|By Maureen O'Gara||
|June 28, 2011 11:30 AM EDT||
Five entities started vying Monday to buy the Nortel portfolio of 6,000 choice US and foreign patents and patent applications that the AM Law Daily says could be "key to the future of mobile computing." The auction could theoretically take days if hotly contested.
The bidders include Google, Apple, Intel and two purpose-built syndicates, according to a source close to the action.
One of the syndicates, a small one, is reportedly led by Microsoft, which already claims to have "a 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" and has asked the bankruptcy court in Delaware to overturn the terms of the sale that would allow any new owner to terminate existing license agreements.
That eventuality would be catastrophic, Microsoft said, resulting "in considerable disruption in the development and enhancement of various existing technologies and give the prospective purchaser an unfair competitive advantage."
The other consortium is reportedly a large syndicate of many members that won't have to dig that deeply into their pockets to cover the collective cost of the patents as it spirals upward possibly into the billions, probably more than any other portfolio has ever commanded.
According to court filings, some 40 companies were allowed to review the patents under NDA before deciding whether to bid, down from the 105 parties that originally expressed interest in the things. Of course it's possible that Google, Apple and Intel could also be part of one or both of the consortia.
One of the two consortia is evidently called Rockstar Bidco LP. Which one isn't clear, but Bloomberg reported last Friday that American regulators had cleared both Intel and Rockstar Bidco LP to bid for the prized portfolio. Apple and Google were previously cleared.
The Justice Department has been concerned the patents could be used to stifle competition or extract high-tech ransom demands and has been reviewing the bidders' intentions.
Google's $900 million stalking horse bid established a floor for the auction and the best of the sealed bids that had to be in by the afternoon of June 13 will have been selected as Monday's opening bid. It would have to have been more than $929 million and each sequent bid would have to be at least $5 million better.
The unprecedented auction is being held at the law office of Cleary Gottlieb Steen & Hamilton in Manhattan.
The 6,000-odd patents and patent applications cover widely used or essential widgetry like LTE, the 4G mobile data technology, data and optical networking, wireless video, Wi-Fi, voice, Internet search, social networking and semiconductors.
If Google doesn't win it'll still get a $25 million breakup fee.
A hearing is scheduled for July 11 to approve the final sale. Objections are supposed to be filed by July 6.