Nortel delays patent auction

Nortel France factory during a general assembly on July 20, 2009 in Chateaufort, outside Paris.

Jeremy Hobson: Next week the bankrupt telecom company Nortel Networks is trying to sell off whatever it can. Including product patents.

As Marketplace's David Gura reports, those could be worth a lot of money.

David Gura: Nortel was a telecom titan for a long time, but it took on too much debt.

Rob Enderle: Well, they kind of melted down.

That's tech analyst Rob Enderle. Lawyers were set to auction off some 6,000 patents yesterday, but editor Larry Dignan says that because of "significant interest," they decided to wait a week.

Larry Dignan: They might as well have said, we're delaying this a week because we have a bidding war on our hands, and we're going to hang back and see what happens.

A lot of companies have checked out the merchandise. Google was prepared to bid almost $1 billion. So why's this stuff worth so much? Analysts say a company wants to have lots of patents, so that if it gets sued for violating one, it can counter-sue.

Dignan: And then the two parties kiss and make-up, swap a few billion, and you're done.

Dignan says Google's a young company, without a diverse patent portfolio. And rivals have sued it over its Android operating system. Dignan says with these patents, Google could build up its arsenal.

In Washington, I'm David Gura for Marketplace.

About the author

David Gura is a senior reporter for Marketplace, based in the Washington, D.C. bureau.


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