RPX Considering Bid for Nortel’s ‘Nuclear Weapon’ of Technology Patents
By Hugo Miller, Steven Church and Olga Kharif - May 5, 2011
RPX Corp., a patent-buying firm that represents companies including Sony Corp. and Cisco Systems Inc. (CSCO), is considering a bid for Nortel Networks Corp.’s portfolio of technology patents, said an attorney representing RPX.
Nortel, a Canadian phone-equipment maker that filed for bankruptcy in January 2009, is selling about 6,000 patents and patent applications for wireless, wired and digital technologies. Google Inc. (GOOG) offered $900 million for the patents last month, in what Toronto-based Nortel said was a starting point for an auction.
RPX organized a group that is considering a bid for the patents, attorney Andrew Kent said during a May 2 bankruptcy court hearing. The San Francisco-based company had questions about the auction rules governing joint bids by multiple companies, he said.
“We might be one of those parties,” Kent, with the law firm McMillan LLP in Toronto, said in comments to Ontario Superior Court Judge Geoffrey Morawetz in Toronto.
Greg Spector, an RPX spokesman, confirmed that Kent represents the company and declined to comment further. RPX, which began trading yesterday on the Nasdaq Stock Market, climbed $4.88, or 26 percent, to $23.88.
The company has spent more than $250 million buying patents since its inception in July 2008 for companies including Cisco, Sony, Nokia Oyj (NOK1V) and Samsung Electronics Co., according to an investor prospectus. A successful bid would see it control and license wireless-video and LTE, or long-term evolution technology crucial to future generations of smartphones such as Apple Inc. (AAPL)’s iPhone and BlackBerrys made by Research In Motion Ltd. (RIM)
Google’s Bid
To top Google’s bid, companies have to offer at least $929 million under rules approved by the two courts overseeing Nortel’s bankruptcy.
“I believe RPX can go higher,” Peter Holden, a partner at Coller Capital, which reviewed the Nortel portfolio, said in an interview. “The Nortel portfolio is a big threat to everybody. Whoever buys this has a very big nuclear weapon. Moving forward, there’s only RPX and a cash-rich corporation that will counter the Google bid.”
The bidding for the patents may reach as much as $1.5 billion, he said.
Google may want the patents to protect handset makers like Samsung and HTC Corp. that have adapted Google’s Android operating system for mobile devices, Holden said. Companies such as Apple have sued several manufacturers of Android devices alleging patent violations.
RPX Clients
“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 and general counsel for Google, said in an April 4 blog.
A call to Nortel Chief Strategy Officer George Riedel’s office was referred to Nortel’s press office. A message left there was not immediately returned. Jim Brady, a Cisco spokesman, and Lisa Gephardt, a Sony spokeswoman, declined to comment.
RPX’s other clients include SAP AG, Sharp Corp., Verizon Communications Inc. (VZ), Panasonic Corp. and Google, according to the same prospectus. The bidding group for a particular set of patents could include some clients and not others, said Holden.
RIM is also considering a bid, two people familiar with the company’s plans said last month. RIM co-CEO Mike Lazaridis declined to say whether it will bid when asked by an investor at the company’s annual analyst day on May 2.
Nortel filed for bankruptcy after a loss of $5.8 billion as its customers put off spending on new equipment amid the recession. Since then, Nortel has raised about $3 billion for its creditors by selling businesses, with the patents portfolio the last of the major assets to be sold.
The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).
AI
