The Real Deal Behind Yahoo and Microsoft Patents

Last week there was a rumor that Microsoft’s real intention behind acquiring Yahoo is around valuable IP. This article talked about how everyone was scrambling to find out which patent Yahoo held that was so critical to Microsoft.  This was interesting on two levels: 1) what IP asset is so valuable to warrant billions of dollars to purchase Yahoo, and 2) what would Microsoft do with that asset if they acquired it?

While I admit this is the first I had heard of the rumors, I can’t say that I’m surprised.  Microsoft has been heavily attacked on multiple IP fronts with several hundred of millions to billions of dollars judgments against them.  Depending on where they are going in the future, they know the price of not innovating and what it costs to get it wrong.

I think the true take away from the story is that patents are a huge financial asset and are now a large focus of acquisitions.  However, the lack of solutions to find, assess and financially analyze patents is the big pain.  All of Silicon Valley is scrambling to understand what is so valuable, but they will all fail without some synthesis of business, legal and IP/technical information.  For tax accounting, risk analysis, forecasting and financial metrics, patents have been neglected in how companies manage them like true financial assets. 

As more stories like Microsoft surface, I predict the evolution of standard industry financial practices for patents.  The only way to do so will be to interconnect with financial accounting systems, ERP systems, HR systems, etc to get a completely seamless picture of patents as financial assets.  Imagine being able to attribute patents to product revenue, market growth, HR incentives, product planning, SOX compliance reports and tax returns.  All other financial assets have been incorporated into this model, and I predict this will become standard operating procedure within the next 5-10 years. 

As Microsoft knows better than anyone, the value of Yahoo is not just in operations, but in future markets and protection against new threats.  I’m passionate about this future and believe we are at the Early Majority phase where patents will become the first assets to be valued for daily operations.

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