Microsoft, Apple Consortium Beats Google To Nortel Patents

Nortel Networks has confirmed that it has sold its patent portfolio for $4.5 billion (£2.8bn) to a consortium that includes Apple, Microsoft, Research In Motion, Sony, EMC and Ericsson.

The sale is a blow to Google, which started the stalking horse bidding by offering Nortel $900 million (£562m) for the patents back in April.

Google desired – some would say needed – the patents to stave off increasing litigation in the mobile technology sector.

Google Disappointment

“This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition,” Google said in a statement. “We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers.”

Nortel, which is mired in bankruptcy, struck its deal in a multiday auction, shedding 6,000 patents and patent applications that cover wireless, wireless 4G, web search, social networking, data networking, optical, voice, Internet, service provider and semiconductors.

Nortel’s patent sale is subject to approval by courts in Canada and the United States. The networking company will seek those approvals at a joint hearing 11 July. Nortel aims to close the sale in the third quarter this year.

Nortel was quite pleased with the results, considering the bidding started at under $1 billion (£624m) with Google.

“Following a very robust auction, we are pleased at the outcome of the auction of this extensive patent portfolio,” said George Riedel, Nortel’s chief strategy officer and president of business units. “The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world.”

LTE Demand

J.P. Morgan analysts said last December Google and Apple were gunning for Nortel’s patents for 4G wireless communications, also known as LTE (Long-Term Evolution). This proved prescient, with the Justice Department clearing both rivals to bid for Nortel’s intellectual property.

4G networks are far faster than the current 3G networks. This affords considerable opportunities for smartphone software such as Google’s Android and Apple’s iOS platforms.

Google is patent-poor compared with older, larger companies, a fact Kent Walker, Google’s senior vice president and general counsel, noted in April:

“One of a company’s best defences against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services.”

Oracle is suing Google for patent infringement over its use of Java in its open source Android operating system. Apple has sued HTC and is embroiled in a nasty, increasingly complex legal battle with Samsung over alleged patent infringements.