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Nortel Patents: A Painful Loss For Google

Google offered $900 million for Nortel's remaining patent portfolio in a stalking horse bid. A consortium of Google enemies, however, placed the successful bid of $4.5 billion. What now, Google?

Nortel squeezed a substantial amount of cash out of its 6000 patents, thanks to the patent-sue-me-sue-you frenzy in the wireless industry. Relating to the areas of wireless, wireless 4G, data networking, optical, voice, internet, service provider, and semiconductors, the portfolio may have little value as an asset the perspective of active innovation, but it is said to carry tremendous value as a defense in potential lawsuits.

The winning consortium consists of Apple, EMC, Ericsson, Microsoft, RIM and Sony. What makes this sale so special is the fact that those are companies that already have a substantial patent portfolio, while Google has not and it is generally seen as a problem for Android. Whether we like it or not, the U.S. and this industry in particular is a patent and legal system mess. Fraudulent lawsuits are surfacing frequently and threaten to slow or halt innovation.

Google, which originally made it sound like it had to simply buy the portfolio to be able to "innovate", is now out of the loop again and there are questions just how dangerous this game is and how likely it is that Android can be shut down by lawsuits. At the very least, Google will need to be more open about its strategy to defend especially Android developers and handset manufacturers against lawsuits.