SAN FRANCISCO — Google has bid $900 million for the patent portfolio of Nortel Networks, the Canadian telecom equipment maker, as part of a strategy to defend itself against patent litigation.
The bid, which could grow even larger in Nortel’s bankruptcy auction, would be the third-largest purchase by Google, smaller only than its payments for YouTube and DoubleClick.
The amount of money involved signals how fierce the patent wars have become, particularly in Silicon Valley, where even the largest and most powerful companies like Google are besieged by dozens of patent infringement suits. It also underscores Google’s frustration with the state of the patent reform legislation in Congress.
Although Google could potentially use some of the technology in the Nortel patents in future research, the company said it wanted to buy them to defend against patent litigation. By building a large portfolio of patents, Google keeps them out of competitors’ hands. It also hopes to dissuade other companies from suing it, either because Google holds similar patents to the ones they might sue over or as deterrence — if you sue me, I will sue you.
“The only reason Google’s spending $900 million is because they feel the risk of those patents being in the hands of someone else — a competitor like Apple or a nonpracticing entity — is much greater than $900 million,” said Daniel B. Ravicher, executive director of the Benjamin N. Cardozo School of Law Public Patent Foundation, which advocates patent reform.
Kent Walker, a senior vice president and general counsel at Google, wrote in a company blog post, “One of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services.”
Google’s bid also highlights the growing importance of its mobile business. Many of the prominent patent suits in the technology industry involve mobile devices, including Android phones. Nortel’s patents are in wireless and telecommunications technologies, as well as other areas important to Google like Internet search and social networking.
“Google is basically buying legitimacy and buying a foothold in one part of the cellphone market,” said Robert P. Merges, director of the Berkeley Center for Law and Technology at the University of California, Berkeley.
After a confidential bidding process, Nortel chose Google’s offer as the starting point for the auction of 6,000 patents, 2,600 of which are in the United States. Nortel said it expected to hold the auction in June. The dozens of patent lawsuits that Google is fighting include one from Oracle, which has sued Google for patent infringement related to Java software used on the Android mobile device platform, and another from Paul G. Allen, the Microsoft co-founder who has sued Google and 10 other companies for infringement. Microsoft and Apple have taken aim at Google’s partners developing Android phones.