Apple consortium beat Google and Intel in bidding war

$4.5bn Nortel patents won by Apple Microsoft consortium

Apple has teamed up with software and telecoms giants to buy Nortel Networks' patents for $4.5bn.

The 6,000 patents and patent applications were auctioned by bankrupt Nortel in the largest public sale of its kind, selling for three times the expected amount - underlining the value of intellectual property in the telecoms world.

"The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world," said George Riedel, Nortel's chief strategy officer and president of business units.

The group consisting of Apple, Research in Motion (RIM), Microsoft, Ericsson and Sony, are expected to share the patents to maximise their scope to pursue patent litigation.

"We believe the consortium is in the best position to utilise the patents in a manner that will be favourable to the industry long term," said Swedish telecoms company Ericsson.

BlackBerry maker RIM will pay $770m of the purchase consideration, and Ericsson will pay $340m.

The other parties did not immediately say what their share would be.

Nortel said it did not expect shareholders to receive any value from the sale, part of its creditor protection proceedings, and that it expected equity interests to be cancelled as a result of the proceedings.

The mobile telecoms industry has seen a wave of legal battles in recent years as long-established incumbents try to protect their position against newcomers.

"The patents are more useful the more you've got, because you can find the one that's applicable to the person who's suing you," said Richard Windsor, global technology specialist at Nomura Securities.

"And then the consortium will go out and seek to make a return by prosecuting the other people, particularly the Android camp."

Google, the newest major entrant to the mobile market with its three-year-old Android software platform, has a weak patent portfolio compared with telecoms rivals and will now be more vulnerable to lawsuits from the auction winners.

The search engine market leader had been expected to be a winner after opening the bidding in April with a $900m stalking-horse bid.

However, Google lost an "unprecedented opportunity" to acquire a major bargaining chip that would strengthen it at the mobile industry's intellectual property negotiating table, said Germany-based intellectual property analyst and blogger Florian Mueller.

"I'm afraid it won't get a similar opportunity in quantitative and qualitative terms any time soon," Mueller added.

Nortel, which filed for bankruptcy protection more than two years ago after struggling for years after the tech bubble burst in a cut-throat telecoms gear market, has now raised a total of about $8bn in asset sales.

The latest sale spans wireless, wireless 4G, data networking, optical, voice, Internet and semiconductor technologies.

The most prized relate to emerging 4G standards such as long-term evolution (LTE).

The patents sale is subject to Canadian and US court approvals that will be sought at a joint hearing expected to be held later this month, Nortel said.

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