Northern Telecom Corporation or Nortel is auctioning off its portfolio of patents today. The portfolio contains around 6,000 patents on wireless networks, search technology, mobile technology, optical and voice technology, and semiconductors, among others.
The big names of the mobile industry - Apple, Intel, RIM, ZTE, and Microsoft - are all expected to be at the auction. Nortel has entered into a stalking-horse agreement with Google which puts the opening bid value of the Nortel portfolio at $900 million.
This portfolio of patents is Nortel’s most valuable asset and could be expected to fetch as much as $1.5 billion in the auction. Court papers indicate that the portfolio could be sold whole or split up and sold individually.
Nortel, which was forced to declare bankruptcy in 2009, had given up on restructuring plans and decided to liquidate all assets. The company faced a range of problems that led to them declaring bankruptcy including the recession, accounting scandals, and fierce competition. At the height of its success, Nortel ran a productive research and development operation that allowed it to patent various wireless, telephony, social network adn search engine technologies.
Competitive bidders will be interested in the company’s mobile patents relating to LTE and Wi-Fi technologies. Google has the strongest position in today’s auction with the stalking horse agreement that allows it to set the starting bid. If no bidder exceeds Google’s $900 million offer, the portfolio will be sold to Google for that price, but with the immense interest that the auction has attracted it doesn’t look like that will be the case.
If Google does get to claim Nortel’s patent portfolio, however, that will allow it to protect itself from any further patent litigation. It also allows the winning company to license patents to be used by other companies. Emerging technologies such as LTE and other wireless standards are a valuable asset to the acquiring bidder.
A strong patent portfolio like Nortel’s also allows the chance to develop new products without having to worry about patent litigation down the line. Given the number of patent related lawsuits that have been seen in the recent past, acquiring a patent portfolio like this provides a strong line of defence. However, the acquisition of this portfolio by a company that is aggressively pursuing patent litigation could prove detrimental to the mobile industry.
It is not very often that patents such as Nortel’s are put up for sale, and, with the mobile industry heating up, this auction represents a huge opportunity for interested companies to grab what is left of one of yesteryear’s tech giants. Whichever party win’s today’s auction will acquire a gem of an asset.
