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IP, IP Asset, Patent

Nortel Auction Update — Microsoft Says, ‘Hey Google! How Do You Like These Apples?’

First of all, don’t weep for the Google-lemming as it plunges into the Nortel patent canyon … the $25 M break-up fee should cushion its fall. By now you may have heard that mystery bidder Rockstar Bidco emerged victorious from the Nortel auction, acquiring the full kit & caboodle for a mere $4.5 Billion (with a “B”). Joff Wild asks whether things could have gone any worse for Google, since its woefully inadequate portfolio is still so, and its enemies are now armed with a cache of additional patent assets that could make trouble for Google and the Android developers for years to come.

This morning, we all learned the true ownership of Rockstar, composed of Apple, RIM, Sony, Ericsson, EMC and Microsoft. To be sure, Microsoft has been very vocal about the fact that it already enjoys a license to the Nortel patents, so why it would contribute to this consortium is puzzling. The portfolio was already overpriced from an out-licensing opportunity perspective at Google’s $900 MM stalking horse bid, so I doubt very seriously if Rockstar will ever recover its $4.5 B investment, much less turn a profit.

However, Microsoft does have another motive for jumping into the fray. The company vehemently objected to Google’s participation in the bidding process. Moreover, for the benefit its Android patent licensing campaign, Microsoft needs Google to remain vulnerable and helpless to aid its many downstream developers. Thus, if Microsoft’s contribution to this consortium’s bid ($750 MM each, on average) helps ensure that the portfolio stays out of Google’s hands, it might well be worth the expense in the long run. Any additional return Rockstar generates going forward is just gravy.

Did Microsoft help purchase the Nortel patents just out of spite? Who knows. Does it sound like something Microsoft would do? Personally, yes.

As for Nortel itself, Wild asks “How could the company’s board failed to have seen the potential in the patent portfolio that it owned?” Well, personally I don’t think the board should beat itself up too bad. The portfolio is obviously worth $4.5 B today to this particular buyer. However, I think the overwhelming majority of that value is attributed to bidder identities and circumstances than to the quality of the patents themselves.

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Discussion

2 thoughts on “Nortel Auction Update — Microsoft Says, ‘Hey Google! How Do You Like These Apples?’

  1. Considering the company’s bidding strategy on the Nortel patents, one has to wonder whether Google was ever very serious about its bid. If so, hopefully it learned its lesson: next time, instead of Pi, go with Feigenbaum’s constant ($4,669,201,609).

    Posted by patent litigation | July 4, 2011, 9:20 pm

Trackbacks/Pingbacks

  1. Pingback: How Do The Nortel Patent Auction Numbers Measure Up? A Look At Comparable IP Monetization Efforts « Gametime IP - July 5, 2011

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