With $4.5 Billion Bid, Group Led by Apple and Microsoft Claims Nortel Patents

July 1, 2011 2:45 PM

Posted by Andrew Goldberg

In a patent auction unprecedented in size and scope, a consortium of high-tech heavyweights banded together to buy Nortel Networks Corporation's trove of more than 6,000 remaining patent assets for a record-shattering $4.5 billion.

The winning bidder, a team of six tech companies that called itself Rockstar Bidco LP, consists of Apple Inc., Microsoft Corp., Research in Motion Ltd., Sony Corp., Ericsson AB, and EMC Corp. The consortium will take control of the patents, which cover everything from online search and tablet computers to social networking and 4G LTE mobile technology, pending approval from U.S. and Canadian bankruptcy courts.

Google, the only contender whose identity was known when the auction kicked off on Monday, came away empty-handed. The search behemoth, eager to ward off would-be patent infringement plaintiffs and bulk up its relatively modest patent portfolio, had entered into a “stalking horse” agreement with Nortel to supply the minimum auction bid at $900 million.

Google was advised on the bidding process by lawyers at Wachtell, Lipton, Rosen & Katz , including lead counsel Philip Mindlin, corporate partners Adam Emmerich and Benjamin Roth, antitrust partner Ilene Gotts, and restructuring and finance partner Gregory Pessin.

"This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition," said Kent Walker, Google's senior vice president and general counsel, in a statement. "We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers."

Cleary Gottlieb Steen & Hamilton managed the auction for Nortel, which took place at the firm's New York office from June 27 through June 30. Leading the Cleary team on the bankruptcy aspects were partners Lisa Schweitzer and James Bromley. Partners Paul Shim and Paul Marquardt provided M&A advice, partner Craig Brod assisted on corporate matters, and counsel Daniel Ilan helped on IP matters. Partner Jeremy Calsyn provided antitrust advice. (All are in New York except Marquardt and Calsyn, who are in Washington, D.C.)

David Berten, whose Chicago-based Global IP Law Group was selected by Nortel to advise it on monetizing its patents, noted that the $4.5 billion selling price was unprecedented. "I don't know of any other stand-alone patent sale that's been higher than a billion dollars," he says.

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