$4.5 B. Nortel Bid Shows the Disastrous State of Software Patents

http://www.betabeat.com/2011/07/01/4-5-billion-purchase-of-nortel-patents-is-a-potent-reminder-how-broken-the-system-has-become/

by bproper • 15 years ago

56 48 15 years ago

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monochromatic5• 15 years ago

This article is awfully thin. It doesn't give any argument whatsoever for why software patents are not a good thing. Here's a summary:

1. Google, Microsoft, Apple, RIM, and Sony are willing to pay a lot of money for a bundle of patents, including both software and hardware.

2. Therefore, software patents are evil and a tax on innovation, rabble rabble rabble.

It's not much of a syllogism.

Produce4• 15 years ago

I think that the argument for why software patents are dangerous is the $4.5 billion figure. If companies are shitting their pants to this extent then clearly the patents have a huge impact on business from their perspective.

padrack• 15 years ago

Exactly. The price is well above expert estimates. While these tech giants can afford that extra cost, the same tension is playing out for smaller startups that cannot.

larrik• 15 years ago

But if these patents were say, automotive in nature, and a coalition of automotive companies bought them for 4.5 billion, would we immediately jump to the conclusion that automotive patents are bad? I wouldn't (necessarily).

I have to agree with the parent comment.

inkaudio• 15 years ago

The argument is simple, not thin. Instead of spending billions on new R&D, new innovation, these companies have to spend money on the shenanigans of the current software patent system.

monochromatic5• 15 years ago

The money spent on these patents creates a market for innovation by monetizing patents. If Google et al. thought these patents were invalid, obvious extensions of the prior art, would they be willing to spend this much money?

Steko2• 15 years ago

The other side of the coin that no one has pointed out yet:

The innovation represented by these patents just made $4.5 billion. That's the definition of rewarding innovation.

"Instead of spending billions on new R&D"

If it was legal for every KIRF to come in and use every other companies innovations there would be much less incentive to invest in R&D to begin with.

GHFigs2• 15 years ago

I don't understand. For one thing, Google wasn't "the early front runner", they were the stalking horse bid--essentially the minimum. There seems to be this retroactive meme going around to the effect that Google was expected to win with that bid or that they somehow deserved to. It's an auction, folks.

It's not clear to me that that was their final bid, either. Maybe it was, but I can't imagine Google letting something important to them climb at auction from from $0.9 billion to $4.5 billion without staking another bid.

The second thing I don't understand is the connection between the price paid by a consortium of major tech companies[1] for a collection of patents from a formerly major tech company--only a few of which are even software at all--to Fred Wilson ranting about Lodsys. Who is the troll here? Nortel? What is the significance of the dollar figure? How does it "echo the sentiment" of Wilson?

[1]:BetaBeat says "...a coalition of Microsoft, Apple, RIM, and Sony...", while the actual press release[2] states: "Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony."

[2] http://www.marketwatch.com/story/nortel-announces-the-winnin...

SoftwareMaven2• 15 years ago

The complaining was around companies needing to spend $4.5B in pre-emptive legal defense. The $4.5B being pre-emptive is extrapolated by me (and I'm assuming the author) from Google stating their $900M was.

Nowhere in the article did it even imply any of the players in this transaction were trolls.

GHFigs2• 15 years ago

What was the point of saying that the size of the winning bid "echoes the sentiment" of a rant about Lodsys?

scubzero• 15 years ago

I think the patent law being broken arguement that the article is trying to make is as follows:

the consortium that bought nortel's patents didn't do so for the patents themselves, they did so to prevent google from having the patents. And they didn't want google to not have the patents not because they were afraid of google bringing products to market based on those patents, but because they didn't want google to be able to shield themselves from patent lawsuits.

cube133• 15 years ago

Nortel has several 4G LTE-related patents in the pool(http://mobile.eweek.com/c/a/Mobile-and-Wireless/RIM-Not-Goog...). Those are HUGELY valuable to Apple, RIM, Sony Ericsson and Nokia. I would be very surprised if none of those companies came out with 4G phones in the next year or so. Getting control of the patents can save them a pretty tremendous amount of money on licensing fees.

These were probably the ones that those companies wanted, and the entire reason that the price is so high. They simply could not let Google be the sole owner of the patents, because that would give Google way too much power in the mobile space.

Out of all the companies, MS is probably the only one that did it specifically to hurt Google. However, this also could signal that MS is going to make their own WM7 phone.

Caligula• 15 years ago

I worked briefly at Nortel. It makes me sad reading these articles. Nortel was a great company that still could have been successful today were it not for terrible corrupt high level management.

yalogin• 15 years ago

Isn't it better that a coalition won instead of Google? Now at least these companies will not sue each other. Its much better that way. Google should have joined the group rather than going itself.

Also Nortel was a really huge company and a really good one at their peak. So its not surprising it amassed that many patents or that they fetch that much value.

sorbus2• 15 years ago

Google expressed an interest in using the patents defensively, and implied that it would share them with the open source community. If the coalition intends to use the patents offensively, which is very plausible considering the companies involved, then it is not better that it won.

brudgers2• 15 years ago

Nations express an interest in obtaining nuclear weapons for peaceful purposes. One side effect of obtaining them is that it limits their neighbor's options when the tanks roll into their back yard.

Google is no more benign than any other company.

og1• 15 years ago

Probably coincidental, but the math lines up where Google could retroactively buy into the group at the price of it's 900M bid. After that the 4.5 Billion would be split evenly between the five companies.

Edit: Looks the BetaBeat article excluded EMC and Ericsson, so the split wouldn't work so nicely.

petegrif• 15 years ago

Lame poorly written piece without clear argument or even any remotely convincing substantiation for its disconnected assertions.

bproper• 15 years ago

The software patent system in this country is broken.

Google said so in its initial blog about the Nortel portfolio.

Many VCs have been expressing the same thing in recent weeks.

These two separate actions represent the very early and very late stage of the technology game.

The fundamental problem, however, remains the same.

sehugg• 15 years ago

This Wikipedia article is an interesting read: http://en.wikipedia.org/wiki/Motion_Picture_Patents_Company

It describes a strong-armed patent consortium formed around the turn of the century which controlled filmmaking technology. Indie filmmakers reacted by establishing new operations in a little place called Hollywood.

kjksf4• 15 years ago

It seems like there is a simple tweak that would make everything better: DOJ should force the "consortium" to allow Google to join at the same price. It seems each company will pay $750 million. Google should be allowed to pay $750 million for the patents as well.

That way Nortel gets more money and Microsoft, Apple and RIM won't be able to torpedo Android with lawsuits (as opposed to doing a better job).

$4.5 B. Nortel Bid Shows the Disastrous State of Software Patents

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