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Apple-Backed Rockstar Said to Be in Talks to Sell Patents

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Dec. 24 (Bloomberg) -- A consortium created by Apple Inc., Microsoft Corp. and other technology companies to acquire $4.5 billion of patents from Nortel Networks Corp. in 2011 is holding discussions to sell a portion of those patents, according to people with knowledge of the plans.

The group, called Rockstar Consortium, has recently been in conversations with possible buyers about the patents, said the people, who asked not to be identified because the information isn’t public. Rockstar, which also includes BlackBerry Ltd., Ericsson AB and Sony Corp., has had little success in landing large licensing deals for the patents, three of the people said.

The talks signal a turnabout from 2011, when the patents were highly sought after. Apple and its bidding partners trumped an offer from Google Inc. for the patents. The deal, approved in 2012, gave the consortium access to about 4,000 patents and applications in areas including the Internet and chips from a company that was once North America’s largest phone-equipment maker.

Rockstar has already begun selling some of the patents. In July, intellectual-property company Spherix Inc. said it acquired a suite of patents from Rockstar. Spherix paid an undisclosed amount of cash and $1 million in stock, plus Rockstar will receive a percentage of future profits.

Rockstar executives didn’t return repeated requests for comment. Representatives for Apple, Microsoft, Ericsson, BlackBerry and Sony declined to comment or didn’t respond to requests for comment.

Patent Lawsuits

Ottawa-based Rockstar has operated as an intellectual property licensing company. Its chief executive officer, John Veschi, was previously chief intellectual property officer at Nortel. Rockstar has subsidiaries, including one called Bockstar.

Rockstar and its subsidiaries have pursued lawsuits over the patents. In October, Rockstar filed suit against Google, Huawei Investment & Holding Co. and affiliates, Asustek Computer Inc., ZTE Corp., HTC Corp., Samsung Electronics Co., LG Electronics Inc., and Pantech Co. for patent infringement. The patents up for sale don’t include the ones involved in the litigation, two people said.

A buyer, or several buyers, could acquire Rockstar’s patent portfolio excluding those involved in the lawsuits, two people said. Because Rockstar bought the Nortel patents at a high price and doesn’t want to sell them at a loss, the deals could be structured to take advantage of any future financial gain enjoyed by the buyer, the people said.

Another scenario would involve a third party joining the consortium to dilute existing investors, without involving a sale of particular patents, said one of the people.

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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