Apple Inc. and five bidding partners agreed to buy Nortel Networks Corp.’s remaining patents for $4.5 billion, giving them access to a portfolio of technologies used in mobile phones and tablet computers. The bidding group included Microsoft Corp., Sony Corp, Research In Motion Ltd., Ericsson AB and EMC Corp., Ontario-based Nortel said in a statement. The bid trumped the $900 million Google Inc. had offered before the auction for Nortel’s remaining intellectual property.
Apple Inc. (AAPL) joined with rivals Microsoft Corp. (MSFT) and Research in Motion Ltd. (RIM) to outbid Google Inc. (GOOG) for a patent portfolio from Nortel Networks Corp. and gain rights to technologies for mobile phones and tablet computers.
Bloomberg reports that the group, which also includes Sony Corp. (6758), Ericsson AB and EMC Corp., agreed to pay $4.5 billion in cash for the assets, Ontario-based Nortel said in a statement. The companies aim to complete the sale this quarter pending approval from U.S. and Canadian courts, it said.
The purchase will give Apple, RIM and their bidding partners control over more than 6,000 patents and applications that cover wireless and Internet technologies. The winning offer came after several rounds of bidding and was five times the $900 million Google had offered before the auction for Nortel’s remaining intellectual property.
“This is by far the biggest patent auction in history, both in terms of number of patents sold and in terms of the price tag,” said Alex Poltorak, chairman and chief executive officer of Suffern, New York-based General Patent Corp. “Nobody expected the price to get this high.”
The deal brings together Apple, RIM and Microsoft, which compete against each other in mobile computing, and leaves out Google, which makes the Android software for handset makers such as Samsung Electronics Co. and LG Electronics Inc. The Android alliance has become the leading platform for smartphones.
“Everybody is vying for market dominance,” said Poltorak. “My speculation is that everybody else pretty much got together bidding against Google and Intel.”
The bidding process had multiple rounds with about 150 people in the auction room, according to David Descoteaux, managing director of Lazard Ltd., Nortel’s investment banker.
“It was around-the-clock negotiations,” Descoteaux said in an interview. “We went well into the night.”
The price and the bidding show that companies considered the patents vital to their strategic goals, including the need to defend themselves from patent lawsuits and to roll out future products, Descoteaux said.
“This has woken up the world to what IP means and how companies think about ways of monetizing intellectual property,” he said.
Nortel, which filed for bankruptcy in 2009, fetched more for the patents than the $3 billion it had previously raised by selling almost all its businesses. RIM, maker of the BlackBerry smartphone, will pay about $770 million for its share of the patents, the Waterloo, Ontario-based company said in a statement. Ericsson will pay $340 million, the Stockholm-based networking-equipment maker said. Steve Dowling, a spokesman for Apple, declined to comment beyond the Nortel statement.
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