Will BlackBerry Remain a Rockstar?
The fallout following BlackBerry's restructuring news and subsequent private acquisition offer from Fairfax Financial Holdings has mounted all week, but there are still many unanswered questions surrounding the smartphone maker's future. (See BlackBerry Inks Deal to Go Private and BlackBerry to Cut 4,500 Jobs.)
Among those questions is: What will become of its intellectual property assets, which include BlackBerry 's share of the Rockstar Patent Portfolio?
For those who have forgotten, the Rockstar Patent Portfolio comprises the 4,000 former Nortel Networks patents BlackBerry bought in 2011 along with Apple Inc. (Nasdaq: AAPL), Microsoft Corp. (Nasdaq: MSFT), Ericsson AB (Nasdaq: ERIC), and Sony Corp. (NYSE: SNE). (See DoJ OK's $4.5B Nortel Patent Sale.)
The group spent a combined $4.5 billion to acquire the valuable patents, a deal that closed in March of 2012. While there's been speculation that BlackBerry was trying to sell its stake, no deals have been announced yet.
In the wake of Fairfax's offer to take BlackBerry private, it would appear ownership would just transfer over to the Canadian consortium, but it might not be that simple. As Florian Mueller, a consultant and patent expert, explains it, it's not clear whether BlackBerry could take some patents out of the Rockstar pool or if it can only sell its ownership position in the consortium.
"With a minority stake in a company owning patents, you don't really control the patents -- you just get a piece of the action in financial terms," he writes in an email to Light Reading. "And typically such joint ventures come with restrictions as to whom you can sell your stake to. There can be rights of first refusal (you have to give another shareholder the opportunity to buy your shares), etc."
What happens with Rockstar, he says, depends on how the partnership was structured in 2011, but BlackBerry's related flexibility is very limited.
BlackBerry's valuable, and extensive, patent holdings have been cited as one reason why it has attracted a potential buyer like Fairfax. So far the investor group hasn't commented specifically on the intellectual property, but Fairfax CEO Prem Watsa did tell the Associated Press that the company could make a comeback if it focuses on business users. He also noted that Fairfax doesn't intend to break up BlackBerry or leave Canada if the deal is approved.
BlackBerry now has six weeks to consider other offers. However, it's continuing to suffer in the meantime.
This week, T-Mobile US Inc. said it would pull the plug on BlackBerry device sales in its stores, only supporting the brand through online channels. And now, BlackBerry's manufacturing partner Jabil Circuit is considering cutting ties with the Canadian company.
BlackBerry releases its second-quarter earnings Friday morning, but has decided to cancel its earnings call with investors given its letter of intent with Fairfax.
— Sarah Reedy, Senior Editor, Light Reading