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Lazaridis makes impassioned plea to keep LTE tech in Canada, says that RIM and Nortel had an LTE deal before the vendor filed for bankruptcy

RIM CEO Calls Nortel LTE Patents a 'National Treasure'

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
8/7/2009
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BlackBerry 's co-CEO Mike Lazaridis stood up before the Canadian House of Commons industry committee meeting this morning and made a plea to keep Nortel Networks Ltd. 's Long Term Evolution (LTE) know-how in Canada, saying that the two companies had come very close to an acquisition deal both before and after the vendor filed for bankruptcy.

The bulk of the RIM exec's testimony focused on how the maker of the BlackBerry device had tried to cut several deals with Nortel to acquire both Nortel's LTE-related workforce and its intellectual property (IPR) portfolio for months. This IPR, he stressed, is crucial to keep in Canadian hands.

"During this entire process, Nortel knew exactly what it was we were interested in; we came very close to consummating a deal several times... so close that we were sending emails back and forth about issuing a press release," Lazaridis told the committee.

Lazaridis said that RIM had starting talking about acquiring RIM's LTE assets "months before" Nortel filed for bankruptcy in January 2008. (See Nortel Files for Bankruptcy Protection.) He laid out the sequence of events -- as RIM sees them -- for the Canadian politicos this morning:

  • Months before Chapter 11 proceedings, RIM starts talking to Nortel about acquiring LTE assets.
  • RIM believes a deal is in place, is "surprised" by bankruptcy filing
  • The Chapter 11 process means that RIM "increased the scope of bid"; Lazaridis never exactly explains what RIM was bidding for at that stage.
  • Lazaridis once again "thought we had a deal," when RIM finds out about the stalking horse bid from Nokia Networks .
  • RIM sees the non-disclosure agreement (NDA) for the auction procedure. Under the terms of the original stalking horse bid, RIM can only bid for the LTE assets, and the deal doesn't include the IPR that RIM wants. Lazaridis decides that the company won't sign the NDA.
  • RIM issues a press release saying that it would bid $1.1 billion for the LTE and CDMA assets.

Earlier this morning Nortel executives had told the committee that RIM hadn't been allowed in the auction process because it wouldn't sign "the standard" NDA. "The courts have decided there was no shut-out," declared Nortel's chief strategy officer. (See Nortel Could Sell LTE Patents Separately.)

"We had already signed two different NDAs as part of earlier discussions," Lazaridis said. From his perspective, the new NDA would shut RIM out from getting the LTE assets and IPR it actually wanted because under the terms of the agreement it couldn't get both, only the assets and a patent license.

"If we had signed that deal we would not have been able to purchase both at the same time," Lazaridis elucidated, saying that the terms of the auction reduced the value of the LTE IPR for "RIM and other companies."

RIM says the auction was structured this way because it was built on top of the original "stalking horse" bid from Nokia Networks . NSN, it emerged earlier this morning, wasn't interested in the LTE patents, only the workforce. Nortel has said that the auction process was supervised and determined to be fair by the bankruptcy court.

Ericsson AB (Nasdaq: ERIC) eventually trumped NSN in the auction process. Lazaridis used his bully pulpit to call for talks on that auction and the IPR that Nortel holds. Nortel's LTE patent portfolio and development work is,"nothing short of a national treasure that Canada must not lose," he said.

"Before we rush to get rid of things that we believe are very important to Canada's future, all we are asking is that we all get together in a room -- RIM, Ericsson, Nortel, and the government -- and discuss it."

The Canadian parliament could further examine the deal under "net benefit to Canada" and "national security" clauses. Several committee members mentioned such possibilities during the proceedings, but no definite statements have been made yet.

— Dan Jones, Site Editor, Unstrung

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