Facebook Acquisition of WhatsApp Lacks a Patent Portfolio Investment Research February 20, 2014 by Maulin V. Shah
Yesterday, Facebook announced that it will pay $4 billion in cash and $12 billion in stock for WhatsApp, plus an additional $3 billion in restricted stock units. As reported by USA Today, the deal ranks as the “fourth-largest technology acquisition of the past decade.”
Over the last two years, Facebook has amassed a large patent portfolio, primarily from purchasing 750 patents from IBM, and another 650 patents from Microsoft (which were originally owned by AOL). However, the deal with WhatsApp appears to be driven by the mobile messaging company’s fast growing user base of 450 million users.
WhatsApp does not have any issued US patents, and the company owns a single published US patent application, US 20120294352, related to multimedia transcoding and formatting of data exchanged between mobile devices. Envision IP also identified three pending unpublished US patent applications that list Jan Koum, co-founder of WhatsApp, as an inventor.
While WhatsApp has enjoyed tremendous commercial success since its founding in 2009, the company has not made significant efforts to obtain patents on its technology. It should be noted that WhatsApp may have additional pending US patent applications that are not yet published. In contrast, Nest has built a portfolio of 100 patents since its founding in 2010.
Companies in the mobile messaging industry may simply not have much novel and innovative technology. For example, SnapChat does not have any published US patent applications, and the company owns a single issued patent, US 8428453.
It is quite possible that many of the IBM and AOL patents owned by Facebook are relevant to instant messaging, group chat, and distributed communication; patents that could potentially protect the WhatsApp platform. Along those lines, we suspect that BlackBerry, HP, and Yahoo may certainly have patent portfolios very relevant to the new breed of mobile messaging technology.
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