Nortel Networks (fka NRTLQ)

[alexander77]

"The highest bidders at the upcoming auction of Nortel Networks Corp.'s patent portfolio could make losers out of their rivals."


The auction of the defunct telecommunications company's patents will take place in private June 20 at a New York law firm. Google's offer of $900 million for all the patents will start the bidding, but there's no guarantee the tech giant will win, or even that the patents will be sold in bulk.

The roughly 6,000 patents cover everything from mobile data transmission technology to voice-activated control features and would offer buyers the chance to revolutionize numerous telecommunication sectors, including internet advertising and wireless devices.

If the parts go as a whole, one company could lord the portfolio over others and charge other communications companies big bucks to develop any technology that may even hint at using a nuance mentioned in one of the patents. The charges could still remain if the patents are sold piecemeal, the only difference would be that one company wouldn't have a monopoly and the charges -- and probably patent infringement lawsuits -- would likely fly between competitors and alleged potential bidders Google, Microsoft, Apple, Sony Ericsson and Research in Motion.

The patents from Toronto-based Nortel, which filed for Chapter 11 bankruptcy in 2009, could be fetch billions at auction, according to Michael Lennon, a patent litigator and licensing advisor with Kenyon & Kenyon LLP, and result in unknown revenue for the patent's new owners.

"When you have a portfolio of this size, its potential to impact the markets that companies like Google or Apple are operating in, it's huge," said Lennon to the Wall Street Journal. "It's almost unprecedented, almost impossible to put a value on it other than to put it up for auction."

The potential for further ammunition in the raging "patent wars" among major tech companies is helping to ride up the price of the Nortel war chest.

Recently the Supreme Court ruled last week Microsoft illegally used an editing tool Canadian company i4i had a patent on, in a case that would've had widespread ramifications on how patent infringement would be proven. Samsung wants to see Apple devices because Apple has been awarded the right to preview Samsung devices to check for copycatting, and Nokia has sued Apple multiple times for alleged use of their patented technology in iPads and iPhones.

Having a passel of patents like Nortel's would bolster any company's position, especially if lawsuits continue escalating.

Even small companies can get in on the patent fight action. If they're lucky enough to place the highest bid on a patent or two, some small companies make money simply by buying patents like these and suing for infringement or charging for the privilege of using them.

Regardless of how the auction turns out, it's likely winners will use the patents to form new technology, and it's possible anyone trying to create competing technology will be faced with a litigation or a major fee. Or maybe no new technology will be developed, and companies will sit on their patents, watching and waiting for an infringer.

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