Microsoft, RIM And Partners Mum On Plans For Nortel Patents

Six big technology companies, including Apple, Microsoft, Research In Motion and Sony, just bolstered their intellectual property resources with the purchase of a trove of Nortel Networks’ patents. The patents, which number more than 6,000 and cover nearly every part of telecommunications technology (wireless, 4G, data networking, optical, voice, internet, service provider and semiconductors) were put up for auction in June, about two-and-a-half years after the Canadian telecom equipment manufacturer declared bankruptcy.
The consortium of companies, which also included information management specialist EMC and telecom supplier Ericsson, will pay $4.5 billion for the patents. That amount, which a local Canadian paper called “staggering,” helped the consortium prevail over Google, which filed a “stalking horse” bid of $900 million back in April.
Given the scope of the assets for sale and the number of players involved, the deal could have significant consequences for the telecom and wireless industries, as well as the Internet search and social networking markets. It could also influence the myriad IP battles raging between Apple, Google, Microsoft, Nokia and Samsung, among others.

It’s not clear, however, how the winning companies will utilize the patents. When contacted by Forbes, all declined to comment on their plans or how the patents will be divvied up between the consortium members.
The press releases that accompanied the June 30 announcement don’t shed much more light.  In a written statement, Nortel Chief Strategy Officer George Riedel described the auction as “very robust” and the transaction, in terms of size, dollar value and bidder interest, as “unprecedented.” Indeed, Nortel has been selling off pieces of its business, including patents, for years, without raising anywhere close to this amount.
RIM’s statement was more terse, though it did specify that its portion of the transaction is approximately $770 million. Since that amount is a little more than 1/6 of the overall purchase price, it indicates that some consortium members contributed more than money than others.  (Ericsson, in fact, said it will pay $340 million toward the total.)
Ericsson’s press release was the most revealing. (Apple, EMC, Microsoft and Sony did not issue releases.) In it, Kasim Alfalahi, Ericsson’s Chief Intellectual Property Officer, praised the Nortel patents as a reflection of the company’s “more than 100 years of R&D”. He also contended that the consortium was best-positioned to utilize the patents in “a manner that will be favorable to the industry long term.”
Alfalahi’s reference to the industry’s long-term interests appears to support analyst comments that consortium members wanted to keep the patent trove away from Google.  Only two of the six companies involved –Ericsson and Sony – can be considered supporters of Google’s mobile operating system, Android. That connection is also somewhat indirect; both companies are part owners of Sony Ericsson, which makes Android smartphones.
Most of the rest of the consortium, such as Apple, Microsoft and RIM, preside over operating systems that compete fiercely with Android (iOS, Windows Phone and BlackBerry). Android competitors have been watching its rise warily, especially now that it ranks as the leading mobile operating system both worldwide and in the U.S.
Google seemed disappointed with the outcome. The company released a statement that characterized its auction defeat as a setback for innovation and creativity. It also said it would continue to work to “reduce the current flood of patent litigation that hurts both innovators and consumers.”
The consequences may not manifest themselves for several months. The transaction requires approval by the U.S. and Canadian Bankruptcy Courts. Nortel said it expects the sale to close in the third quarter of this year.