Final Nortel patents up for auction
The Canadian Press
Posted: Jun 27, 2011 8:40 AM ET
Last Updated: Jun 27, 2011 11:03 AM ET
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The last of Nortel's assets — patents for Internet search, mobile video and wireless networks that can be used in consumer technology — go up for auction Monday, ending an era for the bankrupt Canadian telecom company.
Internet search engine giant Google has started the bidding at $900 million US. iPhone maker Apple, Swedish telecom company Ericsson and chipmaker Intel are also expected to bid on Nortel's 6,000 patent and patent applications, which could fetch as much as $1.5 billion in the U.S. auction.
"There was a lot of research and development going on at Nortel in its heyday," said Mark Tauschek of Info-Tech Research Group in London, Ont.
Nortel was prolific in getting patents for a "wide swath" of technologies they were working on or would be working to defend itself against patent infringement lawsuits, Tauschek said.
"They were pretty savvy in that respect," said Tauschek, director of research. "That's why the portfolio is as valuable as it is."
The Nortel patents include advanced wireless network technology called Long-Term Evolution networks, which are starting to rollout globally and are able to handle lots of data for TV watching, music listening and video streaming.
The LTE patents are considered jewels in the remaining Nortel assets due to the popularity of mobile devices like smartphones and computer tablets.
The patents also include Wi-Fi technology that connects devices to the Internet when in range of a wireless network as well as data networking, Web search and social networking technology.
The winning bidder will be able to defend itself against potential litigation from other companies who say they had a particular technology first and allege it's being used without a licence, Tauschek said. Or the winner could licence the technology.
Google, also a leading force in the smartphone business with its Android operating system, has said as much. The California company has said it views the acquisition of the Nortel patents as a defence against "an explosion" of patent litigation.
Chinese telecom ZTE Corp. as well as U.S..-based RPX Corp., which could represent a consortium of companies possibly including Canada's RIM, could also be bidders.
Nortel had more than 10,000 employees devoted to research and development.
At its height a decade ago, it was among the world's most advanced developers of telecom equipment but was felled by numerous problems, including challenging market conditions, economic upheaval and an accounting scandal. Former Nortel executives didn't respond to requests for interviews.
Anne Clark-Stewart, spokeswoman for Nortel Retirees and Former Employees Protection Canada, said pensioners hope to get a chunk of proceeds from all of the sales of Nortel's assets to help top up their underfunded company pensions.
Sales of Nortel's assets have totalled about $3.2 billion so far.
Clark-Stewart noted most of Nortel's technology was developed in Canada.
It was, in the majority, developed by Canadian scientists and engineers," she said from Ottawa. "And that money isn't necessarily going to come back to help us."
Pensioner Leo Strawczynski, who developed a number of patents, said Nortel was involved in leading-edge research and worked in conjunction with universities and various standards bodies.
"I spent most of my professional life at Nortel and it's sort of sad to see it all waste away," he said from Ottawa.
"The companies that have acquired Nortel technology have done very well with it, by and large."
Over the last couple of years, Nortel has sold its wireless network business to Sweden's Ericsson for $1.13 billion and its enterprise solutions business to U.S.-based Avaya Inc for $689 million, among others.
Tauschek said Google is the strongest contender for the patents so far.
He said Google would likely be interested in patents that apply to smartphones and smartphone applications. Google's Android operating system runs in smartphones brands such as HTC, Samsung and Motorola and these phones are taking a bite out of RIM and even the iPhone's popularity.
He said if Google is the successful bidder, it could end up selling the wireless technology patents.
"Whoever acquires the portfolio is not going to make a ton of money licensing it and getting royalties from it. I really think it's more of a defensive kind of thing...so you can't get sued."
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