Google bids $900m for Nortel patents

Google has sought to bolster its weak position in the smartphone industry’s patent wars, bidding $900m for a stack of patents put up for sale by Nortel, the bankrupt Canadian communications equipment maker.

The bid, announced on Monday, comes as the search company, along with handset makers and others that use its Android mobile operating system, find themselves beset by lawsuits over the software.

Companies including Oracle, Microsoft and Apple have taken aim at Android as it has risen to become the most widely-used software on touchscreen handsets, potentially slowing its adoption and raising the spectre of high licensing fees for hardware makers.

Bulking up on its patent holdings would give Google a stronger defence against such attacks, software industry experts said.

In part, that is because it would leave it with a war chest of its own intellectual property to counter-sue aggressors.

“[Google’s] patent portfolio is too weak for what they have undertaken with Android,” Florian Mueller, an open source software advocate, said.

“If you’re going to make a foray into such a litigious area of business, you’d better have an arsenal.”

Kent Walker, Google’s general counsel, said in a blog post that one of the best defences against legal attack “is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services.”

While not referring directly to smartphones, he warned of an “explosion of litigation, often involving low-quality software patents, which threatens to stifle innovation”. The Nortel intellectual property, which has been on the block since the middle of last year, covers around 6,000 patents and patent applications in a range of communications technologies. These span optical networking, voice and semiconductors as well as the wireless and data networking areas that are closer to Google’s business.

Google said its offer was a “stalking horse” bid that would be used by Nortel as a base to try to elicit other offers.

With the price tag already approaching $1bn, few others would be able to bid against Google, said Eric Goldman, an associate law professor at Santa Clara University in Silicon Valley. Apple, which has been reported in the past to have an interest in the patents, was one of the few that could compete, he added.

Mr Walker blamed Google’s weak IP holdings, which amount to some 600 patents in the US, to its young age as a company. By contrast, Microsoft, which embarked on a concerted campaign to boost its IP portfolio early last decade, has more than 17,000.

If Google did not buy the patents, they could well end up “with a competitor, or in the hands of trolls who are going to go out and start trouble”, Mr Goldman said – a reference to buyers who acquire patents purely to start legal actions.

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