SAN FRANCISCO—Nortel Networks Corp. has accepted a $900 million "stalking horse" bid from Google Inc. to serve as a starting point in an auction for the bankrupt telecommunications equipment maker's 6,000 patents and patent applications, Nortel said Monday (April 4).
The agreement includes patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios, Nortel (Toronto) said.
In a blog posting, Google (Mountain View, Calif.) said that if its bid is successful it hopes that the acquisition of Nortel's patent portfolio would discourage others from suing Google. The company said it also hopes it would help Google, its partners and the open source community continue to innovate.
Google said it has long argued for meaningful reform of the U.S. patent system to curtail an explosion in patent litigation. The company said Monday that, in the absence of meaningful form, it believes the acquisition of Nortel's patent portfolio is the best long-term solution for Googe, its users and partners.
In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners.
The U.S. Congress continues to work toward patent reform. Last week, competing interests squared off in a hearing over details of a House of Representatives version of a patent reform bill. The Senate passed its own version of patent reform bill (S.23) in a 95-to-5 vote on March 8.
Nortel, which filed for bankruptcy protection in January 2009, has already sold off much of its assets. The company's bankruptcy period was extended to run through June.
"This is an unprecedented opportunity to acquire one of the most extensive and compelling patent portfolios to ever come on the market," said George Riedel, Nortel's chief strategy officer and president of business units, in a statement. "We look forward to what we hope will be a robust auction, following the requisite court approvals, currently expected to be held in June 2011."
Nortel said it would file the stalking horse asset sale agreement with the U.S. Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under U.S. code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice, Nortel said. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required, Nortel said.
I received this response from someone closer to Google: "I saw your comments on the EETimes article, wondering why Google is interested in Nortel patents.
The reason is simple: to protect Android against RIM/BlackBerry and Apple/iPhone.
If Apple or RIM decide to sue Google over software features in Android, how would Google defend themselves? Buying a huge Nortel
warchest gives them plausible means to counter-sue, thus settling out of court. It would keep Apple and RIM from litigating against Google. However, Google could also use it to litigate against Apple or RIM, if it chose to do so.
RIM will probably be bidding on the Nortel patents as well. The more cynical side is to believe that Google wants to set a high price floor to entry, making RIM pay even more for it, potentially weakening the competitor.
I'd also speculate that the Nortel patent warchest includes lots of stuff about network switches. Smart network switches which play an
increasing role in the datacentres, which Google may want to commercialize. That is, they may want to sell a "datacentre cloud solution", which includes servers, network switches, and software, much like Microsoft's Azure, rather than selling the service of using Google's datacentre.
No matter what way you slice it, I see a lot of reasons why Google would like to bid. I'm not sure the reasons add up to $900m, but hey
that's just me"...hope these comments settle the issue "why"...Kris
inlewski says:"Most of these patents have nothing to do with Google business."
but we could modify that sentence a bit and than Google's move makes more sense" Most of these patents have nothing to do with Google's present business....
thank you @yalanand, this slowly is starting to make sense...I am really surprised Google has only 600 patents, for such an innovative company this is very low...compared to 17,000 for Microsoft (I do realize one is much older than the other, still, the difference is very significant)...Kris
Here is some info which i found on FT.com
"Companies including Oracle, Microsoft and Apple have taken aim at Android as it has risen to become the most widely-used software on touchscreen handsets, potentially slowing its adoption and raising the spectre of high licensing fees for hardware makers.
Bulking up on its patent holdings would give Google a stronger defence against such attacks, software industry experts said."
You can check the full info here :
If Nortel was suing Google, the acquisition of patents would be easy to explain. What's Google really up to is totally a mystery. The patent office has been overwhelmed by number of patents. The patent litigation has been increased in the last few years. Would Google's move have anything to do with these problems?
I think the key reason for the bid is already in the article, as in. ....the acquisition of Nortel's patent portfolio would discourage others from suing Google.
This move would portend even bigger forays by Google into the communications and communications control arena. Control the information and the means for users to get it, and that is how you can grow bigger, provided an alternative does not appear.
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