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Intel buys RealNetworks' patents and video coding tech

image captionIntel says the patents will help develop more powerful laptops

Intel has agreed to buy about 190 patents from RealNetworks as part of a deal worth $120m (£76m).

The sale also includes a further 170 patent applications anda commitment to co-develop and shareRealNetworks' video encoding software.

Intel says the deal will help it offer "exciting video experiences" on devices using its chips.

Industry insiders say the move undermines recent reports that "the patent bubble" may have burst.

The agreement has been struck against a backdrop of a rising number of lawsuits fought by tech companies accusing each other of infringing their intellectual property.

Recent weeks have seen legal actions filed by Motorola Mobility against Apple, Apple against Samsung, and British Telecom against Google, amongst others.

A victory can allow a company to demand a sales ban of its rivals' products, or force the loser to pay expensive licence fees.

By purchasing part of RealNetwork's library Intel buys itself protection against claims from other firms on the purchased video technologies, and can potentially block rivals using the same techniques.

"The planned acquisition... includes foundational media and other patents, expanding Intel's diverse patent portfolio and strengthening our focus on innovation in new markets," a company spokeswoman said.

"As internet-connected computing expands beyond the PC to nearly every kind of electronic device - including phones, tablets, consumer electronics, cars and other areas not traditionally associated with computing - there is a growing need to deliver exciting video experiences across all these devices."

Courtroom battles

RealNetworks said that the move helped it free up cash which it could use to invest in new businesses.

"We look forward to working with Intel to support the development of the next-generation video codec software and related products," said the firm's chief executive Thomas Nielsen.

The firms say the deal is expected to be completed next month.

A number of high profile patent deals over the past year had led some analysts to claim that a price bubble had developed.

A consortium including Apple, Microsoft, Sony and RIM paid $4.5bn for patents belonging to the bankrupt telecoms firm Nortel Networks last July.

Then in August Google agreed to buy Motorola Mobility and its 23,500 patents for $12.5bn. The search firm also acquired close to 1,200 patents from IBM.

Failed deals

However, two recent developments caused analysts to question the health of the market.

Last Thursday, Kodak filed for bankruptcy protection after struggling to auction more than 1,100 of its digital imaging patents.

Then on Monday the telecoms research firm Interdigital confirmed that it had called off plans to sell its portfolio of 20,000 patents after failing to strike a deal after six months of talks.

The Financial Timessubsequently reportedthat "the bubble-like mood of last summer has started to fade".

Reuters Breakingviews went further writing that the bubble had been "pricked".


Although Intel's purchase is significantly smaller in value than some of the previous deals, one patent lawyer said it would be premature to claim the market had cooled.

"There is still real value and significant strategic advantage to be claimed by striking careful and shrewd deals in the hi-tech sector," said Jonathan Radcliffe, intellectual property partner at the law firm Mayer Brown which acts for a number of technology firms.

"We are increasingly going to see this kind of thoughtful and considered patent portfolio building in the future, especially where the deals compliment [a] company's existing core strengths."

Some analysts admit Google may have overpaid to clinch some of its deals, but say that patents continue to command a premium.

"Intellectual property is still a massively important commodity and there are global consumer electronics titans fighting each other in a cutthroat business," said Ben Wood, director of research at the consultants CCS Insight.

"So long as the litigation continues so will the demand for patents."

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