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Big Winners and Losers of Tech Patent Wars

Stocks in this article: AAPLGOOGBBRYMSFTAOLYHOOFB

On the other hand, how can you call Google a loser in this patent war? From the moment Chairman Eric Schmidt took back the iPhone plans to his troops and they quickly pivoted to copy it, they have acted with capitalistic zeal, speed, and effectiveness that would make any Chinese copy-cat pitching phones on the streets of Shenzhen proud.

They've been able to co-opt this smartphone model for Google's goal of world domination -- at least by market share standards -- utterly effectively. It has had to see its partners pay a toll here or there to Microsoft (MSFT) but, in the grand scheme of things, so what?

Who else have been the big winners from the thermonuclear war between Apple and Google?

How about Carl Icahn?

Here's a guy who was sitting on a terrible investment in Motorola (although remember he was in both parts of a company that got split up, not just the Mobility side). If Google hadn't bailed him out by doubling the price of Motorola Mobility overnight, he would have been sitting on a lot of pain in that particular position. Instead, he did very well for himself.

It wasn't an accident. Icahn didn't sit back waiting for the guys in Naperville to figure it out. He was directly involved in haranguing both Motorola and Google management to get this deal done. He deserves full credit. He's been the biggest single beneficiary from the whole patent war.


Don't forget Sanjay Jha, Motorola's CEO at the time of the deal. He inherited a huge albatross when he took over this company. Where would Motorola be today if Google hadn't bought it? Likely gone. Instead, Jha is sipping pina coladas by the pool.

Tim Armstrong of AOL (AOL). Huh? It's true.

Armstrong parlayed the patent skirmish between Yahoo! (YHOO) and Facebook (FB) into a $1.1 billion patent deal to Microsoft, which in turn sold half the portfolio to Facebook. That sale price was as large as AOL's market cap at the time. AOL's stock went up over 40% the day that deal to the low $20s. It was on its way to over $40 in the months to come.

No one has monetized their patent portfolio (from a percentage basis) than Tim Armstrong. Game. Set. Match.

Don't forget that Microsoft has done well for itself forcing all the little Android makers to pay it a toll for each handset sold. That's a nice little revenue stream for Redmond.

The patent wars have certainly not played out the way Steve Jobs or anyone else would have predicted back in 2007 -- or even in 2011.

At the time of publication the author was long YHOO, BBRY and AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.

You can contact Eric by emailing him at eric.jackson@thestreet.com.

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