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Optical/IP

Nortel Sells Patents for $4.5B

A consortium of major companies comprising Apple Inc. (Nasdaq: AAPL), EMC Corp. (NYSE: EMC), Ericsson AB (Nasdaq: ERIC), Microsoft Corp. (Nasdaq: MSFT), BlackBerry and Sony Corp. (NYSE: SNE) has won the auction to buy Nortel Networks Ltd. 's remaining patents and patent applications for US$4.5 billion.

The consortium, which triumphed following a multi-day auction, will share more than 6,000 patents and patent applications covering multiple mobile technologies (including Long Term Evolution (LTE)), optical, voice and processors.

Nortel notes in its announcement about the auction result that the patent portfolio "touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking."

Nortel notes there was "significant interest" from "major companies around the world" in the patents. Other names linked to the patent sale prior to the auction include Google (Nasdaq: GOOG), Intel Corp. (Nasdaq: INTC) and patent-holding specialist RPX Corp. The auction process was triggered by a $900 million bid by Google in April. (See Stage Is Set for Nortel's Patent Auction and Google Bids $900M for Nortel's Patents.)

The consortium members have not split the cost of the patents equally, however. RIM is paying $770 million, while Ericsson notes that its contribution is $340 million.

The sale to the consortium requires court approval, with a hearing set for July 21. Nortel expects the sale to close during the third quarter of 2011.

— Ray Le Maistre, International Managing Editor, Light Reading

MMQoS 12/5/2012 | 5:00:28 PM
re: Nortel Sells Patents for $4.5B

Pretty enthused out here as we might now get some of our compensation from 2009 if we live that long.


I worked in the Nortel Santa Clara research lab for 8 years and I can tell you that while the amount seems large even to me, the company was very encouraging and helpful in having employees develop patentable concepts and we did, good ones in many different fields.  So to Jepovich's comment, don't judge Nortel's technical capabilities by only considering the (aged) product portfolio.  Most of my colleagues put the blame on management (pre Zman) and an INCOMPETENT BoD who milked the company for bonuses and cash bennies instead of using the extensive patent portfolio and cash in the bank to develop new products.  


I remember joining the company after the Bay Nets acquisition and a few of us went to Canada and said; invest now in a term which we (Geoff Thompson) invented, Carrier Ethernet.  We even co-founded the MEF to that end as well as proactive work in IEEE802, but the Canadians (not all but the execs) said "SONET forever" and why canabalize a profitable business for something that was unsure!  They even put the President of the Optical Networks div (read ATM) into the CTO spot who of course was not at all ready to "eat his own children" or probably risk his year end bonus.  So it was a classic case of lack of prioritization on new products at a time when the bank had the funds to support development even though the BoD had made some bad acquisitions.


Well the rest is history but don't underestimate the power of that patent portfolio.  Apple et all didn't.  I worked in the semiconductor industry in the '80's and '90's when Nortel had their own CMoS development early and they had some very innovative and now probably fundamental patents in that space.


LTE:  One of the last areas of development areas getting reasonalbly funded before bankruptcy and principally for Verizon Wireless where Nortel would have shared a piece of their biz.


I just was reading some of the questions about some of the previous sale and the accompanying patents.  Note in that most if not all cases, the patents were included either "for use" or "non-exclusive" which to me means that Nortel maintained ownership.  


mmQoS 


 


 


 

zargos 12/5/2012 | 5:00:29 PM
re: Nortel Sells Patents for $4.5B

I found this blurb in Ciana report (http://files.shareholder.com/downloads/ABEA-26H477/0x0xS950123-10-115852/936395/filing.pdf  )








"in connection with the MEN Acquisition, we obtained a non-exclusive license to use patents and other intellectual property controlled or exclusively owned by Nortel in connection with our manufacture, sale and support of a broad range of optical networking and Carrier Ethernet products and services and natural evolutions of such products and services. This license also provides us with an exclusive license to use a narrower set of patents and other intellectual property owned by Nortel in connection with Ciena’s manufacture, sale and support of optical networking and Carrier Ethernet products and services within a narrower field of use and subject to certain limitations. As part of this license, we granted Nortel a non-exclusive license to use the patents and other intellectual property (except trademarks) that we acquired as part of the MEN Business in connection with the manufacture and sale of products and services in the fields of Nortel’s other businesses (including those businesses sold and to be sold to other parties) and natural evolutions of such"


I read elsewhere that Ciena acquired 1100 Nortel patents.  The above seems to indicate that Ciena has the right to use Nortel's other patents.







Anna Molony 12/5/2012 | 5:00:29 PM
re: Nortel Sells Patents for $4.5B

Details of all published patent applications are available through the relevant patent office, which means that details of all Nortel Networks patents and patent applications which have been published (i.e. excluding any filed less than 18 months ago) can be accessed by anyone.


You can carry out patent searches through the European Patent Office's espacenet online patent searching tool, at:


http://worldwide.espacenet.com...


Simply enter 'Nortel Networks' in the search box.


Link to results below:


http://worldwide.espacenet.com...


From the results you can link to copies of all of the patents/patent applications located in the search.


Dr Anna Molony


UK & European Patent Attorney


For and on behalf of Chapman Molony


 

rahat.hussain 12/5/2012 | 5:00:30 PM
re: Nortel Sells Patents for $4.5B

craig,


several questions that one would expect to be answered by diligent reporters:


1) is this the list that was just auctioned? or was this the complete list of all patents issued to nortel, ever?


2) i would think that many of the optical patents went with the men sale to ciena, no?


3) would be good to know if ciena got exclusives on those patents, or did ericsson just scoop all these patents for $350M?


4) i am assuming this sale was exclusive? no?


odo


 


 

fanfare 12/5/2012 | 5:00:31 PM
re: Nortel Sells Patents for $4.5B

I disagree.  I think donegan may have a point.  NT failed, but this does not mean that the R&D that was not even ready for trials, let alone production, did not have some valuable jewels in its chest.  In fact, the price seems to indicate that indeed, there was some pretty significant research being done at NT, though they did not have the time nor the $$ to bring the ideas to fruition.  Either way, it doesn't matter since neither you nor I know the details of all the research, and I'm betting the engineers from those companies have some idea along those lines.


At one time, NT was a leader in FO tele-tech.  There were a lot of good science minded innovators working for the company.   Many patents get filed for tech that is not ready for prime time at the time they are filed.


 

pdonegan67 12/5/2012 | 5:00:32 PM
re: Nortel Sells Patents for $4.5B

To repeat what I said- "At first glance this might appear to be an era-defining milestone. Then again, perhaps all it does is reaffirm and encapsulate mobile industry trends that have been evident for the last three or four years."


And valued at $4.5 billion, I'd have thought that the importance of the patent portfolio, and the preferential rights that a subset of players have secured over it, could reasonably be construed as decidely non-trival.

jepovic 12/5/2012 | 5:00:32 PM
re: Nortel Sells Patents for $4.5B

Era-defining?


I think you are grossly overestimating the importance of Nortel's telecom patents. After all, the company went bankrupt because it wasn't competitive.  I think the main idea for Ericsson was to prevent competitors from catching up - a defensive move. 340 MUSD is not a lot of money - similar to a few month's of R&D expenses.


Also, you are assuming that all parties in the consortium will get access to all patents, which I find far from obvious. Perhaps they have a list already of how to split them up?

sarahthomas1011 12/5/2012 | 5:00:33 PM
re: Nortel Sells Patents for $4.5B

This doesn't bode well for Google and future legal battles.

Rush21120 12/5/2012 | 5:00:35 PM
re: Nortel Sells Patents for $4.5B

A good day for NorTel in it's final flash.

pdonegan67 12/5/2012 | 5:00:37 PM
re: Nortel Sells Patents for $4.5B

 

I had previously speculated on the probability of a consortium-based approach but one centered around traditional telecom players competing head on, and one-on-one, with the industry’s new Internet-oriented leaders.

I got the consortium part right but the composition wrong. In the end, Apple and Microsoft have made common cause with Ericsson, the wireless industry leader. The pockets of the arrivistes proved far too deep to allow Ericsson to directly replicate its 1999 acquisition of Qualcomm’s CDMA infrastructure assets and critical IPR portfolio on the eve of the 3G era. Ericsson gains a similar strengthening of its position in 4G through this consortium. It has to share its access rights this time round, albeit not with any companies that are direct competitors in its core business of mobile network infrastructure and services.

The two biggest absentees from the consortium are Huawei and Google. But they are big enough that they can bear the exclusion and still be highly competitive - either with cash or further patent development of their own.

ALU and NSN would doubtless have liked some level of involvement but as pure-play infrastructure vendors their exclusion is probably not as detrimental to their prospects as it would have been if they had their own smartphone and devices play.

Samsung is also excluded but already has a very strong 4G IPR portfolio of its own. From that perspective, Samsung loses some part of the competitive advantage that it held versus Microsoft and Apple from this deal rather than emerging as a net loser. And Samsung also retains that IPR edge over Google and many other players in the terminal space.

At first glance this might appear to be an era-defining milestone. Then again, perhaps all it does is reaffirm and encapsulate mobile industry trends that have been evident for the last three or four years.


 

Pete Baldwin 12/5/2012 | 5:00:38 PM
re: Nortel Sells Patents for $4.5B

The sale almost closed on Canada Day ...


Regarding the patents -- Here's a list of what appears to be all Nortel patents as of 2006:


http://www.nortel.com/corporat...


Some of them deal with optical fiber, optical amplifiers -- so maybe a lot of those were in the leftover pile after the MEN sale.

NoCopper 12/5/2012 | 5:00:38 PM
re: Nortel Sells Patents for $4.5B

Thank you Craig, very helpful link.


Doing a quick search on "coherent" did actually bring up some patents, but I guess the key patents on coherent are owned by Ciena now.


 

NoCopper 12/5/2012 | 5:00:39 PM
re: Nortel Sells Patents for $4.5B

I was thinking that Ciena did acquire all the optical patents that came along with the MEN acquistion. Did Ciena select and pick only a subset of the optical patents or is "optical" related to someting else here?

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