June 24, 2011

Google bids $900 million USD for Nortel patents

TECHNOLOGY - The juggernauts of the tech industry are set to rumble over the final remains of Nortel Networks Corp. At stake is the liquidation of over 6,0000 of Nortel's wireless-related patents, a veritable treasure trove would allow the owners of those patents control specific key markets and shift the balance of power in the mobile communications market.

The auction is set to begin Monday in New York, and everyone is invited. Foreigners are packing in for a chance to snap up patents that could be very valuable in North America and world wide.

Companies bidding include Google Inc., Apple Inc., RPX Corp. (which is fronting 80 smaller corporations which are interested in a share of the patents), Sweden’s Ericsson AB, and many others. Intel Corp. and Research In Motion Ltd. are also expected to make some bids

Google has already filed a “stalking horse” opening bid of $900 million USD for all the patents. That sets the opening bids at $150,000 per patent.

Nortel Networks filed for bankruptcy protection in early 2009, a day before Nortel was to repay an interest obligation on bonds, which would have amounted to a fraction of its cash reserves. Instead the company decided to take its money and run, vowing to sell off much of its property, patents and reorganize as a smaller company. The latter of which never happened. Its questionable whether bond holders will ever get any of their money back. Its possible now that Nortel is selling off their patents.

Depending on how much money is raised from the auction it increases the likelihood that Nortel will be repaying bond holders. Nortel creditors and former employees/pensioners also have their hands out for more of Nortel's money.

Mike Zafirovski took over as Nortel's CEO in 2005 and promptly ran the company into the ground, losing nearly $7 billion.

Nortel’s horde of wireless patents and pending patents include wireless video communication, Wi-Fi, Internet search technology, social networking, and its next generation mobile data technology.

“The winner of this auction will have what amounts to a nuclear arsenal in the war for mobile market share,” says Alexander Poltorak, chief executive of patent licensing firm General Patent Corp.

Patent licensing is a very lucrative business, often including lawsuits against rival companies who infringe upon patents.

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