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Apple, Microsoft and four others team-up to buy Nortel patents for $4.5 billion

July 1, 2011 |  8:30 am

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Nortel Networks Corp.'s highly coveted mobile tech patents have a new owner and it isn't Google.

It's Apple and Microsoft, along with Research In Motion, Sony, EMC and Ericsson.

The six companies teamed up to buy the Nortel patents as a group, together spending $4.5 billion for a cluster of more than 6,000 patents and patent applications that many consider crucial to the future of mobile computing technologies.

The patents cover wireless technologies used in phones and tablet computers, wireless 4G data transfer, data networking, optical technologies, voice, Internet, service provider, semiconductors and other highly sought-after patents.

The sale of the patents is a coup for the six-company consortium over Google, which is known for having a weaker patent portfolio than many of its competitors that has left its mobile operating system Android, the world's most popular smartphone operating system, vulnerable to lawsuits. And the lawsuits have come for Google, some still ongoing such as Oracle seeking billions of dollars in a dispute over Android.

Google made a $900-million bid for the patents that was a starting point in the multi-day auction, which began on Monday. Information on how many other bids were made, and by whom, was not released.

"Following a very robust auction, we are pleased at the outcome of the auction of this extensive patent portfolio", said George Riedel, Nortel's chief strategy officer and president of business units, in a statement. "The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world."

The sale is a big one for Nortel, a company dealing with a bankruptcy. The deal is still subject to approval from Canadian and U.S. courts. A decision is set to take place in a joint hearing expected to be held on July 11, the Toronto-based communications company said.

"Nortel will work diligently with the consortium to close the sale in the third quarter of 2011," the statement said.

Florian Mueller, an intellectual property analyst writing for the blog Foss Patents, said he believes Google could have afforded to spend more than $4.5 billion for the Nortel patents, but it didn't, which might show it's not as committed to Android as many might have expected.

"No major industry player is as needy in terms of patents as Google," Mueller said in a statement. "There are already 45 patent infringement lawsuits surrounding Android and makers of Android-based devices have to pay royalties to dozens of rights holders. Just this week, Microsoft announced that three more Android device makers, in addition to HTC, are already paying royalties on Google's Android to Microsoft."

Buying Nortel's mobile patents wouldn't have solved all of Google's Android patent issues at once, but it could have helped tremendously, he said.

"There are many entities asserting rights against Android whose calculus wouldn't have changed if Google had bought those patents," Mueller said. "Oracle is a good example. Its lawsuit would have continued at any rate. But Google lost an unprecedented opportunity to acquire a major bargaining chip that would strengthen it at the mobile industry's intellectual property negotiating table.

"I'm afraid it won't get a similar opportunity in quantitative and qualitative terms anytime soon. It will have to continue to buy up smaller quantities of patents from failed start-ups and similar kinds of sellers."

RELATED:

Google bids $900 million for Nortel patents

Apple gets FTC approval to bid on Nortel mobile patents

Oracle seeks billions of dollars from Google in Java patent lawsuit

-- Nathan Olivarez-Giles

Twitter.com/nateog

Photo: Apple CEO Steve Jobs gives a wave at the conclusion of the launch of the iPad 2 on stage during an Apple event in San Francisco on March 2. Credit: Beck Diefenbach / Reuters

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