Old telecom companies never die, they just end up as part of Web companies’ patent trust. After all, the distinction between telecom and web are fading fast…
Google is willing to shell out $900 million for about 6,000 patents covering all sorts of communications technologies. Why is this relatively young company interested in Nortel patents? Some may even liken it to Google digging up fossils (after all, Nortel is a dinosaur compared to Big G).
In short, Google is fed up with being sued, especially by patent trolls:
The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation. Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology. The patent system should reward those who create the most useful innovations for society, not those who stake bogus claims or file dubious lawsuits. It’s for these reasons that Google has long argued in favor of real patent reform, which we believe will benefit users and the U.S. economy as a whole.
This widens Google’s defense against its competitors as well as “dubious lawsuits.” Should Google indeed end up owning these Nortel patents, the company may even go on the offensive. Who would’ve ever thought that a Web giant like Google (incorporated in 1998) could potentially file a patent infringement suit against, say, AT&T (founded 1885)…
The patent acquisition also happened on co-founder Larry Page’s first day as Google CEO, replacing Eric Schmidt. Quite a tactical move for the first day on a job. Page means business, and he is definitely not afraid to spend money or pick up valuable scrap from the industry heap.
The official word from Nortel (lots of fine print):
April 4, 2011
- Enters into Stalking Horse Sale Agreement with Google Inc. for US$900 million in cash
- Planned sale includes approximately 6,000 patents and patent applications covering a broad range of wired, wireless and digital communication technologies
- Subject to Canadian and U.S. court approvals, auction expected in June 2011
TORONTO – Nortel Networks Corporation announced that it, its principal operating subsidiary Nortel Networks Limited (NNL) and certain of its other subsidiaries, including Nortel Networks Inc. and Nortel Networks UK Limited (in administration), have entered into a stalking horse asset sale agreement with Google Inc. for the sale of all of Nortelfs remaining patents and patent applications for a cash purchase price of US$900 million.
The agreement includes the planned sale of approximately 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors and other patent portfolios. The extensive patent portfolio touches nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.
This agreement follows a confidential, multi-round bidding process involving several interested companies and consortia from around the world.
“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. “We look forward to what we hope will be a robust auction, following the requisite court approvals, currently expected to be held in June 2011”.
Details of Sale Process
Nortel will file the stalking horse asset sale agreement with the United States Bankruptcy Court for the District of Delaware along with a motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. A similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice. Following completion of the bidding process, final approval of the U.S. and Canadian courts will be required.
In addition to the processes and approvals outlined above, consummation of the transaction is subject to the satisfaction of regulatory and other customary conditions.
As previously announced, Nortel does not expect that the Company’s common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.
Certain statements in this press release may contain words such as “could”, “expects”, “may”, “should”, “will”, “anticipates”, “believes”, “intends”, “estimates”, “targets”, “plans”, “envisions”, “seeks” and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on Nortel’s current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Nortel operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. Nortel’s assumptions, although considered reasonable by Nortel at the date of this press release, may prove to be inaccurate and consequently Nortel’s actual results could differ materially from the expectations set out herein.
Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) risks and uncertainties relating to the Creditor Protection Proceedings including: (a) risks associated with Nortel’s ability to: stabilize the business and maximize the value of Nortel’s businesses; obtain required approvals and successfully consummate pending and future divestitures; ability to satisfy transition services agreement obligations in connection with divestiture of operations; successfully conclude ongoing discussions for the sale of Nortel’s other assets or businesses; develop, obtain required approvals for, and implement a court approved plan; allocation of the sale proceeds of our businesses among the various Nortel entities participating in these sales may take considerable time to resolve ongoing issues with creditors and other third parties whose interests may differ from Nortel’s; generate cash from operations and maintain adequate cash on hand in each of its jurisdictions to fund operations within the jurisdiction during the Creditor Protection Proceedings; continue to have cash management arrangements and obtain any further required approvals from the Canadian Monitor, the U.K. Administrators, the U.S. Principal Officer, the U.S. Creditors’ Committee, or other third parties; raise capital to satisfy claims, including Nortel’s ability to sell assets to satisfy claims against Nortel; realize full or fair value for any assets or business that are divested; utilize net operating loss carryforwards and certain other tax attributes in the future; avoid the substantive consolidation of NNI’s assets and liabilities with those of one or more other U.S. Debtors; operate Nortel’s business effectively under the new organizational structure, and in consultation with the Canadian Monitor, and the U.S. Creditors’ Committee and work effectively with the U.K. Administrators, French Administrator and Israeli Administrators in their respective administration of the EMEA businesses subject to the Creditor Protection Proceedings; continue as a going concern; actively and adequately communicate on and respond to events, media and rumors associated with the Creditor Protection Proceedings that could adversely affect Nortel’s relationships with customers, suppliers, partners and employees; retain and incentivize key employees as may be needed; retain, or if necessary, replace major suppliers on acceptable terms and avoid disruptions in Nortel’s supply chain regarding our remaining businesses and stranded contracts; obtain court orders or approvals with respect to motions filed from time to time; resolve claims made against Nortel in connection with the Creditor Protection Proceedings for amounts not exceeding Nortel’s recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to Nortel’s interests; and (b) risks and uncertainties associated with: limitations on actions against any Debtor during the Creditor Protection Proceedings; the values, if any, that will be prescribed pursuant to any court approved plan to outstanding Nortel securities and, in particular, that Nortel does not expect that any value will be prescribed to the NNC common shares or the NNL preferred shares in any such plan; the delisting of NNC common shares from the NYSE; and the delisting of NNC common shares and NNL preferred shares from the TSX; and (ii) risks and uncertainties relating to Nortel’s business including fluctuations in foreign currency exchange rates; any requirement to make larger contributions to defined benefit plans in the future; a high level of debt, arduous or restrictive terms and conditions related to accessing certain sources of funding; the sufficiency of workforce and cost reduction initiatives; a failure to protect Nortel’s intellectual property rights; any adverse legal judgments, fines, penalties or settlements related to any significant pending or future litigation actions; failure to maintain integrity of Nortel’s information systems;; and Nortel’s potential inability to maintain an effective risk management strategy.
For additional information with respect to certain of these and other factors, see Nortel’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC. Unless otherwise required by applicable securities laws, Nortel disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For the Companies listed below, The Institute of Chartered Accountants in England and Wales authorises A R Bloom, S Harris and C Hill to act as Insolvency Practitioners in the UK under section 390(2)(a) of the Insolvency Act 1986 and the Association of Chartered Certified Accountantsauthorises A M Hudson to act as an Insolvency Practitioner in the UK under section 390(2)(a) of the Insolvency Act 1986.
The affairs, business and property of the Companies are being managed by the Joint Administrators, A R Bloom, S Harris, AM Hudson and C Hill who act as agents of the Companies only and without personal liability.
The affairs, business and property of Nortel Networks ( Ireland ) Limited are being managed by the Joint Administrators, A R Bloom and D Hughes, who act as agents of Nortel Networks ( Ireland ) Limited only and without personal liability.
The Companies are Nortel Networks UK Limited; Nortel Networks SA; Nortel GmbH; Nortel Networks France SAS; Nortel Networks NV; Nortel Networks SpA; Nortel Networks BV; Nortel Networks Polska SP Zoo; Nortel Networks Hispania SA; Nortel Networks (Austria) GmbH; Nortel Networks sro; Nortel Networks Engineering Service Kft; Nortel Networks Portugal SA; Nortel Networks Slovensko sro; Nortel Networks Oy; Nortel Networks Romania SRL; Nortel Networks AB; Nortel Networks International Finance & Holding BV
In addition on 28 May 2009, secondary proceedings were opened in relation to Nortel Networks SA pursuant to which the French Court authorized Nortel Networks SA to continue to operate the business owned and operated by Nortel Networks SA and appointed inter alia the French Office Holders as the administrators and liquidators of NNSA who act as agents of Nortel Networks SA and without personal liability.
*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.
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