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

By | June 27, 2011, 2:12pm PDT

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

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.

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Mary Jo has covered the tech industry for more than 25 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).

Disclosure

Mary-Jo Foley

Freelance journalist/blogger Mary Jo Foley has nothing to disclose. WYSIWYG (what you see is what you get). I do not own Microsoft stock or stock in any of its partners or competitors. I have no business ventures that are sponsored by/funded by Microsoft or any of its partners or competitors.

Biography

Mary-Jo Foley

Mary Jo Foley has covered the tech industry for 25 years for a variety of publications, including ZDNet, eWeek and Baseline. She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years. In the late 1990s, she penned the award-winning "At The Evil Empire" column for ZDNet, and more recently the Microsoft Watch blog for Ziff Davis.

Got a tip? Send her an email with your rants, rumors, tips and tattles. Confidentiality guaranteed.

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RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)
tomlin21-24319035676893835085146735905770 11th Oct
I used nfl jerseys out to subscribe with your rss provender, but had a difficulty incorporating it to google RA
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Makes sense. Sure MS has
Will Pharaoh 27th Jun
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.
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Message has been deleted.
Linux Geek Updated - 28th Jun
@Linux Geek

Not so fast...let the court decide, you anti MS je*k!
  • Flagged
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Not at all, Linux Geek
Mister Spock 27th Jun
@Linux Geek
but then your response indicates you know nothing of legal procedings, either.

plain
  • Flagged
@Linux Geek
What nazi censor deleted my post?
  • Flagged
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They're also potentially usable as weapons
John L. Ries Updated - 27th Jun
@Will Pharaoh
(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)
@Will Pharaoh
Why? more fun to see Google lose against MS and Apple..
@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.
@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 wink

Cheer to all!
@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.
@Will Pharaoh ,,, EVERY move ANY company makes is a FINANCIAL endeavor! Otherwise there is no "company".
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I Hope
garyc2008 27th Jun
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.....
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Yes, they will still be valid after the auction as
Mister Spock Updated - 27th Jun
@garyc2008
No company would spend the money licenising patents without such safegaurds in place to protect themslves from this very event.

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.

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.

plain
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
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).
@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.
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.
@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.
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They're the Smarties
vhaakmat 28th Jun
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.
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Win-Win
WebSiteManager 28th Jun
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?
Every time MS (and Oracle too) buys a company deprecates prior signed agreements with competitors. I have seen this between MS and EMC and also Oracle and EMC. When MS buys they do it for supporting they monopoly business.
@jsapaj

Can we see where they did this, or are you just blowing FUD for the sake of hating.
How is the Microsoft-Nortel deal still valid now that Nortel is bankrupt? I thought that rendered contracts null and void.

If I'm renting a house from someone and they go bankrupt and the house gets repossessed, I don't get to stay there at the same rent just because I had a contract.
@tsrich They not. it clear they are not because Microsoft tried get such conditions as maintaining current licensing deals it had with Nortel impose on the auction and failed. Which is why they are having to bid for the patents.
This is the other problem with the patent system. Patents should NOT be transferable. This just feeds the trolls.
0 Votes
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Mary Jo Toying With Us Again
csgallagher@... 28th Jun
Skype is why Microsoft wants (and needs) telecommunications patents; the company intends to "unify" Unified Communications.
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Of course they want them.
PassingWind 28th Jun
Owning them will give Microsoft the power to say no.

And they thrive on power.
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WHY? It's obvious, IMO
tom@... 28th Jun
WHY do they want the Nortel patents? As one who worked "next door" to them in Kanata and shared many plane flights around the country with their engineers & marketing people, why not? They have experience in the software end of everything telecom and it's 90% software, 20% hardware (overlaps). A PBX that used to fill a room a few years ago now sits on a desktop and even has redundancy. Their knowledge of 911, E911 and EX911 alone is worth billions to the right company and that's not countng the huge amount of sas and saas they can and do provide worldwide. Then when I moved from telecom to telecom compliance testing worldwide, I got to see a lot more of their products.
Their downfass is/was the same as many of the telecom companies; lack of leadership and an inability to market, on top of some very poor support, which went for very big bucks. Forget what the current situation is with them; that is what started the whold ball of waz rollling downhill.
Nortel could have been king but missed the boat to the mainland on both sides of the pond.

All figures are "IMO" approximations and I have no current data about them. But they own some seriously golden patents that prove why software should not be patentable in the way it is.
"Not so fast...let the court decide, you anti MS je*k! :

Pot - Black. If you can't accept others' opinions you certainly don't belong here!
I have been wondering the same. If it is Microsoft, or another large company, why remain anonymous. I have been blogging about it all week at http://www.tangible-ip.com/2011/rockstar-bidco-the-speculation-continues.htm
Microsoft is bidding because they believe if Google won the bid, they could terminate those licenses. Since Microsoft can outbid Google, they should just buy them up.
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RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)
jackson1984-24316069205748857739440257893812 9th Oct
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RE: Is Microsoft secretly bidding for Nortel's patents? (And if so, why?)
tomlin21-24319035676893835085146735905770 11th Oct
I used nfl jerseys out to subscribe with your rss provender, but had a difficulty incorporating it to google RA

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