Patent-Licensing Companies Signal Interest in Nortel’s LTE Portfolio

Although debate rages about the approximate value of Nortel’s unsold LTE and other wireless patents, a market for those patents is sure to materialize when the insolvent former telecommunications giant finally decides how to dispose of them.

Nortel retains more than 3,000 (some reports say 4,000) patents, many relating to OFDMA, MIMO, and other key attributes of LTE. It now must decide whether it will auction the patents, fold them into a joint venture with a partner company, or keep them and pursue long-term licensing agreements with its former competitors and technology partners.

I have seen estimates of the patents’ worth ranging from $400 million to $1 billion. Ultimately the market will determine value. Nortel’s creditors, not inclined to draw out the process, would prefer to see the patents auctioned rather than consigned to a joint venture or an ongoing business.

Two patent-hoarding companies already have voiced interest in bidding on the Nortel patents.

One is Wi-LAN Inc., which has about 800 of its own patents and annual revenue in its latest fiscal year of C$35.4 million. To consummate a deal for the patents, Wi-LAN might have to create a separate company, with institutional investors providing the necessary capital. Unless there isn’t much of a market for the Nortel patent portfolio, I don’t think Wi-LAN will come away with the prize.

The other party that has expressed a strong public interest in the patents is Mosaid Technologies Inc. In a Reuters story published earlier today, Mosaid’s CEO said his company is prepared for a “highly competitive auction process” for Nortel’s patents.

Said John Lindgren, Mosaid’s CEO:

“The one that is getting the most market attention is the LTE patents and we certainly do have an interest in those.”

“There are some patents that we see as very attractive. We find diamonds in the rock quite a bit. We got our eyes on the specific areas.”

Mosaid has 1,915 patents, but none relating to LTE. Like Wi-LAN, Mosaid might not have the financial resources to prevail in a competitive auction. Like Nortel, Mosaid and Wi-LAN are headquartered in Canada.

Another Canadian company, with considerably more resources at its disposal, already has expressed clear interest in Nortel’s LTE patent portfolio. That company, Research In Motion (RIM), could easily outgun Wi-LAN or Mosaid in an auction. Nortel’s creditors obviously will prefer the highest bid.

If Wi-LAN and Mosaid are RIM’s only competition for Nortel’s LTE patents, you’d have to like the BlackBerry vendor’s chances.

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