Google (NASDAQ:GOOG) has been named as the stalking horse bidder for a portfolio of approximately 6,000 patents held by Nortel Networks.
Nortel declared bankruptcy in January of 2009 and ever since has been shedding its assets. The patent sale is one of the final steps in the dissolution of Nortel. The patents include wireless, data networking, optical and voice patents as well as social networking and search.
“This is an unprecedented opportunity to acquire one of the most extensive and compelling patent portfolios to ever come on the market”, said George Riedel, Chief Strategy Officer and President of Business Units, Nortel in a statement.
A stalking horse asset sale is one where there is a bidder that sets the floor price for the sale. Other bidders may still emerge to outbid Google, though Google will have the ability to increase its offer. The patent sale auction is expected to occur in June.
When Nortel sold its enterprise business to Avaya in 2009, Avaya was the stalking horse bidder, with an initial bid of $475 million. The final sale of Nortel’s enterprise business ended up costing Avaya $900 million as other bidders pushed up the price.
Google’s interest in acquiring the Nortel patents is partially a defensive move to help protect against patent litigation.
“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,” Kent Walker, Senior Vice President and General Counsel at Google wrote in a blog post. “In the absence of meaningful reform, we believe it’s the best long-term solution for Google, our users and our partners.”
Others in the open source ecosystem, include Linux vendor Red Hat (NYSE:RHT) also considers its patent portfolio to be a defensive measure.