Google has bid $900 million for patents from bankrupt Nortel Networks, in an initial "stalking horse" asset sale agreement.
The internet search giant wants the Nortel patents which could help it fight a growing wireless patent war involving its Chrome browser and Android mobile operating system.
The agreement includes the planned sale of approximately 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios.
Google's bid sets a minimum price for other bidders to use as a starting point for their own proposals, and the agreement is expected to draw in higher competing offers from other companies and consortia around the world.
This includes Chinese telecom network company ZTE; Ericsson, which bought most of Nortel's wireless operations; and RPX, which licenses patents for member clients.
Experts say that the final price could go well over $1bn and may be as high as $2bn.
"This is an unprecedented opportunity to acquire one of the most extensive and compelling patent portfolios to ever come on the market", said George Riedel, Nortel's chief strategy officer.
"We look forward to what we hope will be a robust auction."
Nortel, which filed for bankruptcy protection in January 2009 and has sold most of its physical assets, said Google was chosen after a confidential, multi-round bidding process.
Although there has been huge interest in its patents, a deal was delayed as the company's liquidators and potential buyers haggled over price.
The extensive patent portfolio on offer touches nearly every aspect of telecommunications and additional markets including internet search and social networking.
Kent Walker, Google's general counsel, said: "Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories."
Google has pushed its Android mobile phone software to the top of the wireless heap, attracting litigation in the process.
"As the mobile market gets increasingly litigious it comes as little surprise that Google is interested in assets that could help it defend its Android mobile platform against rival patent claims," said Ben Wood, an analyst at CCS Insight.
Oracle is suing Google over Android, while Apple is fighting Taiwan's HTC in what is widely seen as a proxy attack on Android, which runs on HTC smartphones as well as devices from Samsung Electronics, Motorola Mobility and others.
More established mobile vendors have cross-licensing deals with each other, which keeps their patent fees low but makes entrance expensive for newcomers like Apple and Google.
IDC analyst Francisco Jeronimo said the "patent war is getting tougher and expensive" and that it was unclear how widely the Nortel patents have already been licensed.
"The patent system should reward those who create the most useful innovations for society, not those who stake bogus claims or file dubious lawsuits," Mr Walker said.
"If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community - which is integrally involved in projects like Android and Chrome - continue to innovate."
Nortel will file the agreement to a bankruptcy court in Delaware along with a motion on bidding procedures for the auction, which it expects to hold in June.