CBNweekly Magazine - Interview with Alexander Poltorak

GPC's Chairman and CEO, Alexander Poltorak, was interviewed by CBNweekly - a popular magazine in China with millions of readers - for an article that was published on August 20, 2012. For those who can read Chinese, the article is available to download in two parts: Page 1 and Page 2.

Interview excerpt (in English):

1. You have said that "Before, nobody really paid attention to patents. Now patents are emerging as a new currency." Why has this happened?

[AIP] As the world economy is transitioning from a brick-and-mortar economy into a knowledge-based economy, patents are emerging as the new currency because they capture advances in human knowledge, in technology innovation.

2. What do you think about how Apple and Google went head-to-head over Kodak's patent sale? Kodak said that those 1,100 patents are not the core of its future business. And some one also said that those digital imaging patents are not the core patents Apple and Google want, so that they won't give a high price. So what's your comment about the low bids Kodak may receive? And what kind of patents do you think are valuable for Apple and Google?

[AIP] In a large patent auction, such as the Kodak auction, patent portfolios are typically priced at $100,000 to $250,000 per patent. (Nortel's auction last year and AOL’s sale of its patents to Microsoft were outliers and should not be used as yardsticks.) Based on this metric, the Kodak portfolio comprised of 1,100 patents may be worth between $110 and $275 million. Because Kodak patents are heavily encumbered (by existing licenses, cross-licenses and covenants-not-to-sue) they should be priced at the low end of this spectrum. Furthermore, many Android mobile phone manufacturers, such as Samsung and HTC are already licensed under many of the Kodak patents. Based on these considerations I had predicted that the bids would fall within $100 to $250 million range. As far as we know, all of the bids so far came exactly within this range.

A patent is little more than a license to sue – a call option on patent litigation. It is a weapon of war. Patents are rarely bought to practice the patented invention. Patents are usually bought to fight patent wars – either offensively or defensively. Apple and Google are engaged in a global war, although not directly but through numerous proxy-wars, such as Apple’s wars with Samsung, HTC and Motorola Mobility. Apple and Google are accumulating stockpiles of patents to fight these wars. However, Kodak's portfolio, having been licensed before to many of these companies, has little of their original fire-power left in them. Hence I do not expect this patent auction to attract very high bids.

In your opinion, what is the trend of the patent fight in Silicon Valley, including the patent transactions and lawsuits?

[AIP] The patent wars will continue. As technology is playing an ever-increasing role in our lives, patents – the currency of technology - will be playing an ever-increasing role in business. And because a patent is nothing but a right to sue for infringement, patent lawsuits will become part and parcel of business strategy.