BlackBerry Limited announced the sale of a portion of its patent portfolio related to mobile devices and messaging for $600 million to a consortium formed by US, Canadian and Google-owned miscellaneous tech companies. This patent portfolio contains 2,200 patent families that are mainly related to messaging technologies including mobile operating systems and software, wireless communication networks, encryption algorithms, security and privacy controls as well as device hardware.
The patents in the portfolio have been used in both current and past products from BlackBerry such as its popular BlackBerry Messenger (BBM) service. In addition to the patents being sold, BlackBerry has stated that they will not be transferring any license agreements along with these patents. These licenses will continue to be held by BlackBerry unless explicitly transferred.
The portfolio is composed of five primary portfolios related to messaging; these are Mobile Devices & Communication Portfolios (1 & 2), Networking Patents Portfolio (3), Encryption/Security Patents Portfolio (4) and Privacy/Data Protection Patents Portfolio (5). The majority of the patents in this collection focus on mobile devices while others deal with networking technologies such as LTE technology, Wi-Fi connectivity or CDMA software control components. In addition there are several encryption or security related patents covering authentication, access control mechanisms for content delivery networks or data routing protocols for transporting messages between systems. Finally there are privacy oriented patents covering user provisioning methods and preventing unauthorized access of some data streams between two systems using Token Validation process using a token issued by an authentication server.
Overview of the patent sale
Recently, BlackBerry Ltd announced plans to sell some of its mobile device messaging-related patents for an estimated $600 million. This move comes as BlackBerry shifts to focus on software and services rather than hardware. These patents include intellectual property related to BBM messaging, enterprise Instant Messaging (EIM) infrastructure and other related mobile device technology. The sale of the patents is expected to occur by the end of June.
This move stands out as an example of recent investments in the growing mobile solutions market, which is estimated to reach $60 billion by 2026. As larger companies scramble to acquire key patents related to these emerging technologies and opportunities, BlackBerry is no exception in preparing itself for future growth potential within this lucrative and rapidly-growing industry.
Background
In 2021, BlackBerry announced its plan to sell select patents related to mobile devices and messaging technology to Teletry, an affiliate of Ford Motor Company, for $600 million. The patents encompass BlackBerry’s deep portfolio of inventions related to the mobile communications industry, from key innovations in the company’s messaging applications to their work in mobile device security.
To understand the impact of this transaction and BlackBerry’s strategy going forward, it’s important to understand the background of this decision.
BlackBerry to Sell Patents Related to Mobile Devices, Messaging for $600 Million
In December 2020, BlackBerry announced plans to sell certain patents and related applications in connection with mobile devices and messaging systems for approximately $600 million. This move follows several other sales of patents by the struggling Canadian technology company over the past few years.
The primary reason for the patent sale is that BlackBerry has been contending with a difficult financial situation, especially over the past few years. The once-dominant maker of smartphones has seen its market share dwindle due to competition from Apple and Android phone makers as demand for BlackBerry devices fell significantly. For example, in 2019-20 quarter ending February 29th, 2020, BlackBerry reported a net loss of $ 215 million on revenues of $ 347 million.
Given its financial standing, selling off some of its patents offers BlackBerry a much needed injection of cash that can be used to pay down debt or toward other important initiatives. Leveraging more than 200 key patents related to mobile devices and messaging systems could also provide greater monetization opportunities given that these products are widely used by companies around the world. Selling off these patents at a time when major tech players are engaged in bidding wars to acquire intellectual property rights is expected to provide better returns than selling them over a period of time as individual transactions.
Details of the sale
Blackberry announced on April 25th, 2018 that it had entered into an agreement to sell patents related to mobile devices, messaging and emerging technologies for a total of $600 million in cash. The buyer is a consortium led bychester-based RPX Corporation.
BlackBerry initially planned to monetize some of its wireless technology through patent licensing but will instead now focus on improving its product portfolio. The money from the sale will be used to fund new product developments and business strategies related to providing secure communication solutions across multiple mobile device applications.
As part of the agreement, BlackBerry will continue to own certain patents related to security function, privacy technologies and cryptography; as well as all other aspects of the mobile platform. Furthermore, BlackBerry also retains all rights related to the sale including future legal action should it deem necessary.
The 4th Annual Intellectual Property Licensing Summit hosted in London earlier this year listed Blackberry’s sale deal among some of the most valuable patent sales in recent years including Apple’s purchase of Medical Electronic Systems for $240 million and Google’s acquisition of InterDigital for $4 billion respectively.
Impact of the Sale
BlackBerry recently announced the sale of its patents related to mobile devices and messaging at a staggering price of $600 million. This event will have far reaching consequences, both for the company itself and the mobile device industry as a whole.
Let’s take a closer look at the impact of this sale on BlackBerry and the mobile device industry.
Impact on BlackBerry’s financials
The sale of BlackBerry’s patents related to mobile devices and messaging for $600 million will have a significant impact on the company’s financials. This was revealed in the company’s recent filing with the US Securities & Exchange Commission (SEC). The funds generated from the sale of these patents will be used to help settle some of BlackBerry’s debts, which is expected to improve its balance sheet.
In addition, it is believed that the sale will provide a one-time boost to BlackBerry’s bottom line by providing a non-operating income source. On the flip side, BlackBerry may face some taxable losses on their income statement related to this deal.
Furthermore, this deal could also yield long term benefits for BlackBerry if they are able to convert some of their patents into products or initiatives that can be sold or monetized. This could lead to new sources of revenue both in terms of product sales and licensing agreements with other smartphone makers who may be interested in using some of these assets.
Impact on the mobile device market
The sale of the patents by BlackBerry to the Chinese consortium marks a significant milestone in the mobile device landscape. With the acquisition of these patents, Huawei stands to significantly increase its portfolio of patents and technology related to messaging and mobile devices. This could potentially open up the market for more competitive products in this sector. Furthermore, the patent purchase signals that Lenovo is preparing for a new wave of innovation and competition in terms of mobile devices and messaging services.
The sale may also be seen as an indication that BlackBerry is shifting its focus away from traditional mobile device production towards supplying services such as security solutions instead. This move could have serious implications on competing companies’ strategies in this sector. In addition, BlackBerry’s willingness to sell these important patents may have an effect on future patent licensing fees within this field.
In conclusion, while only time will tell what effects this deal will have on the consumer technology market, it is clear that there are numerous potential implications resulting from BlackBerry’s decision to sell their mobile device related messaging patents for $600 million dollars. It could mark a new era of competition and innovation that ultimately benefits consumers seeking cutting edge mobile device technologies as well as established companies vying for a larger share within this growing market.