Google puts $900M bid on Canada's 'national treasure' Nortel patents

Bankrupt Canadian telecommunications company Nortel Networks Corp. has selected Google as the stalking horse bidder in the auction for the company's vast and highly valuable patent portfolio.

Nortel first went into Chapter 11 bankruptcy in January 2009 and has been selling off its assets since that time. In 2009, the company sold off its Enterprise Solutions Business and shares of Nortel Government Solutions and DiamondWare to Avaya for $900 million; and its CDMA and LTE Access businesses went to Ericsson for $1.13 billion.

But this auction is the biggest deal of them all. Research in Motion co-CEO Mike Lazardis called Nortel's LTE intellectual property portfolo "a national treasure that Canada must not lose."

With such a high intrinsic value, interest in the bankrupt company's patents is naturally already quite intense. In February of this year, for example, Chinese telecommunications company ZTE expressed interest in Nortel's portfolio, because the acquisition would bring the company to a point where it held about 10% of the world's LTE patents.

The portfolio includes more than 6,000 individual patents on wireless telecommunications, from integral 4G wireless technology to semiconductors, to search and social networking.

Google's Senior Vice President & General Counsel Kent Walker said on Monday that the acquisition would be a defensive move for Google, and one that will help further Google's mobile OS aspirations.

"A formidable patent portfolio...helps maintain your freedom to develop new products and services. Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories," Walker said. "If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community --which is integrally involved in projects like Android and Chrome-- continue to innovate. In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners."

Nortel said Google's stalking horse offer was $900 Million in cash.

"We look forward to what we hope will be a robust auction, following the requisite court approvals, currently expected to be held in June 2011," George Riedel, Chief Strategy Officer and President of Business Units at Nortel said on Monday.