Google may gobble up Nortel patent portfolio for $900 million

Nortel Networks Corporation announced Monday that it and certain of its subsidiaries have entered into a stalking horse (the starting point against which others will bid prior to the auction) asset sale agreement with Google Inc. for the sale of all of Nortel’s remaining patents and patent applications for a cash purchase price of US $900 million.


Nortel Networks Corporation announced Monday that it and certain of its subsidiaries have entered into a stalking horse (the starting point against which others will bid prior to the auction) asset sale agreement with Google Inc. for the sale of all of Nortel’s remaining patents and patent applications for a cash purchase price of US $900 million.

The agreement includes the planned sale of approximately 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios. The extensive patent portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.

This agreement follows a confidential, multi-round bidding process involving several interested companies and consortia from around the world.

“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, Chief Strategy Officer and President of Business Units, Nortel. “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.”

Details of Sale Process
Nortel will file the stalking horse asset sale agreement with the United States 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 Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.

In addition to the processes and approvals outlined above, consummation of the transaction is subject to the satisfaction of regulatory and other customary conditions.

In a blog post, Google discussed its reasoning behind the bid, citing that having “a formidable patent portfolio helps maintain your freedom to develop new products and services.”

As reported by Ben Parr on Mashable.com, Google has fought several patent infringement suits in the past, and may seek to leverage Nortel’s telecommunications patents in its lawsuit with Oracle, which “sued Google last year for IP infringement related to Android’s use of Java (a technology Oracle now owns, thanks to its acquisition of Sun Microsystems).” Parr also proposed that “with tech companies like IBM and Microsoft being granted 3,000 to 5,000 patents per year, it’s easy to see why Google feels the need to play catch-up.”