Observations on the Nortel Patent Auction

July 1, 2011

As the world just learned, a consortium of rival technology companies, including Apple, Microsoft, RIM, Sony, Ericsson and EMC, outbid Google and its partners in a $4.5 billion mega-purchase for the rights to a patent portfolio from Nortel Networks. By all accounts this is an unprecedented event, in terms of size (~6,000 patents), dollar value (~$750,000 per protected idea) and its potential impact on the mobile computing industry.

Today, as the dust settles, the question on everyone’s mind is “who came out ahead?”

Was it Apple, Microsoft, RIM and the others who squeezed Google out of the bidding? Or was it Google and its partners invested in the Android ecosystem, who saw their largest competitors pay an historic sum while playing defense?

Analysts and pundits will go back and forth on this question. But the lesson here isn’t about Apple or Google, phones or tablets. It’s that strong IP portfolios are now a clear business necessity for the world’s most innovative and respected technology companies. Invention rights are increasingly valuable, and the strategic acquisition of IP will allow these companies to continue fearlessly inventing.

Over the coming months we’ll witness the ripples of the Nortel wave – companies will question the protection of their products, hire chief IP officers and strategists, and invest in IP like a crucial piece of capital. And as these companies awaken to the importance of IP, the market for invention will continue to grow and prosper.

There’s value in ideas. Now more than ever.

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