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Google Bids Nearly $1 Billion For Nortel Patent Portfolio

Google has bid $900 million (according to the Wall Street Journal) for an extensive patent portfolio owned by the now-bankrupt Canadian company Nortel Networks. The move is primarily defensive, as Google explains in a blog post:

The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation. Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology . . . So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the “stalking-horse bid,” which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google . . .

As a “stalking-horse bid” it represents the price floor. The patents might ultimately go for two or three times that amount.

Other companies potentially interested in the Nortel patents include BlackBerry maker RIM, chip-maker Qualcomm, Ericsson and RPX Corp, which is an organization that acquires patents and licenses them to members on highly favorable terms in exchange for annual fees. Members include Microsoft and Intel, among others. There are also probably other bidders out there.

Nortel has more than 5,300 awarded patents in the US and other countries, some of which cover key wireless and enterprise technologies. It’s quite a trove.

The Google calculation here is pay now to avoid exposure in potential future litigation. Other companies may have similar concerns but may also be interested in licensing revenue. How they value the patents could be different or greater than the value Google is placing on them.

Stock image from Shutterstock, used under license

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