Deals

Apple and others gearing up for patent wars with bids on Nortel’s 4G wireless patents

Nortel, a telecommunications giant that controls some major patents on the next generation of wireless technology, is auctioning off the remainder of its patents to suitors like Research in Motion, Apple and Microsoft, according to a report from Reuters.

The 4,000 patents, 7 of which are part of 105 patents that are considered important for the development of Long Term Evolution (LTE) wireless technology, that are being auctioned off are worth around $1 billion. For Apple and Microsoft, they seems like an obvious choice because the companies are making a strong push into the mobile space and have to gear up for potential patent lawsuits with major players like Nokia.

Dealing with patent lawsuits is basically a sure thing for larger companies — particularly newcomers in the mobile space like Apple. It’s a game large companies typically play amongst themselves as a scare tactic and as a way to defend their market share. Patents are also a good source of revenue from licensing deals and the like.

Apple has already assembled a legal team to prepare for pending patent wars with Nokia, one of the old guards of the mobile market. According to the report, Nokia controls more than half of the patents important to the development of the LTE 4G wireless network. Picking up Nortel’s patents would give Apple a bit of a better foundation in that fight.

Apple already has a lot of early mobile computing patents, thanks to its misadventures with its Newton personal digital assistant. But it does not have a lot of mainstream, modern cell-phone technologies. Microsoft and Research in Motion — traditionally aggressors in the patent war zone — could also find a lot of use for Nortel’s patents. Apple is in a pretty good position to pick up the patents, seeing as the company brought in more than $20 billion in revenue last quarter alone and said it has plenty of cash on hand.

The auction for the patents began around seven months ago and is being run by Lazard Capital and Global IP Law Group. Research in Motion made an earlier bid for the patents in 2009 but has not said if it is involved in the current auction, according to the report.

Nortel, once a giant company with a market cap of roughly $250 billion has faded into obscurity after filing for protection from creditors in 2009. The company was a casualty of the dot-com era recession and spent the next years spinning down its operations. The patent auction is one of the last dances for the telecom giant.