Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

Summary: There's a report circulating that Microsoft may be among the bidders for Nortel's war chest of 6,000 telecommunications patents.

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TOPICS: Legal, Microsoft
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There's a report circulating that Microsoft may be among the bidders for Nortel's war chest of 6,000 telecommunications patents.

This seems somewhat surprising to me, given last I heard from Microsoft, company officials said they felt no need to bid on the patents which are up for auction. A spokesperson told me in April 2011 that Microsoft already has" worldwide, perpetual, royalty-free license to all of Nortel’s patents that covers all Microsoft products and services, resulting from the patent cross-license signed with Nortel in 2006.”

So what's up with the June 27 SOA World Magazine report that  bidders for Nortel's patents now include Google, Apple, Intel and "two purpose-built syndicates," one of which is led by Microsoft?

I've asked Microsoft whether it is one of the entities bidding on the patents and was told by a spokesperson that the company had no information to share at this time.

It's worth noting that if the Softies are one of the cloaked bidders, it wouldn't be the first time Microsoft has kept its identity secret when bidding for patents. It did the same when it made a bid as part of a consortium for Novell's 800 or so patents. Microsoft's role in the Novell patent-consortium bid came to light via regulatory filings.

Patent expert Florian Mueller said he believed that "there's no doubt they (Microsoft) feel they have nothing to fear from those (Nortel) patents. That said, having ownership of them (together with other members of a consortium) would have additional benefits."

"Microsoft might also believe that up to a certain price those patents are simply a good financial investment for someone who understands the patent monetization business," Mueller added.

Nortel filed for bankruptcy protection in January 2009. The Nortel patents up for auction were said to cover wireless handsets and infrastructure, as well as optical and data networking, Internet, Internet advertising, voice and personal computers In 2007, Microsoft and Nortel announced a wide-ranging strategic partnership. Via that much-trumpeted alliance, the pair committed to take on Cisco by integrating and cross-selling their communications wares and by jointly licensing each other’s IP.

In June, when it looked like Google might be the default victor for Nortel's patents with an alleged bid of $900 million, Microsoft officials told a judge the deal could give the proposed buyer, Google “an unfair competitive advantage.” Microsoft asked for guarantees to protect its patent agreement if Google purchased the patents in question.

Topics: Legal, Microsoft

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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31 comments
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  • Makes sense. Sure MS has

    a worldwide, perpetual, royalty-free license to all of Nortel?s patents that covers, so even if someone bought them and released them to use under GPL, MS can't be sued or forced to stop using them, so they're fine. They can't even be asked to start paying for them.

    They could buy them and license them to others, thus making money, which is what I'm pretty sure Google would do with them, as I can't see them spending a billion dollars on them to give away, (the shareholders would flip).

    Just sounds like a purely finacial endevour.
    Will Pharaoh
    • Message has been deleted.

      Linux Geek
      • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

        @Linux Geek

        Not so fast...let the court decide, you anti MS je*k!
        owlnet
      • Not at all, Linux Geek

        @Linux Geek
        but then your response indicates you know nothing of legal procedings, either.

        :|
        Tim Cook
      • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

        @Linux Geek <br>What nazi censor deleted my post?
        Linux Geek
    • They're also potentially usable as weapons

      @Will Pharaoh <br>(Sarcasm)Regardless, patents are property and the owner has the right to use them as he sees fit. Thus, speculation by outsiders as to the motivation for buying patents is at the least improper and is potentially a violation of the patent owner's property rights.(/Sarcasm)
      John L. Ries
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @Will Pharaoh
      Why? more fun to see Google lose against MS and Apple..
      Hasam1991
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @Will Pharaoh

      They're bidding as part of a consortium, I'd take a guess that Nokia and Siemens, either independently of each other or under the Nokia Siemens Networks are also a part of it.
      OffsideInVancouver
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @Will Pharaoh

      I agree with the GPL proposition, but then again why would Nortel do that since they would have nothing to gain? Maybe a very low royalty fee when used for commercial purposes could be more attractive and still solve the problem?

      This Nth case simply shows that the patenting laws and regulations need to be changed to keep protecting companies rights but stopping once and for all patent trolling.

      There should be no full patents lasting forever, where a patent holder could deny it to the world even after hundreds of years.

      How about a limited exclusivity for first few years, license/royalty based revenue for a further number of years following exclusive rights, and possibly open source it after a longer period.
      A system working in such way, should sound fair for patent holders and I am referring to reasonable people, not endlessly greedy ones who would be satisfied only by forever patents.
      Fair patenting laws and regulations, would allow patent holders to be properly protected while keeping at bay the complacency which could arise when feeling entitled to be able to own patents indefinitely and simply sit on the laurels, reaping benefits that at a certain point will start becoming unfair and that will eventually become even harmful to a healthy, creative and inventive environment since for each new idea there would be a ?can?t be done?, because of a patent prohibiting one thing or another for hundreds of years. But perhaps most importantly a fair system would help minimize unnecessary litigations and will help foster a higher and continuous motivation to move progress and innovation forward at a much faster pace.

      I may be delusional, but I believe that a fair patenting system would be a win/win situation for everyone (unwelcome only to greedy companies) and would not even be so impossible to achieve if only there was a will to do so.

      (You may say I am a dreamer, but I am not the only one?)

      PS: Well... google did spend $120M to buy On2 codec and then open sourced it, but they did have an agenda there and $120M is really less than peanuts, we were not talking about billions there... for the billions case I do agree with you Will ;)

      Cheer to all!
      freakqnc
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @Will Pharaoh I believe a judge have already declared that the new buyers of the patents will not have to abide by agreements made by Nortel. Which makes perfect sense to me.
      Knowles2
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @Will Pharaoh ,,, EVERY move ANY company makes is a FINANCIAL endeavor! Otherwise there is no "company".
      tom@...
  • I Hope

    Google win this auction as it will help rprotect Android

    Does anyone really know if Microsofts claim they are covered aleady from a cross-licence deal with Nortel in 2006 will still be valid after this auction ?

    Secondly if it *IS* upheld that this is the case and the 2006 cross-licence is valid, does this mean the winner of the patents also retains the Nortel side of 2006 licence....ie able to use Microsoft IP ?????

    If Microsoft win these patents then the Game is over for Android tbh.....
    garyc2008
    • Yes, they will still be valid after the auction as

      @garyc2008 <br>No company would spend the money licenising patents without such safegaurds in place to protect themslves from this very event.<br><br>The company purchasing the patents does so with the understanding they are licensed to various companies (not just Microsoft) and must conform to the contracts associated with the patents.<br><br>As for the company that purchases the patents getting to use Microsoft's IP, there is a chance they will not, as Microsoft made a deal to license these particular patents, yet the entity Nortel made the deal to License Microsoft's particular patents, not the company purchasing Nortel's patents, unless stated otherwise as part of Nortel's licensing contract.

      :|
      Tim Cook
      • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

        As for the company that purchases the patents getting to use Microsoft's IP, there is a chance they will not, as Microsoft made a deal to license these particular patents, yet the entity Nortel made the deal to License Microsoft's particular patents, not the company purchasing Nortel's patents, unless stated otherwise as part of Nortel's licensing contract.

        Surely that goes both way, Microsoft patents are not available to the new owners of Nortel patents then Nortel patents should not be open to Microsoft. An the fact that Microsoft felt the need to get a judge assurence that they would still have access to Nortel patents, no matter who owns them and failed to get that assurance make me suspect that Microsoft had no safe guards in place in case Nortel cease to exist like they have done.
        Knowles2
      • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

        @Knowles2
        I think it goes as far as: If Microsoft went bankrupt, Nortel would be able to continue to use their patents, but whoever bought Microsoft's patents does not get to use Nortel's (presumably).
        xnederlandx
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @garyc2008 Actually Google with its bid has the right to cancel any existing license agreements. This could be the main reason why MS wants to bid!
      browser.
      • Actually, they don't have the right to cancel the agreement

        @browser.
        because what would stop Nortel (or any company) from licensing their patents, get the money from the companies licensing the patents, then turn around and sell them the next day to another company, then walking away with all the money?

        The agreements usually always state that once signed, the person licensing the patents get the rights to use them no matter who owns them, or how many times they may change hands.
        Will Pharaoh
    • RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)

      @garyc2008
      Since Android devices are out-selling everyone else, I don't think the game will be over for them. Absolute worst case is they might have to re-license the IP again.

      My hope is that Google or Microsoft win these patents and do something to actually move the U.S. telecom industry forward a little faster. Our telecom industry, as it stands now, has to be dragged kicking and screaming toward a distant future which gives Americans parity service with most of the rest of the world. There are developing nations who have far superior data rates at a lower cost than we do with no caps on usage.

      U.S. telecom companies suck because they are century-old monolithic dinosaurs who creak like old men when they try to move. It would be nice to get modern, agile, tech-age companies into the industry who would push cell technology into the 21st century. Regardless of how we feel about the tech giants, they are vastly more nimble than telecom giants.
      BillDem
  • They're the Smarties

    The execs at Microsoft are smarter then people give them credit for. Not Because Ballmer acts like a crazy dude on stage, does it mean he is. This guys is smart, and I think we've only seen half of what he's capable of.
    vhaakmat
  • Win-Win

    Either they can monetize them after they get them. Or they can at least drive up the price for a competitor. What's to lose for Microsoft?
    WebSiteManager