Nortel Shuts Down Big

July 27, 2011 - PRLog -- Former Canadian technology giant Nortel Networks Corp. has auctioned off all its remaining patents for $4.5-billion to a consortium of software companies, which includes a list of big names like Apple Inc., EMC, Ericsson, Microsoft, Research In Motion and Sony. On Friday, Nortel Networks shares were trading 79.80% higher at $0.0899, with volume up from daily average of 6.29 million to 58.97 million. Canada-based Nortel, which filed for bankruptcy back in January 2009, has been selling its assets to repay creditors. The patent sale was delayed by a week after the company received significant interest in the portfolio - 6,000 patents. Earlier the company agreed to sell the patents to Google Inc. for $900 million if any of the competitors’ bids failed to exceed that price. However, the final price fetched by the Nortel shows the value major technology companies placed on the patents. The transaction is expected to be completed in the third quarter of this year and requires approval from U.S. and Canadian bankruptcy courts. The price was about three times the expected amount, underlining the defensive value of intellectual property in the fast-changing world of telecommunications, where established players are seeking to keep out newer rivals.

It was not known how much each of the other companies paid. EMC would only describe the amount as “not material” to its overall finances. The patent portfolio touches nearly every aspect of telecommunications, including Internet search and social networking. In a statement Friday, Google general counsel Kent Walker called the outcome “disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition. We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers.” Google had said it wanted the patents to defend itself against patent lawsuits from other companies until Congress enacts broader changes to the patent system to help reduce such litigation. Google gives away its Android software for free, counting on its wider use to drive usage of other Google services, such as search and maps. The wireless industry has experienced a wave of legal patent battles in recent years as long-established incumbents try to protect their position against newcomers. Some people in the industry see the purchase by a group rather than a single player as better news for the sector overall, since no one company would have a monopoly.

Ten years ago, at its height, Nortel was among the world’s most advanced developers of telecom equipment. But the company was felled by changing market conditions, economic upheaval and an accounting scandal that devastated its stock price. Over the past couple of years, Nortel has sold its wireless network business to Sweden’s Ericsson for $1.13-billion and its enterprise solutions business to U.S.-based Avaya Inc. for $689-million, among others. Some 400 former Nortel employees found themselves abruptly cut off from their long-term disability benefits this year, as part of a court-approved pension settlement between Nortel and its former employees.

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