Google bid nearly $1 billion Monday for the patent portfolio of Nortel Networks, a bankrupt Canadian communications technology company. Google, a young company holding few patents, wants the Nortel patents to shore up its defenses against a growing number of patent-infringement lawsuits. Nortel is using Google’s bid as the amount other companies must exceed in a bidding war for its patents.
Google’s anemic patent portfolio
Google is under siege by competitors filing patent infringement lawsuits and wants Nortel Networks’ portfolio of 6,000 patents to strengthen its legal position. Nortel said it has entered a “stalking horse asset sale agreement” with Google for $900 million. The stalking horse agreement means that $900 million will be the starting bid in an auction for Nortel’s patent portfolio. Google’s play for Nortel’s patents comes as the company’s Android operating system is named in 37 separate lawsuits. Tech industry experts have said that Android has become such a juicy target because of its rapid spread among handset makers, along with the fact that Google’s patent portfolio is weak compared with its rivals. In 2010, Google received only 282 new U.S. patents and holds just 600 overall. Apple received 563 patents last year. IBM, the 800-pound gorilla of patents for the last 18 years, received 5,896 in 2010. Microsoft has about 17,000 patents in its portfolio.
What’s in Nortel’s patent portfolio?
Google is hoping the acquisition of Nortel patents preserves Android’s momentum as companies like Oracle, Microsoft and Apple sue Google, as well as handset makers using Android. Legal experts have said building up its patent portfolio will put Google in a stronger legal position to withstand their attacks. A stronger portfolio of intellectual property will also give Google the ammunition to go on the offensive with countersuits against its legal enemies. According to Nortel, its portfolio is relevant to nearly every aspect of telecommunications, Internet search and social networking markets. It includes about 6,000 patents and patent applications covering wireless, wireless 4G, data networking, optical, voice, Internet, service provider and semiconductor technologies. Google said Nortel’s patents will give it a more open path to innovation in the open source community with projects like Android and Chrome.
Nortel patent auction scheduled in June
Nortel filed for bankruptcy in 2009, and the company’s creditors are hoping the sale of its patent portfolio will raise more than $1 billion. With the stalking horse bid approaching that number, very few other technology companies can outbid Google. According to Reuters, Apple and Ericsson have expressed interest in Nortel’s portfolio, as well as Rational Patent Exchange (RPX). RPX is unique in that it builds a patent portfolio it licenses to clients for an annual fee. Nortel’s patent auction is scheduled for June. If Google wins and courts in the U.S. and Canada approve the sale, it will be one of Google’s biggest deals next to its purchases of DoubleClick, YouTube and a search deal struck with AOL in 2005.
Financial Times: http://www.ft.com/cms/s/2/401793d0-5ee5-11e0-a2d7-00144feab49a.html#axzz1IaTRPLvA
Information Week: http://www.informationweek.com/news/internet/google/showArticle.jhtml?articleID=229400836&cid=RSSfeed_IWK_All
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