Patent Portfolio Auctions from Commerce One and Nortel Networks
Posted on Mon, Apr 11, 2011
By Catherine Zielinski
Although we usually highlight historically interesting patents on Mondays, today comes with a little bit of a twist: instead of examining single patents, we’ll be highlighting two patent portfolios involved in bidding wars resulting in lucrative rewards. Check out which 7 patents were auctioned of for a cool $15.5 million in 2004, and what patent portfolio was recently bid on for $900 million – in cash!
1) Google Bids $900 Million for Nortel Patent Portfolio
Google recently submitted a bid of $900 million dollars in cash for Canadian telecom-equipment maker Nortel Networks’ patent portfolio. The official bidding will occur in June during a bankruptcy auction, and approximately 6,000 patents and patent applications will collectively be up for sale. The patent collection covers everything from wireless technology to semiconductors. The
As quoted in the Wall Street Journal, Google’s general counsel, Kent Walker, commented in Google’s blog that its “’best defenses against’ patent litigation ‘is to have a formidable patent portfolio.’” Although a substantial number of companies are expected to make bids on Nortel’s patent portfolio, the sheer magnitude of Google’s bid sets the bar very high.
It was also announced that the initial bid by Google includes a breakup fee, guaranteeing $25 million paid to Google if the portfolio is sold to a different bidder. The case will need to be reviewed and cleared by both Canadian and U.S. regulators. In addition to the breakup fee, Google may receive up to $4 million in repayment of legal and other expenses.
2) Novell Purchases Commerce One Patent Portfolio
In December of 2004, seven patents and 32 patent applications owned by Santa Clara software company Commerce One were sold in a live auction. The bankrupt company was liquidating it assets and held a fire sale at the Northern District of California Bankruptcy Court. Commerce One’s Web services-related patents were previously used by IBM, Google, and Microsoft, increasing their value as a possible investment.
Many companies in Silicon Valley using Web services feared that the future owner of these patents could exploit them for financial gain, rather than utilize them for innovation and technologically related purposes. As summarized by the IP Law Blog in 2005, “when the auction commenced, tension ran high as attorneys, IP prospectors, and representatives from hopeful technology companies quickly bid the price of the patents up into the millions of dollars.”
Ultimately, the patents were sold for $15.5 million to JGR Acquisition Inc., an unknown entity represented by Dallas, TX lawyer, Mark Mullin. The high-profile purchase drew confusion from industry members as they searched to learn more about the previously-unknown firm. In mid-2005, The New York Times, among others, reported that the purchase was actually made by Novell, a software company based in Waltham, MA.
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