Android (operating system)

Consortium led by Apple buys Nortel's patents for $4.5 billion

July 1, 2011: 5:55 AM ET

Google's Android operating system is the big loser as 6,000 patents fall into enemy hands

In the largest exchange of intellectual property rights in the Internet age, a powerhouse consortium led by Apple (AAPL) and Microsoft (MSFT) has agreed to buy from the bankrupt Nortel Corp. access to more than 6,000 patents covering key telecommunications technologies, from Internet services to wireless data networking.

The consortium, which includes Sony (SE), Research in Motion (RIMM), Ericsson (ERIC) and EMC (EMC), bid $4.5 billion for Nortel's patent portfolio. "The size and dollar value for this transaction is unprecedented," said George Riedel, chief strategy officer of Nortel in a press release.

The winning bid was five times larger than the initial "stalking horse" offer of $900 million made in April by Google (GOOG). Google, a relative late-comer in the highly litigious world of wireless technology, seemed to be trying to secure patent protection for its Android operating system.

"No major industry player is as needy in terms of patents as Google," wrote FOSS Patents' Florian Mueller after Nortel announced the results of the sale late Thursday. "There are already 45 patent infringement lawsuits surrounding Android, and makers of Android-based devices have to pay royalties to dozens of right holders."

In January Mueller called Android a "suit magnet," and subsequent events have proved him right. He summarized the latest round of litigation and licensing agreements in an analysis published earlier this week.

"In light of Android's patent problems it's surprising that Google didn't outbid everyone else," he wrote Friday. "It could have afforded more than $4.5 billion but it doesn't appear to be truly committed to Android."

In an e-mail to news organizations, Google called the outcome of the patent auction "disappointing."

Below: Nortel's description of the patent portfolio the consortium has agreed to buy.

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