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The Nortel stalking horse

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Google has bid $900m for Nortel's patent portfolio, saying it hopes to use the portfolio to deter lawsuits against not only Google but also partners and open-source developers working on projects such as Android and Chrome.

On Monday, Nortel announced that it has entered a "stalking horse asset sale agreement" with Google, meaning that Google's bid will serve as a starting point when Nortel auctions off its portfolio. Nortel filed for bankruptcy in 2009, and according to a February report from Reuters, creditors of the fallen communications giant are hoping to raise over a billion dollars from the sale its portfolio.

According to Nortel, the portfolio includes about 6,000 patents and patent applications covering wireless, wireless 4G, data networking, optical, voice, internet, service provider, and semiconductor technologies.

"The extensive patent portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking," Nortel says.

Google has long been an advocate of patent law reform, but it has come to realize that before such reform occurs, it needs a hefty portfolio for defensive purposes. "As things stand today, one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services," the company said in a blog post. "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."

Mountain View said it reached the decision to bid for Nortel portfolio in the company's bankruptcy auction after "a lot" of thought. "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."

According to patent and open source software watcher Florian Muller, Google's Android operating system is now the subject of 37 separate lawsuits. Muller and others have claimed that one of the reasons Android has been attacked so frequently is that Google's patent portfolio is relatively weak.

Reuters has said that Apple, Ericsson, and RPX (Rational Patent Exchange) are also interested in the Nortel portfolio. RPX is an operation that seeks to help its clients reduce their patent litigation, and it does so by building a patent portfolio of its own and allowing clients to license the portfolio for an annual fee. ®

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