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 A consortium of Apple, Microsoft, Sony and BlackBerry maker Research in Motion and others have successfully bid for a prized tranche of patents from the bankrupt.
Nortel Networks patent portfolio for $4.5 billion in an auction that saw Google and Intel bow out. The winning consortium also included storage company EMC and Swedish communications company Ericsson.
The result could give Apple and Microsoft a clear advantage in respect of future patents rows according to analysts. Microsoft has already forced a number of companies to pay for using its patented technology which Google infringed upon with its Android mobile operating system. Oracle is locked in a legal dispute against Google with allegations that Android infringed a number of Java patents, and is claiming $6.1 billion in damages. According to analysts, had Google won the bidding for the patents, it would have been better able to protect Android from patent infringement claims as large patent portfolios often serve as a counter-strategy against patent claims by rivals: cross-licensing deals effectively lead to a legal ceasefire. Google as a later entrant in the field has few patents that could be used in such deals. The current Nortel portfolio comprises 6,000 patents and patent applications across wireless, wireless 4G, data networking, optical, voice, internet, semiconductors and other patents. The most valued of these relate to mobile broadband technology that would be used in emerging 4G standards such as long term evolution (LTE). In April, Google opened the bidding at $900 million and Apple and Intel then quickly followed suit. The three companies are relatively new to the highly litigious mobile industry which is witnessing increasing demand for smartphones and tablets. Apple recently concluded a cross-licensing deal with Finnish handset maker Nokia after a long-running patent infringement dispute, the settlement for which is expected to cost the US company many millions of dollars every quarter. According to George Riedel, chief strategy officer and president of business units at Nortel, the size and dollar value for the transaction was unprecedented, as was the significant interest in the portfolio among major companies around the world, according to George Riedel, chief strategy officer and president of business units at Nortel. RIM paid around $770 million, while Ericsson paid $340 million according to separate statements from the companies. Apple and Microsoft have not come out with their contribution or how the ownership of the patents will be split. Analysts conjecture that the most likely scenario was that if the patents were licensed then the companies would receive payments in proportion to their contributions. The sale is subject to approvals by Canadian and US court approvals which is expected to be sought in a joint hearing to be held on 11 July, according to Nortel. The patents are the last among Nortel Network's assets to be sold off. During the 2001 telecoms problems, Nortel was hard hit first by an accounting scandal asnd then again in 2008, the financial crisis led to a rollback of capital spending by some of its biggest wireless customers, including Sprint Nextel, the third-largest US mobile network operator, following which it filed for bankruptcy protection in January 2009. Nortel has since then raised around $3.2 bn for creditors by selling business units.
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