FTC confirms decision to let Apple to bid on Nortel patent trove
United States anti-trust regulators confirmed Thursday that they have granted Apple clearance to participate in a high-stakes bidding war for the assets of bankrupt Nortel Networks Corp, which could afford the winner a material edge in the future of smartphone and wireless technologies.
Apple's clearance was noted in a list of approved transactions released Thursday by the Federal Trade Commission, according to a report by the The Wall Street Journal, which added that the U.S. Justice Department has been examining potential bids on Nortel's assets for possible competitive violations.
Among those assets up for grabs is a so-called treasure trove of some "6,000 patents spanning key portions of the modern world, including wireless video, Wi-Fi, Internet search and a next-generation mobile-data technology now being adopted by carriers, known as LTE."
Nortel, a Canadian maker of telecommunications equipment, filed for bankruptcy in January 2009 and agreed to sell the patent portfolio to Google for $900 million unless a competitor bids more at an auction next Monday, June 27, to take place at the law offices of Nortel?s U.S. law firm, Cleary Gottlieb Steen & Hamilton LLP.
Previous auctions for Nortel's assets held at the same location have reportedly lasted for more than 24-hours, with several rounds of bidding ultimately raising more than $3 billion to pay off Nortel's creditors. A spokesmen for Nortel confirmed the company has no plans to make any information about the bidding public until after it picks a winner.
Microsoft, Hewlett- Packard and Nokia were among technology companies that objected to the sale of Nortel's portfolio to Google, saying in court papers the deal might not guarantee them continued access to technologies they currently have a right to use in their products.
In addition to Apple, heavyweights such as Intel and Ericsson AB will "vie with Google" to buy a trove of 6,000 patents from the telecom-equipment maker. RPX, a firm that preemptively purchases patents for clients to prevent them from being wielded, has also reportedly been accepted as a "qualified bidder."
The auction was originally scheduled to take place on June 20, but was moved to June 27 due to a "significant level of interest" from other companies. People familiar with the matter said Apple and Intel had been accepted as separate bidders, while Ericsson and RPX were accepted as part of one or more consortiums.
Sources said earlier this month the U.S. Department of Justice had concluded an antitrust investigation into Google's $900 million starting bid for the collection. The DOJ reportedly didn't find any "major competitive" issues with Google's interest in the patents, and has had greater concerns about Apple.
Companies are interested in the group of patents mostly because it contains key technologies related to the fourth-generation Long Term Evolution standard, though Wi-Fi and social networking patents are also included in the lot. The presence of the LTE patents has raised concerns that the winner of the auction could gain an unfair advantage over competitors in the 3G 'arms race.'
BlackBerry maker RIM had been rumored to be "weighing an offer" to outbid Google, but the company's recent financial troubles make a bid seem unlikely. Apple on the other hand maintains a war chest of roughly $70 billion in liquid cash, clearly positioning it as a front-runner to a face-off with Google should the iPhone maker so choose.
Apple's clearance was noted in a list of approved transactions released Thursday by the Federal Trade Commission, according to a report by the The Wall Street Journal, which added that the U.S. Justice Department has been examining potential bids on Nortel's assets for possible competitive violations.
Among those assets up for grabs is a so-called treasure trove of some "6,000 patents spanning key portions of the modern world, including wireless video, Wi-Fi, Internet search and a next-generation mobile-data technology now being adopted by carriers, known as LTE."
Nortel, a Canadian maker of telecommunications equipment, filed for bankruptcy in January 2009 and agreed to sell the patent portfolio to Google for $900 million unless a competitor bids more at an auction next Monday, June 27, to take place at the law offices of Nortel?s U.S. law firm, Cleary Gottlieb Steen & Hamilton LLP.
Previous auctions for Nortel's assets held at the same location have reportedly lasted for more than 24-hours, with several rounds of bidding ultimately raising more than $3 billion to pay off Nortel's creditors. A spokesmen for Nortel confirmed the company has no plans to make any information about the bidding public until after it picks a winner.
Microsoft, Hewlett- Packard and Nokia were among technology companies that objected to the sale of Nortel's portfolio to Google, saying in court papers the deal might not guarantee them continued access to technologies they currently have a right to use in their products.
In addition to Apple, heavyweights such as Intel and Ericsson AB will "vie with Google" to buy a trove of 6,000 patents from the telecom-equipment maker. RPX, a firm that preemptively purchases patents for clients to prevent them from being wielded, has also reportedly been accepted as a "qualified bidder."
The auction was originally scheduled to take place on June 20, but was moved to June 27 due to a "significant level of interest" from other companies. People familiar with the matter said Apple and Intel had been accepted as separate bidders, while Ericsson and RPX were accepted as part of one or more consortiums.
Sources said earlier this month the U.S. Department of Justice had concluded an antitrust investigation into Google's $900 million starting bid for the collection. The DOJ reportedly didn't find any "major competitive" issues with Google's interest in the patents, and has had greater concerns about Apple.
Companies are interested in the group of patents mostly because it contains key technologies related to the fourth-generation Long Term Evolution standard, though Wi-Fi and social networking patents are also included in the lot. The presence of the LTE patents has raised concerns that the winner of the auction could gain an unfair advantage over competitors in the 3G 'arms race.'
BlackBerry maker RIM had been rumored to be "weighing an offer" to outbid Google, but the company's recent financial troubles make a bid seem unlikely. Apple on the other hand maintains a war chest of roughly $70 billion in liquid cash, clearly positioning it as a front-runner to a face-off with Google should the iPhone maker so choose.
Comments
Whoever wins will seriously and ridiculously overpay..
In terms of what?
To a company like Google, the patents hold a much higher value than the licensing fees they may provide because the Nortel patents would give them ammunition against other companies whos patents they are infringing against.
To a company like Apple, the value isn't in the licensing fees either nor it it in the underlying technology. The value to a company like Apple is in keeping these patents away for Google.
In terms of what?
To a company like Google, the patents hold a much higher value than the licensing fees they may provide because the Nortel patents would give them ammunition against other companies whos patents they are infringing against.
To a company like Apple, the value isn't in the licensing fees either nor it it in the underlying technology. The value to a company like Apple is in keeping these patents away for Google.
Double plus good.
If Apple was sure Google would do anything to get this bundle, it could drive the bidding into the stratosphere just to make sure Googs comes away as much lighter in the wallet as is possible. But I suppose it is a sealed bid kind of thing with no auctioneer in the stereotypical sense. Anyone know how these things are done?
In terms of what?
To a company like Google, the patents hold a much higher value than the licensing fees they may provide because the Nortel patents would give them ammunition against other companies whos patents they are infringing against.
To a company like Apple, the value isn't in the licensing fees either nor it it in the underlying technology. The value to a company like Apple is in keeping these patents away for Google.
Bidding war always ends up with someone overpaying.. Ask HP. But then again there are things that are worth more to people or company than it's actual monetary value.
I hope Google comes out the winning bidder. Apple needs a strong competitor. I am not a huge Android fan, but I like that they have moved the industry forward in ways that might not have happened if Apple completely dominated the mobile space. Competition is great for the consumer.
I hope Google comes out the winning bidder. Apple needs a strong competitor. I am not a huge Android fan, but I like that they have moved the industry forward in ways that might not have happened if Apple completely dominated the mobile space. Competition is great for the consumer.
Google, the new Microsoft.
You have to play mind-games at things like this. Steve himself should go to the auction. Who would really want to bid against Steve Jobs directly?
Oh, not only will Steve be there, here's how it's going to go down:
He'll walk in the room in with a relaxed friendly grin on his face wearing jeans and black turtleneck, nod curtly to a few familiar faces around the room.
He'll then casually pull a $5,000,000,000 bill out of his pocket and ask can anyone break this?
He'll hold a look of hurt feeling on his face as the mass exodus swarms around him, then shrug it off. He'll walk up to the auctioneer and State "one set of patents please". When he hands the guy the bill. He'll stare at Steve and say "Sorry Sir, I don't have change"
"No worries" Steve will reply "Keep the change".
He'll turn and saunter out as casually as someone who just bought an ice-cream cone while walking through the park.
Double plus good.
If Apple was sure Google would do anything to get this bundle, it could drive the bidding into the stratosphere just to make sure Googs comes away as much lighter in the wallet as is possible. But I suppose it is a sealed bid kind of thing with no auctioneer in the stereotypical sense. Anyone know how these things are done?
I have to believe that this is done in such a way as to maximize the price of the assets. Remember the context here -- this is an auction to raise funds to pay off creditors for a bankrupt company. This company is dead -- it has no strategic interests that might push them in the direction of preferring a lower bid. The only incentive is the incentive of the creditors to get their money out of a bankrupt company. Everything about this process is almost certainly designed to maximize the price of these patents.
I actually think there's a very good chance that Apple will win this. They have the most money and they have the most at stake. None of the other bidders makes as much profit off of selling cell phones as Apple does. In fact, Apple might make as much off of it as all the other bidders combined. The only ways I can see Apple not winning this are if (1) another company makes an extraordinarily foolish bid or (2) there is some iron-clad assurance from the government that the owners of this patent must license the patents under "reasonable" terms. I suppose #1 is possible, but I think #2 is not. The current administration is pretty vigilant on anti-trust issues, but I doubt the Romney administration would be.
So bottom line -- I'd say there's about a 90% chance Apple wins this auction.
In terms of what?
To a company like Google, the patents hold a much higher value than the licensing fees they may provide because the Nortel patents would give them ammunition against other companies whos patents they are infringing against.
To a company like Apple, the value isn't in the licensing fees either nor it it in the underlying technology. The value to a company like Apple is in keeping these patents away for Google.
These patents have value, but it's not going to be a game changer either way.
Virtually all of the patents will be licensed. So if Apple doesn't get the patents, they simply pay the license fee (which may end up being cheaper).
The odds are very slim that anyone will actually use the patents to block a competitor.
"When we think about big, bold things, we know that if we needed to acquire something, a piece of the puzzle, to make something big and bold a reality, we could write a check for it."
I'd say buying 6,000 patents directly related to one of Apple's biggest profit centers, cell phones, is a piece of the puzzle. Especially if Apple can then collect license fees from any and all competitors who want to use technology covered in those patents.
More on Jobs' statement: http://www.reuters.com/article/2010/...61N4EH20100226
Apple can just hand them a check with a "1" on it and tell them to just keep writing zeros till their arm gets tired, and that will be the price.
Great idea
I find it odd that people sell the rights to ideas explicitly. It makes sense that someone can take ownership of an implementation or design and subsequently license it but to bundle it off to someone else so that they can do that seems wrong. All the money-grabbing and bickering that ensues could be avoided if when the owner of a patent can no longer sustain their ideas, they move into the public domain for anyone and everyone to use freely. A lot of money and resources could then actually go into something useful, it discourages patent trolls/NPEs and encourages constant innovation as well as making those innovations useful.
That's a terrible idea for more reasons than I can even begin to count. I'll just give you one, if a patent can't be sold then business with large IP can't be sold either, because in selling the business you're inevitably going to end up assigning the patent - and if you can assign it you can sell it.
- Company A wants these patents but downplay their interest. Company A's goal is keep others from being interested in bidding higher than they're worth.
- Company B doesn't want these patents but will act like they do. Company B's goal is not to buy the patents but to let their competition vastly overpay for them in effect creating a net loss for their competition.
- Company C also doesn't want the patents but they really don't want Company A and/or B from having them so they are willing to overpay for patents they can't directly utilize.
Did I miss any?The value to a company like Apple is in keeping these patents away for Google.
Google won't survive unless Steve lets them, if he wins the patents. Same thing with RIM and Nokia. Couldn't happen to a nicer bunch of fellas...
These patents have value, but it's not going to be a game changer either way.
Virtually all of the patents will be licensed. So if Apple doesn't get the patents, they simply pay the license fee (which may end up being cheaper).
The odds are very slim that anyone will actually use the patents to block a competitor.
Block competition? Of course not, especially involving the patents that involve LTE, because Apple would make too much money off of patent licensing. These patents are a game-changer. Look at the Apple-Nokia settlement, which may require Apple to pay Nokia billions in the coming years. That's not something Apple wants to repeat. These Nortel patents are equally lucrative. Do your research. SockRolid has it right.
The current administration is pretty vigilant on anti-trust issues, but I doubt the Romney administration would be.
Don't count your chickens before they hatch. Romney may not even be the nominee, with the Balkanization of the current GOP field. Whoever wins the nomination will have a tough battle against the President, especially if the government defaults on its debt. If there's a default, I believe Republicans will be blamed, just like they were for the 1995 shutdown. I especially believe Republicans will be blamed, because during the last budget battle in Congress, I saw this report of two scientific polls, which showed that Republicans would be blamed for any shutdown during that budget battle. So I believe that Obama has a much stronger chance of being re-elected than many believe.
I find it odd that people sell the rights to ideas explicitly. It makes sense that someone can take ownership of an implementation or design and subsequently license it but to bundle it off to someone else so that they can do that seems wrong. All the money-grabbing and bickering that ensues could be avoided if when the owner of a patent can no longer sustain their ideas, they move into the public domain for anyone and everyone to use freely. A lot of money and resources could then actually go into something useful, it discourages patent trolls/NPEs and encourages constant innovation as well as making those innovations useful.
That's a terrible idea for more reasons than I can even begin to count. I'll just give you one, if a patent can't be sold then business with large IP can't be sold either, because in selling the business you're inevitably going to end up assigning the patent - and if you can assign it you can sell it.
Cloudgazer is right. Patent rights can make up a large portion of a company's value. Marvin's logis would mean the creditors would lose another billion or so dollars. Imagine how much less RIMM, who is struggling a bit, stock would be worth if patents had no transfer value.
It's 4G arms race, not 3G, Katie!