Apple & Intel Qualified for Nortel Patent Auction

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Apple Inc. and Intel Corp. have both been qualified as bidders in the upcoming auction for some 6,000 patents being held by bankrupt Nortel. The Wall Street Journal reported that Ericsson AB and an IP holding company called RPX have also been qualified, and all of them will be joining Google, which we reported earlier this week had been cleared by U.S. antitrust regulators for its own bid.

The Journal also reported that the auction has been delayed until June 27th by Nortel in order to give all of these qualified companies time to advance their own talks with the U.S. Department of Justice. Nortel is hoping that the less the bidding companies are concerned about antitrust issues, the more they’ll be willing to bid on the patents.

Once a giant in technology and networking, Nortel declared bankruptcy in late 2009. The company’s vast trove of 6,000 patents in the areas of WiFi, social networking, and LTE wireless networks are among its most valuable assets. The company has acknowledged that the interest level in its patent portfolio is very high, which added to the reasons the company delayed the auction.

Google has already offered an opening bid of $900 million the company terms a “stalking horse” bid. As a young company, Google’s patent portfolio is very light compared to others in the smartphone business, especially when it comes to the hardware side of things. Like Apple, Google is already involved in several patent infringement lawsuits, and the company said it needs Nortel’s patents to add to its defense in these suits.

Google has a large war chest of cash, with more than $36 billion of cash on hand. That’s a little more than half the $70 billion that Richy Rich Apple is expected to have by the end of the June quarter, but it’s more than enough for either companies to make it rain, or even pour, on the heads of Nortel’s bankruptcy trustees.

Even Intel has almost $12 billion in cash, while Ericsson AB has almost $13 billion, giving both companies plenty of ammunition of their own. RPX is the lightweight of the group, with some $156 million, totally the wrong illion for this battle, but the company represents other companies in the area of patent litigation, and it’s certainly possible that the company will have access to other resources at the auction.

In other words, if two or more of these companies are serious about acquiring these patents, it could get expensive. After all, a billion here and a billion there…pretty soon you’re talking real money.

The chart below shows cash on hand for all of the companies that are so far involved in the bidding.

War Chest Chart

Chart by The Mac Observer

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4 Comments

geoduck

Do we know if the patents will be auctioned off in one package, in batches by subject, or one at a time?

Maplethorpe

Nortel did not “declare bankruptcy in late 2009” they entered creditor protection. They are in CCAA status in Canada and have never officially Bankruptcy.

gnasher729

Since “creditor protection” means a company is protected from its creditors when it can’t pay its bills, “bankruptcy” seems to be the appropriate word. It’s exactly the same position as a person that would declare bankruptcy. The next station is forced closing down of the company, we don’t do that with people in the western world.

Maplethorpe

Not sure why I’m replying, but this needs to be cleared up. In Canada there is a very big difference between The Companies’ Creditors Arrangement Act and Bankruptcy. You can learn about it here CCAA In the US, there is a difference between Chapter 11 and Chapter 7.

CCAA is only allowed for companies planning to restructure and they are given a temporary stay on their creditor obligations. Air Canada successfully used CCAA to restructure and re-emerge stronger. Nortel abused the CCAA process by entering it without ever having an intention to restructure; they liquidated their assets without ever declaring bankruptcy.

It is absolutely nothing like personal bankruptcy. Corporate bankruptcy laws are entirely different.

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