Not with a bang but with a whimper. On June 20th, for all intents and purposes, Nortel will no longer exist. That’s the day that the final pieces of its patent portfolio will be sold off to the highest bidder.
At its peak, in 2000, Nortel had a market value of $350 billion. At one time, the stock represented 36% of the entire value of the Toronto Stock Exchange and employed 90,000 people.
And now? The Globe and Mail’s Dawn Calleja confirmed today that attempts to reach a Nortel representative resulted in her calls being routed to an an anonymous call centre in New Brunswick.
It’s an inauspicious end for the once great Ottawa telecom player. Nortel has been basically reduced to the role of organ donor to the wireless industry; it’s technology is used in the iPhone, in BlackBerrys and Android phones. Rumours have all those companies and more at the table in a matter of weeks competing for Nortel’s wireless technology patents.
In April Nortel entered into a “stalking horse” agreement with Google for the sale of all of Nortel’s remaining patents and patent applications, for the negotiated price of $900 million. Some, however, believe that the patents are worth much more, perhaps as much as $15 billion.
Talking to the CBC recently, former Nortel director Sorin Cohn, said “People are talking about $900 million, but Google stands to make anywhere between $5 billion, $10 billion, maybe $15 billion out of these patents that Nortel is putting up through the auctions.”
The latest rumour about the arrival of Ericsson to the table brings the number of punters to four when added to Google, Apple and Research in Motion. And why wouldn’t Ericsson be at the table? After the Stockholm company acquired Nortel’s wireless equipment business in 2009 for $1.13 billion, those assets immediately breathed life into the company, promptly rescuing at least one quarter for Ericsson, whose stock has not recovered from a late 2008 battering.
So are the Nortel wireless patents a panacea for what ails other wireless players? Some say the move is simply a defensive one for Google and Apple because a treasure chest of patents is increasingly seen as a strong defense against IP litigation. According to research firm Fairfield Resources, there are 105 patent families essential to 4G technologies. Nokia holds 57 of these, Ericsson 14. The sale on June 20th is said to represent the final seven.
Since the release of the iPhone in 2008, Apple is the world’s most sued technology company. The company currently faces suits from Nokia, Motorola, HTC, and Kodak. The intellectual property battles are a high stakes game that is just heating up and they’re going to get a lot worse before they gets better, say some experts.
Lyle Vander Schaaf, an attorney with Washington firm Brinks Hofer Gilson & Lione, who handles cases before the International Trade Commission, said “Usually you have one 800-pound gorilla going after a new entrant. Here you’ve got 800-pound gorillas fighting each other.”