Apple knocks head with RIM

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Nortel Networks Corp. bankruptcy auction ignites another patent war, with Apple and Research In Motion group snatching the Nortel Networks’ patents for USD 4.5 billion.

Bankrupt Nortel had put up for sale about 6,000 patents and related applications. It is a kind of treasure trove for latecomers such as Apple, Google, and Intel.

The biggest patent auction involved multiple rounds and negotiations that went for long hours into the early morning. At least three alliances of bidders pushed the final offer to more than five times the starting price.

Bidding procedure

The entire procedure was a four-day affair. The bidders names and their offers were kept as a secret throughout the procedure.

The circumstances of the auction, the size of the portfolio, court-backed guarantee regarding the sale of patents, and in terms of the price tag, made the auction a unique one.

Bidding groups

One of the groups that bid was led by RPX Corp., of San Francisco. They had a backing of 20 clients. RPX buys patents in order to prevent them from being used against their clients in lawsuits.

The winning group of bidders consists of Apple Inc, Microsoft Corp., Research in Motion Ltd., Sony Corp., Ericsson AB, and EMC Corp.

Research in Motion will pay USD 770 million towards the purchase consideration, and Ericsson will pay USD 340 million. The other parties have not said regarding what their share would be.

The purchase will give the winners an opportunity to control over the patents and patent applications on wireless and Internet technologies.

The result may drive more money into the market for intellectual property and also fueling more lawsuits.

Google, the newest player to the mobile market, has a weak patent portfolio compared with its telecoms rivals and will now be more vulnerable to lawsuits from the auction winners.

Bankruptcy issue

Nortel, which filed for bankruptcy protection years ago after struggling for years in a cut-throat telecoms gear market, has now raised a total of about $8 billion in asset sales.

The latest sale spans wireless, wireless 4G, data networking, optical, voice, Internet and semiconductor technologies. The most prized was for the emerging 4G standards such as long-term evolution (LTE).

Source: Bloomberg, moneycontrol.com

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