Google Buys 1,029 IBM Patents: A Bubble Brewing?

Google just bought 1,029 patents from IBM. Blog SEO by the Sea first reported the news. Google subsequently confirmed the purchase on Friday.

SEO by the Sea reported that the purchased patents span a wide range of areas, including SEO, servers, routers, relational databases, object oriented programming, and fabrication and architecture of memory and microprocessing chips.

The purchased patents are listed here. Google did not disclose how much it paid for the patents.

This development has received a storm of attention because of the escalating role of patent lawsuits in the technology world.

"Like many tech companies, at times we'll acquire patents that are relevant to our business needs. Bad software patent litigation is a wasteful war that no one will win," a Google spokesperson said in an emailed statement.

Tech companies primarily compete with each other in the market place with better products and better technologies. However, a big part of their war is also waged in the courts over patent violations. If a patent battle is waged successfully, a company can deter or extract settlements from a competitor.

In an extreme case scenario, it can get a competitor's product banned in the market place.

Currently, the most visible war in the technology space is in the smartphone industry. Apple is embroiled in a nasty international legal war with Samsung. Apple is also battling HTC.

Both HTC and Samsung manufacture smartphones for Google's Android system.

To fight patent wars against each other, companies are going to great lengths to buy patents in an escalating arms race. HTC, for example, recently bought S3 Graphics for $300 million after the company won two patent infringement rulings against Apple in the United States International Trade Commission.

Just a month ago, Google lost a bidding war for 6,000 patents from Nortel Networks. A consortium that included Apple and Microsoft, which are both in the smartphone business, won the Nortel bid for $4.5 billion.

"Patents are instruments of war. Companies are acquiring patents to both defend their market share and to countersue competitors," Alexander Poltorak, a patent valuation specialist and CEO of General Patent Corp, told LA Times.

Currently, U.S. technology companies are choking with cash. Apple alone, for example, hoards over $75 billion. If this trend continues, the tech world could potentially see a patent bubble.