Consortium snatches Nortel patents from Google

Stuart Corner
Sunday, 03 July 2011 16:34

IT Industry - Deals

A consortium of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony has beaten Google to pay $US4.5 billion for more than 6,000 Nortel patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patents.

Google made the initial play for the patents with a $US900m bid saying its main aim was to defend itself against future patent litigation. Google's senior vice president and general counsel, Kent Walker, responded to the sale by saying: "This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition. We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers."

According to Nortel, "The extensive patent portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking." George Riedel, chief strategy officer and president of business units, Nortel, described the portfolio when the Google bid was announced as "one of the most extensive and compelling patent portfolios to ever come on the market."

Commenting on the sale he said: "The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world."

Kasim Alfalahi, chief intellectual property officer at Ericsson, said: "The Nortel patent portfolio reflects the heritage of more than 100 years of its R&D activities and includes some essential patents in telecommunications and other industries. We believe the consortium is in the best position to utilise the patents in a manner that will be favourable to the industry long term."

Patent blogger, Florian Mueller, commented: "No major industry player is as needy in terms of patents as Google. There are already 45 patent infringement lawsuits surrounding Android and makers of Android-based devices have to pay royalties to dozens of right holders. Just this week Microsoft announced that three more Android device makers, in addition to HTC, are already paying royalties on Google's Android to Microsoft."

Mueller acknowledged that the Nortel patents would not have "solved all of Android's patent issues in one fell swoop," but said that Google had missed a major opportunity that was unlikely to be repeated. He concluded: "In light of Android's patent problems it's surprising that Google didn't outbid everyone else. It could have afforded more than $4.5 billion but it doesn't appear to be truly committed to Android."

The sale is subject to applicable Canadian and U.S. Court approvals which will be sought at a joint hearing expected to be held on July 11. Nortel does not expect creditors to get any of the proceeds from the sale.