Vertical Computer Systems Inc (fka VCSY)

[lbman]

Is this a little of the pot calling the kettle black?

" Companies trying to unseat Google Inc. from the lead position in the bidding on Nortel Networks Corp.'s patent portfolio have until 4 p.m. Eastern time Monday to take a shot at it. The list of contenders likely will include Microsoft Corp. Apple Inc., Research in Motion Ltd., and perhaps Telefon AB L.M. Ericsson of Sweden, Intel Corp. and China's ZTE Corp.


Francisco Caceres
"We hope and plan for a vibrant auction that will be attended by people world-wide," said Lisa Schweitzer of Cleary Gottlieb Steen & Hamilton, the law firm running Nortel's U.S. bankruptcy liquidation.

Apple, Research in Motion and Ericsson didn't respond to inquiries seeking confirmation they would join in the competition. LTE couldn't be reached for comment, and Intel declined comment. Microsoft issued a statement that said, "Microsoft has a world-wide, perpetual, royalty-free license to all of Nortel's patents that covers all Microsoft products and services, resulting from the patent cross-license signed with Nortel in 2006."

Nortel, of Toronto, filed for insolvency protection around the world in January 2009, and began selling itself off in pieces six months later. This month, Nortel puts its last major asset, a collection of thousands of technology patents and patent applications, on the block after prolonged marketing.

Monday's 4 p.m. bid deadline can be pushed back, under the court-approved rules, if the company and the creditors who will be watching over Nortel's shoulder think it's justified.

Once the bid envelopes are opened, Nortel has time to decide who will actually kick off the bidding. Under the rules, Nortel is required to name the starting bid by high noon at least one day prior to the June 20 auction.

If past auctions are any guide, chances are the starting bid won't come from "stalking horse" Google. By definition, offers that come in Monday have to be higher and better, or at least as good as Google's $900 million proposition, or there won't be an auction at all.

Google's offer is likely just the opening move in a "chess game," said patent litigator and licensing adviser Michael Lennon, who is with Kenyon & Kenyon LLP. Private-equity investors could join bidding teams, as could patent licensing specialists like RPX Corp.

The prospect of picking up the wide-ranging, international portfolio of intellectual property will amp the intensely competitive technology players into "Wild West" mode, Mr. Lennon predicted. Nortel patents confer intellectual property rights over every major area of technology business, from wireless devices to Internet advertising, to voice-activated control packages to next-generation mobile data transmission to optical and data networking.

They are good for defensive uses, warding off infringement actions, as Google has said, and offensive uses, as well. They could also produce ready cash, through licensing.

Much as technology companies like to complain about having their innovations caught up in court fights, Mr. Lennon said, "They are all are asserting their intellectual property rights against each other all the time."

The sheer size of Nortel's portfolio expands the strategic options for buyers, said Robert Merges, a law professor at University of California-Berkeley's Boalt Hall School of Law and co-founder of the Berkeley Center for Law and Technology.

"The way this game is played, someone throws a stack of patents on the table, and someone else throws a stack on the table and the one with the shortest stack comes out on the losing end," Mr. Merges said.

Putting a price tag on individual patents isn't so tough, even in a litigious industry where a single claim of a single patent can mean hundreds of millions of dollars of damages, or tens of millions of dollars of legal costs. Mr. Lennon said appraisers can sit down and come up with an inherent commercial value for a patent "based on how much in damages a person could collect, analyzing profitability in the market of a product and how much is sold."

The final price for Nortel's collection of patents, however, is something that can perhaps only be determined by seeing what the market will bear, Mr. Lennon said.

"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. It's almost unprecedented, almost impossible to put a value on it other than to put it up for auction. Like an Andy Warhol painting, it's not something you can put a number on in traditional ways," Mr. Lennon said."



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