Google Sells Motorola

Lenovo... The Chinese company that took over IBM's PC/Laptop business.

any more.

Reports in the market press state Google is off loading Moto for 2 primary reasons. The first is they don't make any money while the second is that being in the handset business hurts the deployment of Android to other manufacturers such as Samsung and HTC. They also reported they got what they wanted, the patent portfolio. The deal with Lenovo includes some patents to be transferred and a license to use others Google retains.

Patents expire. What is going to happen as the patents expire?

Motorola hasn't been a significant participant in the smartphone space for a long, long time. Motorola hasn't been a significant participant in the cellphone market in a very long time.

Patents can be renewed as well. Look at Disney and their images of characters. Virtually all of them are covered by patents and copyrights that have been constantly renewed since the 1930's. Drugs are another.

Patents are not renewed beyond 17 years. Copyrights also have a limited life but as they are much longer (something like the life of the author plus 70 or more years), they might as well be forever. Drugs manage to have the appearance of having an unlimited patent life due to changes the drug makers make. Take two well know drugs for example; originally there was Prilosec. It went off patent and AstroZeneca changed the pill slightly and created Nexium with a new patent. Then they went on a marketing blitz to convince people Nexium was better than off-patent Prilosec (which worked - people paid through the nose for the new drug). Nexium is about to go off patent in May 2014 so it will be interesting to see what they replace it with.

The other drug is Claritin. It went off-patent as well as OTC and Schering-Plough needed to keep the money rolling in. They created patent protected Clarinex which is a slight alteration to the active ingredient in Claritin.

I'm curious to see how this shakes out.

In addition, given the Chinese reputation for installing spyware in pretty much everything ( https://en.wikipedia.org/wiki/Chinese_intelligence_activity_... , http://www.dailymail.co.uk/news/article-2480900/China-spying... ), it'll be interesting to see how much U.S. government business Motorola loses.

Not even close. As others have suggested here, they were more likely concerned that being themselves a phone supplier was a negative factor in Android proliferation than any thought of it fading away.

A bit more on patents--as the wiser poster above pointed out patents DO NOT renew.

Patent portfolio acquisition these days is largely defensive. In a field such as cell phones or PCs, you pretty much can't make a product without transgressing on many, many patents owned by several potential opponents. You like to head into the negotiations with a basket full of patents the other guy has to be violating, just in hope of getting a reasonable outcome.

As to the "why do they violate" point, some of the most valuable patents are preposterously broad (and wholly non-inventive to boot). Even though prior art and obviousness are both supposed to be bars to patent award, once the examiner has let it go, a challenger faces daunting expense and an uncertain outcome in attempting to get a patent overturned.

I only got one patent and one other application in my career, but saw the system up close and personal in various facets in half a dozen cases, some of them major, and one of which destroyed a product for which I was the major developer. (That patent was invalid for prior art, in my firm opinion, but my employer--Daisy Systems--lacked the enormous resources to challenge it, and even so giant a customer as IBM had no interest in spending money in that way to enable purchase of the product they had chosen as best suiting their needs).

There are many drugs that have been on the market for years unchanged with no generic equivalent because the drug companies have had patents renewed/extended. It's usually done through one of the Congress Critters that adds it as a rider to some bill. Every few years somebody does enough bitching and the extended protections are allowed to expire. The cholesterol lowering statins are a prime example. Patents on some technologies are handled in exactly the same manner, the tech company buys a Congress Critter through making a large "donation" to their reelection fund.

Lenovo is just getting cellular hardware... There still exists the Motorola brand of two-way radios that are very popular in the governments sector that is not involved in this deal at all... I will not buy a Motorola cell phone ever now... But would not hesitate to buy two-way radios.

These are 2 different companies sharing a common trademark. The company was split with the two-way business becoming Motorola Connected Solutions maintaining the two-way business which was profitable and the consumer products division being the piece Google bought and now has sold.

Moto radios are like IBM PCs in the 70's and 80's. Nobody gets fired for buying them even though there is other equipment available that does the same job with pretty much the same feature set. It's just all those manufacturers build proprietary features and those are what's sold because they are the differentiators between the brands. With most of Public Safety going digital, those proprietary features ensure brand loyalty and compatibility with your neighbor's digital system. But then, digital systems are like cellular in there are 3 major technologies and they aren't necessarily the same.

There is something that may seem similar which does happen, which is that companies bring out new drugs which are close relatives to existing drugs but are different so that they are able to get a new patent. I think the most famous example of this is Nexium, which is an extremely close relative to Prilosec. Quite generally there is an actual improvement involved, as otherwise it would be pretty hard to move a significant fraction of the sales to the new, more expensive, still patented version. In the case of Nexium I think that improvement is unusually questionable.

But in such cases there's nothing whatever stopping generic production of the original version, and quite generally it actually happens. For example generic Prilosec is omeprazole, and it not only widely available, but Over The Counter.

To address your specific example, nearly all the important statins are now available in generic form precisely because they have gone off patent-right on schedule, no extensions. Even Lipitor, the big gun of the group for years, is generic and cheap now. Pravastatin, the one I take, is generic and so cheap it is almost free.

[subsequent edit: At the time I wrote this I was unaware of the S. 156 drug patent extension process. If you want to learn a bit more about this, Google is your friend. The US Patent and Trademark site gives a list of drugs so extended. I continue to think that Box Car overstated how common this is, how specific extensions are obtained, and the statin impact, but my blanket denial was definitely wrong, and I apologize.]

I guess my moto x will be my last moto product.

One of the indicators for a pharma stock value is what drugs are scheduled to come off patent. So the patent protection does not last forever.

Disclosure and Limitation:

I'm a Patent Attorney. These are my opinions, not legal advice. If you need legal advice, find a competent attorney and pay for it. Patent issues are notoriously fact specific.

Patent Terms:
Patents have fixed terms. When they expire, that's it. Patent coverage can terminate early, such as by the action of a court or other agency declaring a patent invalid, by the owner not paying maintenance fees and allowing the patent to expire early, or by other action of the owner.

In some countries there are very limited extensions for pharmaceutical patents which seek to compensate the owners for the years of expensive hell required to bring a new compound to market. (I will also note that many countries specifically do not allow patents for methods of medical treatment, as being against public policy.)

Patent Families:
One of the ways to extend the coverage on a product is through a series of related patents. In pharmas, this may be through trying to get patents on different combinations of ingredients. A current (bad) example of this is the very common and very inexpensive drug colchicine being transmogrified into the expensive brand-name drug Colcrys. How patents can issue on a drug/treatment known since 1500BC I don't know... But then I don't do pharma work, sticking to physics, electronics, and computer related inventions.

Another way to extend protection is through families of patents in different countries. While a parent case may be filed in the U.S., equivalents can be filed in the EU, Korea, Japan, and elsewhere, giving protection in those countries (if patents issue). Some countries take longer than other (Japan, for example).

Patent ownership, licensing, and transfer:
If you want to buy a brick, you go to a store that has bricks. You give someone money and they give you a brick. You walk away with the brick, and the entire brick.

Patents ain't so easy. Usually. Patents can get messy; they get encumbered. As an example, (big) companies like Moto enter into patent cross-licenses for various reasons. Cross-licenses are like herpes -- once a patent is affected by a cross-license, it's affected for life. What this means is any subsequent purchaser of a patent takes that patent subject to existing cross-licenses (or other encumberances). Same goes with licenses -- licensee takes subject to other licenses. That makes it kind of hard (impossible, really) to sell exclusives to something if you've already given away (licensed, cross-licensed) part of it.

Messing with our brick analogy, the bricks (patents) that Google bought with Moto are likely encumbered. What this means is that Google may not be able to throw those bricks (sue a company for patent infringement) at company Y because company Y already had a cross-license to those bricks through a previous cross-license between company Y and Moto prior to the sale to Google.

Smart people have found other ways to do things with patents that don't have that herpes-like permanence, such as covenants not to sue rather than cross-licenses, but that's another story.

(end of rant)

Now that Google has dumped its hardware capability, what will happen?

Other than Apple, is there any other smartphone player that does both the hardware and software?

One company doing the software and another doing the hardware doesn't work as well as having both functions under the same roof.

Motorola wasn't the first phone company they have tried to go after... they have also tried to acquire Blackberry and a few others looks like they are going to maybe use the name to jump into the smartphone market...just have to wait and see when the dust settles, Canada & USA blocked them from purchasing Blackberry dues to potentially allowing a security risk to the Chinese most of our 2 governments still use Blackberry for higher security features over the other smart phones.

And here I am with a Motorola cell phone without even a camera. Still works well after probably a decade.
Wonder if the cell phone companies will do something to make me get a newer one.

Fred

It depends on the carrier. If you are on VZ or Sprint, you will need to change when they complete the upgrade to using LTE exclusively. The CDMA protocol which carries both their voice and data networks for all the 3G phones and voice for the 4G phones will eventually be shut down and converted to an all LTE protocol riding on a variant of GSM as used by ATT and T-Mobile. The LTE standards being developed which drive the different versions are consolidating into a single underlying protocol which resembles more a GSM type than a CDMA type. It will still be 10 years or more in my estimation before this happens though.

Once the shift is announced, it will be at least 3 years between the announcement and the cut-over, just like they did when they discontinued analog service and everyone went digital.

The whole thing makes me a bit sad though and disappointed: Here we have (yet) a major well established American company with a lot of creativity (in business for 70 years or so, who also invented the cell phone!!!) unable to develop and keep the top market share. They then sell themselves (to Google) who "dump" them to a Chinese company at 50 cents on the dollar.

Another tragic American business story!

The great Austrian economist Joseph Schumpeter helped us think of the useful attributes of this sort of change with the term "creative destruction".

Economies which are configured so that longstanding giant enterprises are almost guaranteed to continue mis-using their human and material assets long after they have gone stale come to regret it.

The thing that makes Apple products so nice is the integration of the hardware and the software. In the other world, the operating system has to be all things to all hardware providers at all times. That is a huge responsibility and burden, especially when having to tiptoe through a maze of patents. Apple products are incredibly simple and easy to use and maintain. I thought for sure Google got it and was going to do a super job of integrating their OS with the Moto hardware and try to give it a go. Apple has a good sized share of the smartphone marketspace when measured by units in the field, but Apple takes home the lion's share of the profits from the smartphone marketspace. Nobody else comes close to Apple.

Won't Google continue to develop hardware? Sounds like Google works with a company (LG) in designing a product to Google's specifications for Google to market.

Google still has use of the patents. Google probably doesn't need the Motorola brand name.

If Motorola couldn't make it on their own, and they had the hardware production capability, what makes you think that Google will now be able to make those same patents productive when relying on outsourcing to produce their handsets?

Google has sold off the hardware side and is now just an OS proprietor. The hardware producers are at the mercy of Google and what Google does with the OS. How long do you think that can last?