Science & Technology

Nortel Patents Auction for $4.5 Billion

Note: This article is hosted here for archival purposes only. It does not necessarily represent the values of the Iron Warrior or Waterloo Engineering Society in the present day.

During the internet boom, Nortel was the largest company in Canada, employing 95,000 people worldwide, with a stock value that accounted for one third of the Toronto Stock exchange. After filing for bankruptcy on January 14, 2009, it has been trying to sell off all assets, generating upwards of $7.6 billion. Some of its most valuable assets are its patents and pending patents which cover technologies including mobile communications, social media and internet search.

A group named Rockstar Bidco, which includes Apple, Nortel, RIM, Sony, EMC, and Ericsson, bought Nortel’s 6,000 patents for $4.5 billion on June 30th. The sale resulted in a huge blow to Google and its Android mobile operating system. Google made the initial bid for the patents at $900 million, but the previously mentioned group made an offer five times that amount in later bidding rounds.

The group of tech giants is being accused of unfairly excluding Google. Google would undoubtedly use the patents to protect its open-source Android mobile platform. However, large companies like Microsoft, Apple and RIM do not want this to happen. Apple is presently suing HTC, Samsung and Motorola over technology in their Android phones, and Microsoft is suing Motorola over its Android line.

Google CEO Larry Page denies suspicions that Android is under attack from the increasing pressure of IP litigation. He stated that the company would rather come up with their own patents as opposed to buying them from bankrupt companies. Despite the efforts of its competitors to slow down the growth of the project, Google claims to activate 550,000 Android devices daily and has about 250,000 apps on the Android market.

The seemingly unstoppable force of Google is actually somewhat behind in the intellectual property department. Google has only 600 patents to its name in the US, which is nowhere near the almost 4,000 owned by Apple and 17,000 in Microsoft’s name. This lack of patents has left Google susceptible to legal actions against them as they try to push their open-source Android software. The importance of this bidding war became apparent when Google upped its bid to 4 billion after 18 rounds of bidding. Nortel’s patents, which include Long Term Evolution Wireless technology, could have shielded Google from some of the lawsuits they currently face.

Google has plenty of money and an abundance of brainpower, but it has to come up with a way to level the field in terms of wireless technologies. Presently, they are at risk of being backed into a corner by the legal aspect of the industry. Lawyers seeking to exploit patent law, which is not yet geared to the rapidly-changing tech sector, could potentially do some real damage by slowing the growth of the tech-giant.

The relevance of these patents from Nortel, a company that has been bankrupt for some time, shows how ahead of its time some of the research at Nortel was. One cannot help but wonder how influential this Canadian telecommunications company would be today had John Roth not drove it into the ground in ’00-’01 during the bursting of the internet bubble.