Google has put in a $900 million bid for Nortel Networks' patent portfolio, which could make it a real player in mobile technology and forestall lawsuits over its smartphone line.
Nortel Networks, once a high-flyer in the technology world, filed for bankruptcy in 2009. As a provider of telecom network equipment, it held some 6,000 technology patents, including many related to current 4G technologies.
As part of Nortel's asset sale, the company accepted a stalking horse bid from Google for the patent portfolio. That means the Google bid is the level at which any others have to start. Before the auction can get underway the bankruptcy courts in the U.S. and Canada have to approve the details of the bidding procedures, and then they will have to give the nod to whoever comes out on top in the auction, expected to be held in June.
In a blog post, Google's senior vice president and general counsel, Kent Walker, said one reason for buying the patents was to deter others from suing Google, given the explosion of patent litigation in the technology sector. As things stand today, one of a company's best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services, he said.
Google has long argued for changing the patent system, notably by restricting forum-shopping and offering better methods of challenging patents that have already been granted. But while there is currently a bill in Congress to make some changes, it won't be in the areas Google has argued for.
In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners, Walker said.
The move also comes at a time when several companies, including Apple, Nokia, HTC, Microsoft, Motorola, RIM and Kodak, are all involved in multiple lawsuits against each other over patents that cover most of the technologies in mobile phones. Google has introduced the Nexus line of smartphones, and is likely looking to head off any suits from that direction.