Nortel experts see real value in patents

Nortel has opened up the bidding for its remaining patents, but industry experts said they could be much more valuable to the new owners in the future.

Nortel has opened up the bidding for its remaining patents, but industry experts said they could be much more valuable to the new owners in the future.

Google Inc said Monday that it planned to spend $900 million US to buy thousands of patents and patent applications from Nortel Networks Corp.

The companies said in separate releases that the deal comprises a so-called "stalking horse bid" in which Nortel chose Google's offer as the first bid. Other bidders may now submit competing bids.

The June auction for the portfolio is expected to attract the elite of the high tech world including Apple Inc, Research In Motion and Ericsson.

And some industry experts said this price is a bargain considering the value of these patents to the winning bidder.

"It's an amazing trove of richness," said Sorin Cohn, a former director at Nortel. "People are talking about $900 million, but Google stands to make anywhere between $5 billion, $10 billion, maybe $15 billion out of these patents that Nortel is putting up through the auctions."

The bid includes the 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 patent portfolio covers nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.

Defensive measure

Duncan Stewart, director of research at Deloitte, for technology, media and telecommunications, pegs the value of the intellectual property at between $1.2 billion and $1.4 billion.

Stewart said the patents could be used as defensive measures against competing companies.

"In today's economy, patents are one of the most important things that a high tech company can have in their portfolios," he said.

"They are used in a defensive way. When somebody sues you for patent infringement, you can turn around and sue them for patent infringement and at the end of the day, hopefully you both go away without interrupting anybody's business."

This was clearly the intention of Google's bid, which said they hoped that by acquiring the extensive patent list, they "create a disincentive for others to sue Google.

"If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community — which is integrally involved in projects like Android and Chrome — continue to innovate," Kent Walker, senior vice-president & general counsel, said on the company's web site.

"In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners."

Pension money

But whatever the price the patents garner, Nortel pensioners hope that they will get their fair share of the price.

Nortel retirees spokeswoman Anne Clark-Stewart her organization will be fighting for a share of the total sales of all Nortel assets along with creditors.

She estimates those assets have brought in at least  $3.2 billion, and some of that money can be used to top up their under funded pensions. Clark-Stewart said the patents should be sold in bundles to bring in more money.