A consortium comprising Apple, Microsoft, RIM, Sony, EMC and Ericsson kept Nortel Networks' 6,000 patents from patent-poor Google.
Nortel Networks June 30 said it sold its patent portfolio
for $4.5 billion to a consortium comprising Apple (NASDAQ:AAPL), Microsoft(NASDAQ:MSFT), Research In
Motion (NASDAQ:RIMM), Sony, EMC (NYSE:EMC) and Ericsson.
The sale is a blow to Google (NASDAQ:GOOG), which
the stalking horse bidding by offering Nortel $900 million for the
patents back in April.
Google desired-some would say needed-the patents to
stave off increasing litigation in the mobile technology sector.
"This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition," Google said in a statement. "We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers."Nortel, which is mired in bankruptcy, struck
its deal in a multiday auction,
shedding 6,000 patents and patent applications that cover wireless, wireless
4G, Web search, social networking, data networking, optical, voice, Internet,
service provider and semiconductors.
Nortel's patent sale is subject to approval by courts in
Canada and the United States. The networking company will seek those approvals at a
joint hearing July 11. Nortel aims to close the sale in the third quarter this
Nortel was quite pleased with the results, considering the
bidding started at under $1 billion with Google.
"Following a very robust auction, we are pleased at
the outcome of the auction of this extensive patent portfolio," said
George Riedel, Nortel's chief strategy officer and president of business units.
"The size and dollar value for this transaction is unprecedented, as was
the significant interest in the portfolio among major companies around the
J.P. Morgan analysts said
last December Google and Apple were gunning for Nortel's patents for 4G wireless communications, also known as LTE (Long-Term Evolution). This proved prescient, with the Justice Department clearing both rivals
to bid for Nortel's intellectual property.
4G networks are far faster than the current 3G networks. This affords considerable opportunities for smartphone software such as Google's Android and Apple's iOS platforms.
Google is patent-poor compared with older, larger companies,
a fact Kent Walker, Google's senior vice president and general counsel, noted in April:
"One of a company's best defenses against this kind
of litigation is (ironically) to have a formidable patent portfolio, as this
helps maintain your freedom to develop new products and services."
Oracle is suing
Google for patent infringement over its use
of Java in its open source Android operating system. Apple has sued HTC and is
embroiled in a nasty, increasingly complex legal battle with Samsung over
alleged patent infringements.