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Microsoft Forms a Patent Bloc With Apple, EMC, and Oracle

When Novell (NOVL) finally structured an acquisition deal for itself, part included the sale of 882 patents to a consortium backed by Microsoft MSFT). Thanks to a tip received by free and open source software (FOSS) expert Florian Mueller, we learn that Microsoft's partners are Apple (AAPL), Oracle (ORCL), and EMC (EMC). That raises some interesting questions about where these companies are heading and what it means for others in the industry.

The consortium is called CPTN Holdings, which was formed on November 4, 2010. The timing suggests that Microsoft had formed the consortium in early November to undertake the transaction. However, the news left two big unknowns. First, what patents did the consortium get? And second, what other companies were involved?

Although I have yet to see a detailed analysis of the patent portfolio's value, it covers a number of areas, including mobile data networks, electronic licensing of software (likely including apps), and the distribution of multimedia content over the Internet. There could be significant legal defensive and offensive value buried in there.

Mueller's post answered the question of who else was involved. The breakout is fascinating:

  • Apple is a mobile powerhouse and has expanded quickly into tablets, which are somewhere between handsets and either desktops or notebooks.
  • Microsoft is the traditional king of client computing and office productivity software, but is also huge in server operating systems and software. It also wants to quickly grow in cloud computing.
  • Oracle is the market leader in database software. The Sun Microsystems acquisition brought server hardware, the MySQL database, and Java.
  • EMC is not only the market leader in storage, but it controls VMWare, which is the top name in virtualization software.
There are crossovers in markets among these companies, but given how corporations like HP (HPQ), Dell (DELL), IBM (IBM), Google (GOOG), and Cisco (CSCO) are either in multiple technology segments or trying to be, the CPTN Gang of Four is about as close to complementary companies as you can find these days.

Patents have increasingly become weapons in high tech. Just look at the number of actions directly and indirectly targeting Google's Android mobile operating system. Both Google and Apple are supposedly bidders on the Nortel patents, which include a number of fundamental 4G mobile patents.

Efforts to collect patents haven't just been a way to pass the time for small companies that get the nickname troll. For example, Apple has worked with RPX Corporation, which creates defensive patent blocks and allows companies to purchase annual licenses. A corporation the size of Apple that wanted a license would pay between $4.25 million and $5.19 million.

But when that type of defensive block is run by a third party, any company can buy its way in. CPTN seems to be invitation only, meaning that the list of who isn't included is as interesting as the collection of those who are. Especially when you realize that a company like Microsoft has entered into more than 700 technology licensing agreements since 2003, according to a blog post today by the company's chief patent counsel, Bart Eppenauer. Makes you wonder how much an HP or Google or IBM would have to pay to satisfy their competitors who happened to be CPTN shareholders.


Image: user lusi, site standard license.
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