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Nortel delays patent sale by a week

updated 12:30 pm EDT, Thu June 16, 2011

Cites high interest in assets as reason

Bankrupt Nortel Networks has delayed the start of the auction for its 6,000 patents and patent applications from June 20 to June 27. The company gave the significant level of interest in these assets as the reason. The auction has attracted the focus of many technology leaders including Google and Microsoft.

In May, Canadian and US bankruptcy courts approved a "stalking horse" asset sale agreement with Ranger, a wholly owned subsidiary of Google, for the sale of all of Nortel's remaining patents and patent applications. The offer carried a cash price of $900 million. This effectively set the minimum bid bar for the subsequent auction, scheduled by the courts to start June 13.

More importantly, from Google's perspective, it would allow the company to break any existing Nortel licensing arrangements. Behind this action was Google's desire to protect its Android OS. The company feared that if another company, such as Microsoft, pooled the Nortel intellectual property with its own patents, then it might be able to charge Google and other vendors, who used Android but not Microsoft's own Windows Phone in their products, high royalty fees, effectively pricing Android-driven devices out of the market.

Microsoft, on the other hand would like that any patent agreements to transfer to whichever company made the highest bid at the auction, which the company hoped it would be. Earlier this week, Microsoft filed an objection in court to Google's pre-auction agreement.

Joining Microsoft were HP, Motorola and Nokia. Their interest is commonly thought to be in using patents to ask for royalties on 4G, Wi-Fi, and other wireless devices.

by MacNN Staff



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