Nortel's Patent Assets Auctioned off at US$4.5 Bil: Google Fails to Win the Bid

Nortel Networks, the Canadian phone-equipment maker that filed for bankruptcy protection in January 2009, has auctioned off its remaining assets comprising 6,000 patent and patent applications at US$4.5 billion last weekend.
The portfolios, covering a wide range of technologies spanning wireless, wireless 4G, networking, optical data transmission, voice, Internet, service provision and semiconductors, are described as one of the world's most extensive and compelling patent interests ever put up at auction.
After 20 rounds of bids over four days, a consortium of six companies comprising Apple, EMC, Ericsson, RIM, Microsoft and Sony won the bid. It was reported that the US$4.5 billion cash offer will be paid in the manner of US$2 billion contributed by Sony, US$1 billion by Microsoft and Sony, US$400 million by EMC, and US$1.1 billion by Ericsson and RIM.
The purchase price represents a significant improvement on that proposed initially by Google at US$900 million in a "stalking horse" agreement with Nortel in April. This reflects how much it means strategically to the bidders in the fight over said patent interests, particularly under an environment where mobile market has become increasingly litigious and acquisition of a formidable patent portfolio is one of a company's best defenses against rival patent claims.
Google also intended to create through the bid a disincentive to suits against itself. The company commented on the auction outcome as "disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition", and vowed to keep working to reduce the "flood" of patent litigation.
The purchase, subject to the approval of the Canadian and US courts, is expected to be completed in the third quarter of 2011.