Optical/IP Networks

Patent Firm Wants In on Nortel Auction

RPX Corp. is the latest company to consider a bid for Nortel Networks Ltd. 's 6,000 wireless patents.

Bloomberg reports that Andrew Kent , an attorney representing the patent-buying firm, confirmed RPX's interest during a May 2 bankruptcy court hearing. The company questioned rules governing joint bids involving multiple companies, Kent told the judge.

RPX also represents Cisco Systems Inc. (Nasdaq: CSCO) and Sony Corp. (NYSE: SNE).

Google (Nasdaq: GOOG) kick-started the auction last month with a $900 million bid for the patents, which BlackBerry has said it wants in on as well. (See Google Bids $900M for Nortel's Patents and RIM May Also Bid for Nortel Patents.)

Why this matters
Greater interest in Nortel's patents means the going price will get steep. Bidders must offer at least $929 million to best Google, according to court rules. And RPX could be prepared to pay up. It has already shelled out more than $250 million on patents since it was formed more than three years ago, and Nortel's patents would give it significant power.

If it wins, RPX would gain control of Nortel's valuable Long Term Evolution (LTE) licenses, which it would dole out to handset makers like RIM and Google's handset partners.

For more
Nortel's wireless and data networking patents represent the bankrupt company's final asset sale, scheduled for June 20. It looks to be a doozy.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

ssereboff 12/5/2012 | 5:05:59 PM
re: Patent Firm Wants In on Nortel Auction

RPX went public yesterday but the $150M IPO is a long, long way from the $!B they'll need for this deal.

ssereboff 12/5/2012 | 5:05:58 PM
re: Patent Firm Wants In on Nortel Auction

There are many different possible business plays.  "Practicing entity" like Google might buy the Nortel patents just to prevent a non-practicing entity (aka patent troll) from asserting the patents against the PE.  The flaw with this rationale is that the NPE will have lots of targets, so the patents are worth more to the NPE than to any one PE.  This is where a purchase by a firm like RPX can make sense -- a bunch of PEs each contribute to the purchase so that none of them will have exposure.  For a PE the patents might also have considerable value in cross-licensing with competitors or discouraging competitors from asserting their own patents against the PE.  I could see that working here because many of Google's competitors have big patent portfolios already.  This would even Google's playing field with Apple, Microsoft and others.

Once you have the basic justification there are lots more that can be done because the buyer probably won't need the entire portfolio.  Individual and groups of patents could be sold or licensed.  For example, a patent buyer like Intellectual Ventures could buy the portfolio and thereby provide risk management to its "investors" and licensees, but could also enforce some patents itself and sell others, both of which IV has done.

Pete Baldwin 12/5/2012 | 5:05:58 PM
re: Patent Firm Wants In on Nortel Auction

Oh that's right - I forgot they were going public. They're off to a decent start, for whatever that's worth.

Pete Baldwin 12/5/2012 | 5:05:58 PM
re: Patent Firm Wants In on Nortel Auction

This is getting nice and dramatic, which is good (speaking as a reporter). But it still all comes down to what Google is willing to pay, doesn't it?

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