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Apple, Partners Said to Beat Google Alliance for Nortel Patents

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Apple, Allies Said to Beat at Least Two Rival Groups
Navin Hardyal works on the 'O' of a Nortel Networks sign. Photographer: Norm Betts/Bloomberg

July 2 (Bloomberg) -- Google Inc. tried to join at least one other bidder to buy a patent portfolio from Nortel Networks Corp. before losing to a $4.5 billion offer from Apple Inc. and its partners, a person who attended the auction said.

The biggest patent auction in history involved multiple rounds, negotiations that went into the early morning and at least three alliances of bidders who pushed the final offer to more than five times the starting price, said two people who were not authorized to reveal details of the auction.

“This was probably the most extraordinary bankruptcy auction I’ve ever been involved with,” Fred Hodara, who represented Nortel’s official committee of unsecured creditors, said in an interview.

The winning group includes some Apple competitors-turned-partners: Microsoft Corp., Research in Motion Ltd., Sony Corp., Ericsson AB and EMC Corp., Ontario-based Nortel said in a statement. Bankruptcy courts in the U.S. and Canada must approve the bidding results before the sale is final, Nortel said.

The purchase will give the winners control over more than 6,000 patents and applications that cover wireless and Internet technologies.

“This is by far the biggest patent auction in history, both in terms of number of patents sold and in terms of the price tag,” said Alex Poltorak, chairman and chief executive officer of Suffern, New York-based General Patent Corp. “Nobody expected the price to get this high.”

Google spokeswoman Katelin Todhunter-Gerberg declined to comment. Nortel’s lead bankruptcy attorney, Jim Bromley, declined to comment, said Ashley Baldev, a spokeswoman for the law firm Cleary Gottlieb Steen & Hamilton LLP.

Secret Procedure

The names of all the other bidders, the offers they made and most details were kept secret throughout the four-day auction, Nortel attorney Derek Abbott said. Like all the participants who spoke publicly about the auction, Abbott and Hodara declined to provide any details they considered confidential.

One of the groups that bid was led by patent-buying firm RPX Corp., of San Francisco, company co-founder and chief executive officer John A. Amster said in an interview yesterday.

The price and the determination of the bidders will probably never be repeated, Amster said. The circumstances of the auction, including the fact that it was overseen by a bankruptcy court, the size of the portfolio and the court-backed guarantee that the patents would be sold and not pulled off the block at the last minute, made the sale unique, he said.

RPX’s bids were made with the backing of 20 clients, Amster said. RPX buys patents in order to prevent them from being used against their clients in lawsuits.

The result may drive more money into the market for intellectual property, possibly fueling more lawsuits, Amster said.

The bankruptcy case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

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