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Google bids $900 million for Nortel patents

The acquisition would give the Internet search giant more resources to fend off patent violation lawsuits, especially from competitors to its Android mobile phone software.

April 05, 2011|By Jessica Guynn, Los Angeles Times

Reporting from San Francisco — Google Inc. said Monday that it was willing to pay $900 million for patents held by Nortel Networks Corp., the bankrupt communications technology company.

The Internet search giant couched its bid as a preemptive strike to defend against patent litigation. It has often railed against frivolous patent lawsuits that it says stifle innovation. It has also advocated for patent litigation reform, although Congress has yet to act.

"If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community," Kent Walker, senior vice president and general counsel, wrote in a company blog post.

Mountain View, Calif.-based Google is trying to shore up a major vulnerability as it tries to grow its Android mobile phone software, which is the world's most popular operating system for handset makers and carriers as well as legions of software developers.

"Google has ignored the issue and has been a major laggard in patent ownership," BGC Partners analyst Colin Gillis said. "Any way they can play catch-up on patents, they need to."

Analysts say Google, with its deep pockets and anemic patent portfolio, is wrestling with a major increase in patent litigation from so-called patent trolls and industry competitors. A major patent portfolio such as the one from Nortel would give Google ammunition in these lawsuits.

In the last 12 months, Google has been hit with 39 patent lawsuits involving its Android mobile phone operating software, patent expert Florian Mueller said.

Several of the lawsuits are high-profile, most notably the patent and copyright infringement lawsuit that software giant Oracle Corp. brought against Google in August over the Android software that uses technology that Oracle acquired when it bought Sun Microsystems Inc.

Sun's Java application lets developers write software that works on a variety of computers and systems and runs on mobile devices. Sun held thousands of patents but, like Google, backed open-source sharing. It cut licensing deals for Java but also offered free versions.

"I believe Google probably heard a lot of criticism from its strategic partners, especially Android device makers, and wants to demonstrate that it's determined to address its patent problem," Mueller said.

Google's partners in Android have already become the targets of patent violation claims. Apple Inc. is preparing to square off with Taiwan-based HTC Corp., the world's biggest maker of handsets using Google and Microsoft operating systems, before the International Trade Commission. Apple is alleging that HTC infringed several patents, including ones related to mobile phones. HTC denies the accusations.

"Should HTC be found to infringe on any of Apple's asserted patents, that will scare the entire Android ecosystem because Apple is known to have a very aggressive attitude toward Android," Mueller said. "It's possible that this is yet another reason for which Google makes so much noise about Nortel's patents at this stage, even though it's far from certain that Google will win the actual auction."

Patent portfolios have become a valuable form of currency in the high-tech world, particularly when negotiating disputes. Rarely does such a large patent portfolio become available on the market. Apple is said to be among the companies considering a bid. The Cupertino, Calif., company did not respond to a request for comment.

"Google needs to bring a much more valuable patent portfolio to the table than the one it currently has," Mueller said.

But, he noted, Google's announcement is "a bit premature" and is likely to heat up bidding for the Nortel portfolio.

Nortel, the Canadian telecommunications-equipment maker that filed for bankruptcy protection in 2009, selected Google for a "stalking horse" agreement, Nortel said in a statement Monday. That means Google's bid is a starting point for the auction. The sale will include patents and patent applications for wired, wireless and digital communications technology.

jessica.guynn@latimes.com

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