Apple, Microsoft, Sony and RIM part of consortium that bought patent portfolio from bankrupt telecoms company Nortel Networks
Apple, Microsoft, Sony and BlackBerry maker Research in Motion are part of a winning consortium of six companies which have bought a valuable tranche of patents from the bankrupt Nortel Networks patent portfolio for $4.5bn (�2.8bn), in a hotly contested auction that saw Google and Intel lose out.
Early signs had suggested that Google might be the winning bidder for the patents, which will provide valuable armoury for expected disputes in the communications ? and especially smartphone ? field.
The result could give Apple and Microsoft the upper hand in any forthcoming patents rows. Microsoft is already extracting payments from a number of companies that use Google's Android mobile operating system on the basis that it owns patents that they were infringing. Oracle has big court case against Google alleging that Android infringes a number of Java patents, and claiming $6.1bn in damages.
Had Google won the bidding for the patents, it would have been in a better position to protect Android from patent infringement claims.
Large patent portfolios are often used in a tit-for-tat manner to defend a company and its intellectual property from patent claims by rivals: cross-licensing deals effectively create a ceasefire. As a relatively young company, Google has comparatively few patents that it can use for such deals.
Storage company EMC and Swedish communications company Ericsson were also part of the winning consortium, for which the result was announced late on Thursday night.
The sale includes more than 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, semiconductors and other patents. The most prized ones relate to mobile broadband technology used in emerging 4G standards such as long term evolution (LTE).
Google had opened the bidding at $900m in April. Apple and Intel then quickly entered the auction. The three companies are relative newcomers to the increasingly litigious mobile industry which is seeing booming demand for smartphones and tablets.
Apple recently completed a cross-licensing deal with Finnish handset maker Nokia following a long-running patent infringement row. The settlement is expected to cost the American company many millions of dollars every quarter.
"The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world," said George Riedel, chief strategy officer and president of business units at Nortel.
RIM's portion of the purchase consideration is about $770m, while Ericsson paid $340m, the companies said in separate statements. Apple and Microsoft have not said how much they paid or how ownership of the patents will be split ? though the most likely scenario is that if the patents are licensed then the companies will receive payments in proportion to their contributions.
The sale is subject to Canadian and US court approvals which will be sought at a joint hearing expected to be held on 11 July, Nortel said.
Earlier on Thursday, Nortel obtained a court order to further extend the stay of proceedings under the Companies' Creditors Arrangement Act to 14 December.
The patents are the last major assets to be sold by Nortel Networks, a once-giant Canadian technology company that imploded as the tech bubble burst, and filed for bankruptcy protection in January 2009.
Nortel raised around $3.2bn for creditors by selling business units since then.
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