The following is excerpted from a June 27, 2011 article by Peg Brickley of Dow Jones Daily Bankruptcy Review and published by The Wall Street Journal:
Technology heavyweights will throw down Monday for the formidable patent portfolio of Nortel Networks Corp., vying to stock up their arsenals for raging legal battles over smartphones, Web advertising and whatever comes next in the multitrillion-dollar technology wars.
Stuffed with 6,000 patents and patent applications, the intellectual property treasure chest of the liquidating telecommunications company could ward off hundreds of millions of dollars worth of patent infringement lawsuits and open the doors to billions of dollars worth of sales of devices and technology. Creditors, needless to say, are looking for much more than the $900 million opening offer that Google Inc. (GOOG) threw on the table.
Remarkable for its size and notoriety, the Nortel patent auction is part of a steady and growing stream of patent sales in a market that has been flooded with activity in recent years, one that has billions of dollars of capital ready to do deals.
For many reasons, companies can find themselves with patents they're not using, "like an empty plant," Berten [David Berten, a former litigator and one of the Global IP Law Group's founders] said. Convincing another company to take a license and pay royalties is a long and expensive proposition. "Litigating takes even longer and is more expensive," he said.
A sale is a faster path, but not always an easy one for an asset that has been considered a daunting value proposition, according to Berten.
"Anyone can get comps for real estate. Everyone can calculate what accounts receivable are worth," Berten said. "The asset class that may have the most value is the patents, but that's the toughest to understand."
Read the full article here.