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    SAN FRANCISCO (AP) — It may be the boldest move yet by a company known for being audacious: Google is spending $12.5 billion to buy Motorola Mobility. But the big prize isn't Motorola's lineup of cellphones, computer tablets and cable set-top boxes.

    It's Motorola's more than 17,000 patents — a crucial weapon in an intellectual arms race with Apple, Microsoft and Oracle to gain more control over the increasingly lucrative market for smartphones, tablets and other mobile devices.

    If approved by federal regulators, the deal announced Monday could also trigger more multibillion-dollar buyouts. Nokia Corp., another cellphone manufacturer, and Research In Motion Ltd., which makes the BlackBerry, loom as prime targets.

    The patents would help Google defend Android, its operating system for mobile devices, against a litany of lawsuits alleging that Google and its partners pilfered the innovations of other companies.

    In addition to the existing trove of patents that attracted Google's interest, Motorola, which introduced its first cellphone nearly 30 years ago, has 7,500 others awaiting approval.

    Phone makers and software companies are engaged in all-out combat over patents for mobile devices. The tussle has been egged on by the U.S. patent system, which makes it possible to patent any number of phone features.

    Patents can cover the smallest detail, such as the way icons are positioned on a smartphone's screen. Companies can own intellectual-property rights to the finger swipes that allow you to switch between applications or scroll through displayed text.

    Apple, for example, has patented the way an application expands to fill the screen when its icon is tapped. The maker of the iPhone sued Taiwan's HTC Corp. because it makes Android phones that employ a similar visual gimmick.

    The iPhone's success triggered the patent showdown. Apple's handset revolutionized the way people interact with phones and led to copycat attempts, most of which relied on the free Android software that Google introduced in 2008.

    Android revolves around open-source coding that can be tweaked to suit the needs of different vendors. That flexibility and Android's growing popularity have fueled the legal attacks. About 550,000 devices running the software are activated each day.

    Many upstart manufacturers, like HTC, had only small patent portfolios of their own, leaving them vulnerable to Apple Inc. and Microsoft Corp.

    Getting Motorola's patents would allow Google to offer legal cover for HTC and dozens of other device makers, including Samsung Electronics Co., that depend on Android.

    The deal is by far the largest Google has pursued in its 13-year history. Motorola Mobility's price tag exceeds the combined $9.1 billion that the company has paid for 136 previous acquisitions since going public in 2004, according to filings with the Securities and Exchange Commission.

    Buying Motorola also would push Google into phone and computer tablet manufacturing, competing with other device makers who rely on Android. The largest makers of Android devices are all supporting a deal that Google CEO Larry Page said was too tempting to resist.

    "With mobility increasingly taking center stage in the computing revolution, the combination with Motorola is an extremely important step in Google's continuing evolution," Page told analysts in a conference call Monday.

    Google pounced on Motorola less than two months after a group including Apple and Microsoft paid $4.5 billion for 6,000 patents owned by Nortel, a bankrupt Canadian maker of telecommunications equipment.

    Leaving no doubt about the mounting antagonism among the companies, Google's top lawyer lambasted Apple and Microsoft for their legal maneuvering earlier this month in a blog post titled "When patents attack Android."

    "We believe this acquisition was solely driven by the ongoing patent war," Sanford Bernstein analyst Pierre Ferragu wrote in a research note, referring to the Google deal.

    Apple and Google were once so close that Google's former CEO, Eric Schmidt, sat on Apple's board. But Google has since rolled out Android and provided hardware makers a way to counter the iPhone and iPad. Schmidt resigned from Apple's board two years ago.

    Microsoft, for years one of Google's most bitter rivals, is desperately trying to make inroads in the mobile device market. John McCarthy, an analyst with Forrester Research, says Microsoft may try to counter Google by pursuing a long-rumored takeover of its partner, Nokia.

    Investors were betting on that possibility Monday. Nokia stock rose 93 cents, or more than 17 percent, to $6.29. Research In Motion stock climbed $2.55, or more than 10 percent, to $27.11.

    Oracle Corp. is seeking billions of dollars from Google in a federal lawsuit alleging that Android owes licensing fees for using the Java programming language that Oracle acquired from Sun Microsystems.

    Buying patent protection offered by Motorola Mobility will be expensive. Although Google has $39 billion in cash and can easily afford it, the price translates to $40 per share, 63 percent above Motorola's stock price before the deal was announced.

    Motorola Mobility Holdings Inc.'s stock soared 56 percent, or $13.65, to $38.12. Google Inc. lost about 1 percent and closed at $557.23.

    The deal will test Page's ability to avoid a clash of cultures while he is still learning the nuances of the CEO job, which he took only four and a half months ago. With 19,000 workers, Motorola Mobility's payroll isn't that much smaller than Google's 28,800.

    It's a coup for Motorola Mobility CEO Sanjay Jha and the company's largest shareholder, billionaire investor Carl Icahn, who had been pressuring Jha to cash in on the patent portfolio. With an 11.4 percent stake in Motorola Mobility, Icahn is in line to be paid more than $1.3 billion.

    Motorola Mobility, based in Libertyville, Ill., has been struggling to come up with a product that has mass-market appeal since it introduced the Razr cellphone in 2005.

    The company had some success with the Droid, one of the first phones to run on Android, but it now ranks a distant eighth in the smartphone market, with 4.4 million units shipped in the second quarter, according to research firm Canaccord Genuity. By comparison, the market-leading iPhone shipped about 20 million.

    An attempt to counter the iPad hasn't paid off for Motorola Mobility, either. In an effort to drum up more demand, the company recently cut the price on the Wi-Fi-only version of its tablet, the Xoom, to $499 from $599.

    The troubles saddled Motorola Mobility with a $56 million loss in its latest quarter, sinking the company's stock price to one of its lowest points since its January spinoff from the old Motorola Inc. The remaining part of that company now runs as Motorola Solutions Inc. In contrast, Google earned $2.5 billion in its most recent quarter ending in June.

    ___

    Svensson reported from New York. AP Technology Writer Barbara Ortutay in New York contributed to this story.

     

    46 comments

    • OG  •  9 mths ago
      It is scadalous that the patent system allows companies to "protect" such UI behaviors as the "application filling the screen when an icon is tapped". This is an absolutely unacceptable barrier to innovation and intellectual freedom and would be the equivalent of patenting a phrase like "Hello, how are you?" in our everyday speech. The patent laws are clearly due for a major overhaul.
    • Raymond  •  9 mths ago
      ...and it shall be called Googlerola!
    • Tia  •  9 mths ago
      Google must come out with products that many many many people fall in love with.
    • Lee Ward  •  9 mths ago
      [parody of Metallica's Master of Puppets]

      Google's patent play
      billions pave the way
      if the sale is approved
      feeding off the fear
      of lawsuits that are near
      when Google says
      now I rule you

      legal recourse paved with green
      Motorola Mobile they need
      so they'll be headed to
      the cell phone store near you

      come calling faster
      obey cell master
      competitors burn faster
      obey your master, master

      Google with patents
      not for everything
      the lawsuits will come
      and that's reality
      blinded by speed
      they can't hear the ring
      (master, master)

      just call their name
      when competitors scream
      Google, Google!
      ....
    • Steven  •  9 mths ago
      It Is The Nature Of The World: " NOTHING IS FOREVER " !!!!!!!!!!!!
    • M Live  •  9 mths ago
      Google more like becoming a "me-too" company or "gobble" company. Hey may be that is what corps do, who do I know.
    • Harry  •  9 mths ago
      Didn't realize "people" could be bought and sold here in the good ol' USA!!
    • A Yahoo! User  •  9 mths ago
      but most of these patents are also owned by Motorola Solutions. they should buy that portion of Motorola too
      • Steve 9 mths ago
        Sound like a Motorola Solutions shareholder speaking...
    • lubba  •  9 mths ago
      Yahoo very biased. Only putting out what they want you to read. Cant trust them. I'll be deleting my account in the near future.
    • phriedom  •  9 mths ago
      Patents are about defense. Company A sues company G saying "I have a patent on the way you are opening your windows. I demand you give me a billion dollars or stop making your phone." And company G looks through it's 7000 patents and says "Golly, A, it looks like you are violating my patent on battery meters or something. We could fight it out in court OR I'll pay you a buck to license your patent and you pay me a buck to license mine." And everyone keeps making phones and competes in the marketplace instead of the courtroom. That is what at stake. HTC and Samsung don't have enough patents to fight with Apple and Microsoft, Google is going to give them cover to keep making Android popular.
    • Tia  •  9 mths ago
      Patents are just a political smoke screen that Google is playing. People only care about awesomely great products that they can relate to. Creating and sustaining awesomely great products require talents in Industrial Design, Mechanical Design, Manufacturing Operations, Marketing Management -- all aspects of the complex process of moving a product from the drawing board to the market. Apple's broad-based expertise is mature and far ahead.
      • JasonL 9 mths ago
        Oh? Is "Apple's broad-based expertise is mature and far ahead" the reason the were able to get a patent awarded that no company should have been able to get? Apple was awarded a patent for touch screens that they applied for almost exactly one year ago, and this patent states EXACTLY this.

        [a] computer-implemented method, for use in conjunction with a portable multifunction device with a touch screen display, [that] comprises displaying a portion of page content, including a frame displaying a portion of frame content and also including other content of the page, on the touch screen display.

        Now, go Google this, and find out that I'm 100% correct. After doing that, go Google patent law, especially under the section of prior art. Patents CAN NOT be awarded for something that is or has been in existence previously, and was sold/marketed, OR if the idea was previously published.

        Got those facts straight? Wonderful! Now we get to the problem. Apple was not the first company to make a "portable multifunction device" with a touch screen, as this can be anything from a PDA to a cell phone, and there WERE touch screen cell phones before Apple's iphone. Also, Apple was not the first to make or to sell such a device capable of viewing framed web pages, as it states in their patent.

        So now we come to the final question, how did Apple manage to get such a patent? You might think something is wrong here, since awarding Apple this patent violates patent law, and therefore somehow my argument must be false or incorrect. You might also think that IF Apple was falsely awarded such a patent, then it would easily be shot down in court, and no harm is done. On both accounts, you would be dead wrong. Apple has 75 billion in liquid assets, and it wouldn't surprise me if they outright bought this patent, through some backroom deals and fattening certain people's wallets. It's also a fact that when you have tons of money, you tie up a patent hearing almost indefinitely, and 75 billion would certainly do it. Who would stand to lose more for a few years of fighting Apple's false patent in court? Apple or a company like HTC?

        Apple's only "broad-based expertise" is in business, this is the only area that Mr. Jobs is actually intelligent in. Jobs is now engineer, and has screwed up plenty of devices on his hair brained ideas, from the Apple 3 all the way to the antenna on the iphone 4 (Google those too). While Wozniak was BUILDING the first apple computer, Jobs was designing the font.......yes, that's it, a font, Google that too. But Steve Jobs has a head for business, and that's why Apple is where it's at now. All you have to do is look at everything Apple has done from taking a percentage of all apps and goods sold through the app store, to all the patents it's bought to force competition to a halt, to figure out that Jobs is a great businessman, and a very poor engineer.
    • Richard  •  9 mths ago
      Goodie. Another mega merger consting scarce jobs and creating more of a monopoly. Competition gone. When are people going to wake up to the corporate takeover of our country. Well why not, they already control the political scene -- "they are people too."
    • Merle  •  9 mths ago
      Good move by Google.
    • M Live  •  9 mths ago
      stupid yahoo takes off my messages, if I say "Google Monster "
    • Pat  •  9 mths ago
      There are companies that are buying patents for the sole purpose of being able to sue companies like Google. The larger companies are now buying up companies with patents not for the technology but to protect themselves from these patent lawsuits. Another broken American process.
    • Stan  •  9 mths ago
      Evil, Evil Corporations. How many children will go to bed hungry and how many seniors will have to eat Alpo because Google stole all their food money to buy Motorola. Yep the rich getting richer on the backs of the poor.
      • DM 9 mths ago
        No Stan, The poor staying poor is there own choice. I don't care how hard anyone has had it, there is always a worse story ending in success. I'd like you to find me one poor person that doesn't drink, smoke, watch tv, waste time, complain, and the list goes on and on. Coming from a poor community I know why they are all poor, They think someone is holding them down, when it's really the hundreds of choices they make everyday.
      • DM 9 mths ago
        their*
      • MyNameDoesn'tMatter 9 mths ago
        They don't have to eat Alpo.
    • sarah  •  9 mths ago
      Barriers ( certain types of patents) are set to Slow Progress of the Human Race and Benefit no one in the end.
      • Fristname Lastname 9 mths ago
        why dont you put your energy and time and invent/create something and watch others take away. How does it feel ? You will never know a headache until you get one.
      • JasonL 9 mths ago
        Fristname, what about the Lodsys patents? They went after app developers that were making apps for both Android and iOS because these apps had a button located in the app itself to make payments. This has been done on computers for 20 years now, but because it was in an app designed to run on a mobile phone and not a full sized computer, then Lodsys supposedly has patent rights. I disagree, I don't believe there should be any difference in recognition of a computer, be it desktop, laptop, or cell phone or tablet. These kinds of patents do nothing benefit anyone or anything but someone's wallet, and ARE a barrier to progress.
    • Mike Feldstein  •  9 mths ago
      test
    • D  •  9 mths ago
      How much of that money will be stolen by Obama?
    • Mike Fernandez  •  9 mths ago
      And people say Apple is anti-competitive. I don't see Apple buying up all of its competitors.
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