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Nortel sells patents to consortium for $4.5B
Question of the Day
NEW YORK (AP) - A consortium that includes leading smartphone makers Apple and Research In Motion is paying $4.5 billion in cash for about 6,000 patents and patent applications belonging to bankrupt telecom-equipment maker Nortel Networks Corp.
The group prevailed in an auction this week over Google Inc., which had said it planned to bid $900 million in cash for all of Nortel’s remaining patents and patent applications. Phones running Google’s Android system compete with Apple’s iPhone and RIM’s BlackBerry devices.
Nortel’s patents cover many technologies, including data networking, semiconductors and next-generation wireless systems known as fourth generation, or 4G. Nortel said the portfolio “touches nearly every aspect of telecommunications and additional markets … including Internet search and social networking.”
A former tech highflier in the 1990s, Nortel at its zenith had more than 95,000 employees and a market capitalization of nearly $300 billion. At one point in 2000, Nortel accounted for a third of the market value of the Toronto Stock Exchange. But it grew too quickly and overpaid for acquisitions. Nortel also ran into problems, including an investigation into its accounting practices, which led to shareholder lawsuits.
Nortel filed for bankruptcy protection in the U.S. and Canada in January 2009, hobbled by a sharp downturn in orders from phone companies and looming debt payments. The filing came one day before it was due to make a debt payment of $107 million.
It has been selling its operations off one piece at a time since then.
In a statement Friday, Google General Counsel Kent Walker called the outcome “disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition. We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers.”
Google had said it wanted the patents to defend itself against patent lawsuits from other companies until Congress enacts broader changes to the patent system to help reduce such litigation. Google gives away its Android software for free, counting on its wider use to drive usage of other Google services, such as search and maps.
The winning consortium consists of:
_ Apple Inc. of Cupertino, Calif., maker of the iPhone, iPad and other popular devices;
_ Research in Motion Ltd. of Waterloo, Canada, which makes the BlackBerry;
_ Microsoft Corp. of Redmond, Wash., which is pushing phones running on its Windows operating system and operates the search engine Bing;
_ EMC Corp. of Hopkinton, Mass., which makes companies for data storage;
_ LM Ericsson AB of Stockholm, Sweden, which makes wireless equipment; and
_ Sony Corp. of Tokyo, which makes a range of consumer-electronic devices and has a joint venture with Ericsson for mobile phones.
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