Nortel Patent Auction Generates $4.5 Billion for RIM and Other Bidders

Strategic Insights -

The largest patent auction in history has seen a consortium of companies, including Apple, Microsoft, and Sony, emerge victorious, scooping up over 6,000 patents and pending patents from Nortel Networks Corp. for $4.5 billion. This bid, five times the initial offer from Google, raises the value of intellectual property assets and may lead to increased licensing costs for the search engine giant. The winning bid has significant implications for Nortel's legacy, with the patents potentially being used to defend against patent infringement claims, extract licensing revenue from rivals, or develop next-generation mobile capabilities.

Key Takeaways:

  • The winning bid, led by Apple, Microsoft, and Sony, but including other major players like Ericsson and EMC Corp., reached $4.5 billion, significantly surpassing the initial offer from Google.
  • The auction generated a total of more than $7.6 billion in proceeds for Nortel's asset liquidation sale over the past two years.
  • The acquired patents and pending patents cover wireless and Internet technologies, including mobile standards, Internet search, and social networking.
  • RIM (now Research In Motion Ltd.) is among the big winners of the auction, having paid about $770 million for its share of the Nortel patents, and will now be able to roll out wireless devices on 4G platforms like long-term evolution.
  • Google is now vulnerable, as its open-source software platform for Android smartphones has been a lightning rod for patent violation claims.
  • The failure of Google's bid raises doubts about the company's commitment to Android and its community of developers and manufacturers.
  • The patents and pending patents will also help RIM develop next-generation mobile capabilities, including enhanced support for video downloading and advanced gaming.

Statistics:

  • The winning bid of $4.5 billion is five times the initial offer from Google.
  • The total proceeds from Nortel's asset liquidation sale over the past two years reached more than $7.6 billion.
  • RIM paid about $770 million for its share of the Nortel patents.
  • Over 6,000 patents and pending patents were sold as part of the auction.
  • The LTE standard promises greater web connection and browsing speeds, enhanced support for broadband-intensive mobile applications, and will be used to develop next-generation mobile capabilities.

Sources:

  • Toronto Star
  • Bloomberg News
  • General Patent Corp.