Google’s First Bid on Nortel Patents a Transformative Moment?

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In a blog post on the Official Google Blog yesterday, Google’s Kent Walker, Senior Vice President & General Counsel, announced that Google had been bidding on Nortel’s remaining patent portfolio and Google’s bid was selected by Nortel as the “Stalking Horse Bid” in an auction that is tentatively scheduled to take place in June of this year.

A stalking horse bid is an initial bid on the assets of a bankrupt company chosen by the company as a starting point for competing bids from other potential buyers of the company’s assets. The selection of Google’s bid as this starting point doesn’t mean that Google will end up with Nortel’s patents, but it does indicate that the search giant is pretty serious about acquiring them.

Nortel also issued a press release announcing the Stalking Horse Sale Agreement with Google, and we’re told in that announcement that:

The agreement includes the planned sale of approximately 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios. The extensive patent portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.

Google’s announcement points out two compelling reasons why it would like to acquire Nortel’s patents. One is that a “formidable patent portfolio” would help it stave off bogus or dubious patent litigation. The other is that they see it as a way to “help us, our partners and the open-source community” to continue to innovate.

The Nortel press release notes that this sale will cover approximately 6,000 granted patents and pending patent applications. A USTPO patent search through the main public search interfaces the patent office offers shows a little over 5,000 patents assigned to Nortel.

A search through the USTPO assignment database lists 11,800 pending and granted patents, though those are listed under a variety of different business names such as Nortel Networks Corporation, Nortel Networks Group, Nortel Networks Israel LTD, Nortel Networks France (SAS), Nortel Networks Limited. It’s difficult to tell which actual business entities are involved, and a good percentage of the assignments may be listed multiple times under different entity names.

I’ve skimmed through the titles of a few thousand of the patent filings at this point, and while a great many of the patents involved focus upon telecommunications and wireless technologies and processes, there is also a very wide range of other technologies and intellectual property represented including areas involving hardware, software, advertising, and business process.

Google has been acquiring a large number of companies in the past year, and more quietly acquiring intellectual property in the form of licensing and purchasing patents. These include patents from Exbilio, B.V., Verizon, Myriad Group, and another 51 patent filings from IBM which I mentioned in my update post on Google’s patents.

As I noted above, there’s no guarantee that Google will end up with the Nortel patents, but presently the USTPO lists the number of assigned patents that Google holds (granted and pending applications) at almost 2,000. Add the 6,000 patent filings from Nortel, and that would be a pretty formidable patent portfolio indeed.

Google announced earlier this year that they are hiring in 2011. If they do acquire Nortel’s intellectual property, they may need to add a significant amount of staff just to go through those patents and see how they can make the most of them.

Will Google still be able to function with the nimbleness of a startup under new CEO Larry Page, with a potential acquisition of the size and scope of the Nortel patent portfolio?

Will the focus of the search giant shift even more towards telecommunications and mobile phones?

In a year or two, when Google is mentioned will we think of our handsets first and search second?

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11 thoughts on “Google’s First Bid on Nortel Patents a Transformative Moment?”

  1. Hi Bill,

    Fascinating as always.

    Your comment about Google requiring the nimbleness of a start-up had my head nodding in total agreement. A saying comes to mind: the strategies used to take the hill are not the same as those needed to hold it. It’s going to take a bit of magic for Google not to lose share to the stream of competitors popping up, especially those who shed new light on search. One such is Qwiki, which came to my attentino today. Check out this result for Warrenton, Virginia.

  2. It there anything Google will not buy? They have so much spare cash they are just buying everything what might just be little useful in their strive for world domination!

  3. Hi Chris,

    Thank you. Good point. One of the supposed benefits of joining together with others to run a business is that you can have people with different skillsets and strengths focusing upon different aspects of your business.

    If Google acquires all of those patents, it’s going to take some people good at going through what they’ve acquired and see what can be integrated into the technologies they already possess, what new offerings they might have available, and how to best use the opportunities presented.

    I signed up for the Qwiki demo a while back, and I’ve been receiving emails from them on a regular basis showing off different queries. As an educational tool, I think it’s pretty interesting. As a search engine, I’m not quite so sure because it doesn’t give me a chance to focus down on what I’m actually interested in, and find other resources.

  4. Hi John,

    I remember Eric Schmidt saying sometime last year that Google really wants to focus upon those things where it can be innovative and add something new. That’s potentially a pretty wide mandate, but if it’s something that they can fulfill, it doesn’t bother me too much. I think they are doing some interesting things in a lot of areas.

  5. This is very interesting. What is it actually? A move to monopolize things or it’s just how they go?

  6. Hi Bill,

    I think Chris makes a very good point – whether there is an actual real world benefit in owning the patents or whether the bid is to block current (or future) competitors from owning the intellectual property is yet to be seen.

    Fascinating insight as always!

  7. Hi Andrew,

    The official word on the blog is that having a large patent portfolio like this will help protect Google from patent infringement lawsuits, and may help in developing some new technologies.

    I don’t see it as a move to monopolize, and the strategy they’ve laid out makes sense.

  8. Hi Tom,

    There are so many Nortel patents, that I haven’t had sufficient time to dig through all of them. I suspect that there are some gems in there that could potentially help Google do some things that they might not have envisioned before.

    Part of the purpose of acquiring so many patents may be to exclude competitors from owning that intellectual property. Just wondering what it would have cost Google to develop that intellectual property on their own – I think it would be much more than $900 million.

  9. I believe that Larry Page believes in the universal uptake or adaptability of Google services across all currently available and any future hardware products. From statements he has made to junior engineers working on 20% time software projects he has always insisted that Google should never be tied to heavily to the “here and now” of hardware status quo – rather future-proofing itself by being usable across all – or as many as possible – devices.

  10. Hi Matthew,

    Good points. I think adding the Nortel Portfolio would give Google more freedom and flexibility to experiment and innovate and try new things without having to worry as much about patent trolls. The patents themselves cover a very wide range of technologies, including ones that are still pretty fresh and new and ripe for innovation.

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