensing agreements.
"Everyone is suing everyone else," Gold said. "What's happening now is they're starting to compete based on lawsuits and injunctions rather than products."