Apple approved to bid on Nortel patents?

  • Posted: 17 June 2011 11:46 PM

    Breaking story at WSJ tonight is that Apple has been approved to bid on over 6,000 Nortel patents.  In the running are Google, Intel, Ericsson and now Apple.

    On June 27 (rescheduled) the auction will start with “Gentlemen…open your checkbook”

    4G LTE, social networking and and assorted other Wi-Fi patents are coveted by the bidders in the expanding mobile market.

    RIM was reported to be interested but DOJ doesn’t take kindly to bouncing checks?  LOL

    http://www.appleinsider.com/articles/11/06/17/apple_approved_to_bid_on_nortel_patents_sources_say.html

         
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    Posted: 18 June 2011 12:38 PM #1

    Mercel - 18 June 2011 02:46 AM

    Breaking story at WSJ tonight is that Apple has been approved to bid on over 6,000 Nortel patents.  In the running are Google, Intel, Ericsson and now Apple.

    On June 27 (rescheduled) the auction will start with “Gentlemen…open your checkbook”

    4G LTE, social networking and and assorted other Wi-Fi patents are coveted by the bidders in the expanding mobile market.

    RIM was reported to be interested but DOJ doesn’t take kindly to bouncing checks?  LOL

    http://www.appleinsider.com/articles/11/06/17/apple_approved_to_bid_on_nortel_patents_sources_say.html

    Oceantomo made a nice heat map of the LTE patents in their review of Googles stalking horse bid back in April.  This would save Apple on future LTE royalties.  I would assume they are worth 1-2% of the wholesale handset sales to the winning bidder.  I would expect Apple would cross license and save on iPhone/iPad royalty costs.

         
  • Posted: 18 June 2011 01:00 PM #2

    If it makes strategic and economic sense, Just Do It.

         
  • Posted: 19 June 2011 12:31 PM #3

    Mercel - 18 June 2011 04:00 PM

    If it makes strategic and economic sense, Just Do It.

    Imagine the royalty payments and and/or earned over the life of the patents for the cost of what Apple already has sitting nicely in the bank.

         
  • Posted: 19 June 2011 01:30 PM #4

    DawnTreader - 19 June 2011 03:31 PM
    Mercel - 18 June 2011 04:00 PM

    If it makes strategic and economic sense, Just Do It.

    Imagine the royalty payments and and/or earned over the life of the patents for the cost of what Apple already has sitting nicely in the bank.

    Lord knows Apple needs something more in “Other Income” than interest income.  :-D

         
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    Posted: 19 June 2011 01:39 PM #5

    DawnTreader - 19 June 2011 03:31 PM
    Mercel - 18 June 2011 04:00 PM

    If it makes strategic and economic sense, Just Do It.

    Imagine the royalty payments and and/or earned over the life of the patents for the cost of what Apple already has sitting nicely in the bank.

    Bill Merritt Nortel (CEO)

    As we talked about on the last call. I think the way to look at them is if you’re as a example the Nortel patent portfolio, I don?t believe today is producing significant amounts of revenue. So there really is a future opportunity, but that future opportunity can be enormous.

    I think Scott mentioned on last call if you just look at it a tenth of a percent royalty increase as a result of the added portfolio on a net present value basis it?s worth $900 million. So that doesn?t immediately improve your earnings in the next quarter but it could substantially increase your share holder value over time. And set out the table that that?s a question the board asked so they paid balance all this year so you are asking all the right questions.


    We are talking long-term billions of connected device, and you protect yourself from the other patent trolls.  The only other likely take-over target with even better IP would be IDCC, which has a current market cap of 1.6B so if they are unsuccessful getting Nortel’s patents, they should go after IDCC, if they did both they would own about 25% of the LTE IP.  Which would be larger then Qualcomm’s share.

    Here is an old Qualcomm document where they say they expect to set the FRAND rate for LTE at 3.25% of handset wholesale price.

         
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    Posted: 19 June 2011 02:12 PM #6

    I’m definitely in favor of fortifying of the IP perimeter. 

    If there are going to be new products, the IP had best already be inhouse.

         
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    Posted: 23 June 2011 08:07 AM #7

    Just wanted to keep this thread on the front page.
    Recap:
    Auction is Friday.
    Google has made opening bid of 900M.
    Apple is approved to bid.

    The Nortel patents cover telecommunications technology used in wireless handsets and networks, as well as Internet search, semiconductors and social networking. The patents may also help protect companies in legal disputes or generate licensing revenue.
    To top Google?s bid, companies have to offer at least $929 million under rules approved by the courts overseeing Nortel?s bankruptcy. The growing interest may boost the price for Nortel?s patents to more than $1 billion, said Rich Ehrlickman, president of Boca Raton, Florida-based patent broker IPOfferings.  Source-Bloomberg

    [ Edited: 23 June 2011 11:22 AM by macglenn ]

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    Posted: 24 June 2011 11:19 AM #8

    According to a few stories the auction will be held Monday 6/27 in New York.

    This article has quite a bit more detail.

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  • Posted: 24 June 2011 11:47 AM #9

    What does the AFB think of Apple’s bidding on these patents?

    Normally, I think of Apple as a company that doesn’t overspend. Like a good house shopper, they determine the maximum that they’re going to spend and if the bidding exceeds that maximum, they walk away.

    However, Apple has been EXTREMELY aggressive with their patent litigation. The Nortel patents are valuable simply as a defensive play. But with Apple’s current penchant for litigating patents, they may well feel that this is an instance where aggressive overbidding is warrented.

    Thoughts?

         
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    Posted: 24 June 2011 11:56 AM #10

    I would only bid to force Google to pay more money.

         
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    Posted: 24 June 2011 12:16 PM #11

    The obvious questions that Apple investigates:

    When do the patents expire ? 

    Do the patents relate directly to iOS products ?  If no, then purchase of the patents is a knee-capping of at least one of the competitors ?

    I speculate that some of the patents pertain directly to development of “iPhone nano.”

         
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    Posted: 24 June 2011 12:22 PM #12

    Not having any idea of what the income from such patents is - or if you’d rather the cost associated with having to pay someone else - it’s hard to say what they’re “worth”.  It could be an interesting auction . . . how high are the contestants willing to go?  Is it a live auction, or sealed bids?

    If it’s a must have item, then Apple surely has the cash.  I assume 1 billion is a low bid.

    If they were really as valuable as they’ve been rumoured to be, I’m surprised that a patent pooling organization hasn’t been mentioned as one of the interested parties.

         
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    Posted: 24 June 2011 12:22 PM #13

    Google is desperate to get these patents to bolster it’s relatively weak patent portfolio.  Their ploy to the DOJ to eliminate bidders is proof of that.

    Apple, I figure, will be paying Nokia close to a billion a year for the recent licensing settlement.  1.5% (licensing fee) x $600 (asp ios devices) x 100M (ios devices sold this year)
    So, licensable patents could be worth billions.

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    Posted: 24 June 2011 12:32 PM #14

    Walker said a $1.5 billion price tag was not excessive, considering licensing and royalty deals can cost a company between $500 million and $1 billion.

    “You need to add in a fear premium from most of the people you hear that are attached to this auction,” said a source close to the situation. “I think for certain people it would be a bad thing if other people got their hands on these patents.”

    Also accepted as a qualified bidder: RPX Corp., a San Francisco, Calif., firm that defensively buys up patents on behalf of other companies to stop them from being used against them by investors.

    [ Edited: 24 June 2011 12:37 PM by jimlongo ]      
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    Posted: 27 June 2011 03:54 PM #15

    Court will review the auction on July 11

    Totally off topic - well not totally, maybe even apropos - I watched this enthralling doc yesterday about the fight over the rights to Tetris,