Nortel: We Still Own the LTE Patents

By Mark Evans | Published: July 28, 2009

If there was any uncertainty, Nortel made it clear that it is not – repeat not – selling any of its LTE patents under the planned sale of wireless assets to Ericsson. (Update: Two courts have approved Ericsson’s $1.13-billion offer, according to the Globe & Mail.)

The Wall St. Journal reports that Nortel lawyer Derrick Tay said Nortel will “license the appropriate LTE patents to Ericsson as part of the planned deal”.

The patents are what interests Research in Motion, which made a last-minute bid to participate in last week’s auction for the CDMA business and LTE R&D unit.

While RIM apparently wanted to bid for assets it didn’t really want, it was likely a strategic smokescreen that is working to perfection.

What RIM did was wave the Canadian flag and put the spotlight on how Canadians need to own world-class technologies rather than letting a foreign company own them.

The politicians, who had been happily ignoring Nortel, bit hard on RIM’s efforts. RIM now looks like the local hero, protecting Canada’s innovation and R&D assets.

It’s just a guess but when Nortel does eventually decide to sell the LTE patents, RIM’s going to bid aggressively, and lobby the federal government to support its efforts. This will put the pressure on Nortel to make a deal with RIM; RIM will pay a premium to make creditors happy, this will make the federal government happy, and Canada (aka RIM) will keep ownership of world-class technology.

Update: The Globe & Mail is reporting that the Ontario government could have a liability as much as $500-million related to Nortel’s pension fund.


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Newer Comments →
  • CommonCents

    I believe it was mostly a move to restrict NSN from being an Access player. That is why it was more valuable to them than NSN. As long as no one is using the patents, Ericsson won't have to compete against it.

  • xnt

    RIM wanted two things

    Priority #1 — The LTE patents
    Priority #2 — The best Nortel LTE engineers

    The way Nortel organized the auctions, RIM could not get both in a single deal, and by the rules, effectively a company could only get in on one deal.

    So it made this public play to position itself for the patents, and made it clear to a lot of Nortel LTE engineers that there are likely jobs for them at RIM when they get the patents (if they want to leave Ericsson).

  • NTInfidel

    A tidbit here about who does and does not own LTE patents, though several players likely go unmentioned like Ericsson.

    http://www.thedeal.com/corporatedealmaker/2009/…
    “
    InterDigital tops the ETSI list of LTE patent declarations, with 249.
    Qualcomm, number two on the ETSI list with 187
    China's Huawei Technologies, No. 3 with 147 patents
    Nortel declares 45 LTE patents,
    Nokia Siemens weighs in with 31.

    As for intriguing absences, one of them is RIM. Another is Apple Inc. (NASDAQ:AAPL), maker of the iPhone.”

  • TongueInCheek

    Consider this as a possible play. If RIM were to own the Nortel patents for MIMO, then they could effectively block Apple from using that technology or at least charge a licensing fee to any device maker that wants to use MIMO.

    Good to see that a formal statement has come out on the patents. It is just as I expected and have talked about here for the past week or so. All the sale documents showed an Intellectual Property Licensing Agreement rather than an actual patent sale.

    There is some Canadian case history on this type of thing. WiLAN got out of the equipment business a few years ago and restructured as a Patent Company. They operate today licensing various patents from their portfolio, such as OFDM.

  • john2009

    RIM Can get the LTE Patents but in the future all the new thouhts from canadian Engg (work in (Ericsson – Nortel) would goes to Ericsson only. I dont thing the politician and RIm concerned abt that as they are not bathered about countries future play on hitech telecom industry.Each canadian has to prode that Nortel has more then 3000 patents which all are by hard working brins from canada which we will not going to see from Now.

  • nfn

    Don't forget:

    Priority #3 – tax credits
    Priority #4 – working LTE protocol stack

  • NTcommunicator

    Dear Lord above! If your grammar and spelling are any indication of the power of Canadian brains, then Canada is better off giving the technology to someone far less dangerous (to others and themselves). What was that pile of typed mush supposed to imply?

  • farscape

    Nortel does not have the monopoly on MIMO.

    RIM is looking for some LTE patents that would give them some leverage when dealing with the chip makers, the likes of Oualcomm which collect royalties for every terminal or BTS sold and which contains their IP. Right now they are estimating that 3.5% of the cost of every LTE terminal/mobile will be paid to them…

  • farscape

    Maybe or maybe not: let's not forget the feedback E/// received from Verizon: if it wasn't for NT's financial troubles, they would have preferred them over Ericsson for LTE – this is from Magnus' address in the Monday GIS.

    Verizon might have had a say in this deal, if NSN was targeting a competitor for initial LTE deployment.

  • NortelTragedy

    He probably speaks two, three, maybe four languages more than you and most people.

  • NTcommunicator

    And he can't write in at least one of them. If someone is going to harp about intellectual prowess, they should at least come across as if they have some.

    On another note entirely, and one better related to the blog post, I predict that within six months, Nortel will be selling its LTE patents to RIM.

  • lastCDMAchump

    I bet you, he's one of the new Sprint/Verizon CDMA technical support, customer service experts.

  • RedFlag

    How much are the patents worth and how will they be sold? If RIM gets them, it will be an insider play, bet they will get the patents real cheap.

    BUT I hope Nortel holds on to their patents and sells everything else to become a holding company.

    Creditors will then become majority owners if there is not enough cash to pay all debt from the asset sales. NT will be re-capitalized.

    The inept BOD will finally be replaced and top management will get fired as they deserve to be.

    Atleast, pensions may be saved via royalty payments from the patents. Most employees will get job offers with the asset buyers.

  • scalppeeler

    “It’s just a guess but when Nortel does eventually decide to sell the LTE patents, RIM’s going to bid aggressively, and lobby the federal government to support its efforts”
    –>>He said licensing patents. Is that the same as sell?
    “This will put the pressure on Nortel to make a deal with RIM”
    Wrong. You are saying the federal gov't will pressure Nortel. They haven't done so yet and don't expect them to in the future.
    “RIM will pay a premium to make creditors happy, this will make the federal government happy, and Canada (aka RIM) will keep ownership of world-class technology”
    –>>RIM do have money in the bank. Make no mistake. They could probably buy the entire Carling campus for 250 million. You say the creditors will be happy. What about keeping current employees happy? That should be first and foremost on everyones mind. Reinstate the severances or offer some job security at least short term, and then a severance. Don't the poor slobs still at Nortel deserve a little sympathy sticking through this debacle?

  • TongueInCheek

    Given those comments on your GIS, this transaction makes a lot more sense. Ericsson effectively marginalized a potential competitor at a huge account that is an early adopter of LTE. Hopefully this translates to better job protection for your team.

  • Casual_Observer

    Qualcomm has been surprisingly quiet in all of this.

  • joremero

    ” (Update: Two courts have approved Ericsson’s $1.13-billion offer, according to the Globe & Mail.)”

    I don't think I have seen regulatory approval, so it wouldn't be completed the sale, yet, I think

  • Taka_Taka_Catfish

    If it wasn't for NT's financial troubles, Verizon would have preferred Nortel over Ericsson for LTE!

    So Nortel had plenty of cash and was on the verge of becoming one of the big LTE providers and Z decides to declare bankruptcy?
    Z's panicked decision to file for chapter 11 should get him terminated for cause.

    Z looked like a fool during the Mobile World Congress in Barcelona when Verizon made their announcment about LTE providers.

  • charlesolga

    All I can say is it's about time!!! However, I still got the rosary beads going steady:)

  • MyHeadHurts

    Looks like John Roth's dream will be realized afterall.

    Back in 1997 he had intentions of making Nortel into a IP company. No manufactuering. Just a engineering brainhouse that would cook up patents and license them to others to build. He wanted to close manufactuering. That was the start. Now, we see the logical end.

  • joremero

    One of the Verizon Execs also said something very similar, that NT had one of the best solutions, but due to everything else…. though some people don't want to listen

  • ntpurgatory

    I think you hit the nail on the head, Mark

  • joremero

    NSN can be an access player, and they can use the patents required for the patents, they simply don't have the technology that NT developed. NT has said in the past that it is charging 1% of every LTE handset sold, it doesn't say they are charging vendors… But in this case, since ERIC and NSN both sell handsets, then ERIC should save some money in the long run.

  • tryn2makealivin

    Scalppeeler Writes:”You say the creditors will be happy. What about keeping current employees happy? That should be first and foremost on everyones mind. Reinstate the severances or offer some job security at least short term, and then a severance. Don't the poor slobs still at Nortel deserve a little sympathy sticking through this debacle?”

    First you say make the employees happy and then you call them slobs, reall nice. So when did you get the impression Nortel, Courts, Lawyers, creditors or anyone cares about employees anywhere especially Nortel.

  • tryn2makealivin

    Catdish pretty much summed it up. Nortel has had the people, R&D and yes the products but dumb arse management has always found a way to ruin it. Nortel has and continues to occupy buildings with echos i.e. 10times the space they need. They continue to carry a sales team large enough to be a 20 Billion dollar company. This is all to satisfy the egos of the SLT team who are automatic millionaires just by landing a job at NoTel.

  • scalppeeler

    I am being nice calling them slobs.
    You should see what I call undesireables.

  • yes4aapl

    The Wall St. Journal reports that Nortel lawyer Derrick Tay said Nortel will “license the appropriate LTE patents to Ericsson as part of the planned deal”.
    The patents are what interests Research in Motion, which made a last-minute bid to participate in last week’s auction for the CDMA business and LTE R&D unit.

    While RIM apparently wanted to bid for assets it didn’t really want, it was likely a strategic smokescreen that is working to perfection.
    ====
    re
    RIM would be happy if gov pushed Nortel to give these patents to RIM, wrapped in Canadian flag as someone said so.
    Not a chance
    If those patents are of strategic value, creditors would require auction in which other smart phone makers would participate.
    also I don't understand why BK courts don't give creditors powers to decide about Nortel. The irony is that creditors want to restructure Nortel and BOD wants to sell all assets one by one.
    MatPat idea is most valuable for stakeholders including Pension Funds.
    Nortel's actions are only good for BOD and managers.

  • Teleguy

    You're a brainless asswipe.

  • tryn2makealivin

    Well you have proved yet again you are consistent in contradicting yourself. Up the medication.

  • whatnext4nt

    Quality is more important in many respects vs. quantity when it comes to patents. Nortel LTE has less quantity but some very significant quality LTE/wireless patents. Some of the key Nortel LTE/wireless inventors including Wen Tong jumped ship to Huawei; but there are many great inventors left in the Nortel Wireless group.

  • whatnext4nt

    MOSAID is another example.

  • NortelTragedy

    I think Scalppeeler meant SLT-obs

  • PM_Guy

    Next on the block “Enterprise” Going once,Going Twice, Gone, and the winner is…

  • shleprock

    Why have the shareholders not gotten together and filed a class action lawsuit???

    or has there been one filed??

  • scalppeeler

    You would be surprised.

  • scalppeeler

    Send me 50k and I'll be glad to represent you in Court.
    I can guarantee you'll get at least 10 percent of your investment in Class Action back.
    And I believe it is a smooth move to launch a class action when a company is under bankruptcy protection. I think you should me a 25k retainer tonight.
    American Dollars only please and Cash only.

  • joremero

    “also I don't understand why BK courts don't give creditors powers to decide about Nortel”
    Because even though it looks like CH7, it is still CH11 where Creditors don't have as much power

  • exnt_x_2

    Ah yes, all the expat's are going home. Good riddance. Great political players but crap engineers.

  • vladhed

    It's not a nationality thing: Peter Ashwood Smith, another former Nortel patent star, is now working for Huawei. I know for a fact that he is not Chinese :-)

  • fabrice002

    How much you wanna bet that with the competitive sale of CDMA/LTE, Enterprise, and then a lucrative sale of IP to RIM, that Nortel will raise enough capital to pay the creditors and continue operating OME/MEN as-is?

    Just saying….

  • joremero

    do you have any idea how much Nortel has in liabilities?
    I believe it is over 7-8 billion

  • zeroman

    impossible. total debt is 11 billion. burn rate is still high. remaining units do not make profit. CDMA was the one carrying Nortel.

  • joremero

    I want to bet with you. 20 dollars ok? Liabilities far exceed assets.

  • joremero

    even if they win, they would become another creditor. So let's say they settle for 10% of the value, or even 40-50%. Then out of that, since they are creditors, they will end up getting 10-20% of that… at the end it may not be worth it.

  • broadbandbill

    and keep paying themselves those huge 'success' bonuses…–bb

  • yes4aapl

    Update: The Globe & Mail is reporting that the Ontario government could have a liability as much as $500-million related to Nortel’s pension fund.

    ====
    re
    Ontario $500 mill? and Canada as a whole?
    In UK Pension deficit was $1 bill to $3 bill USD
    In USA it was about $500 mill
    Total Pension deficit at low end would be $3.2 bill as I have posted it here before /even before BK/ just simple math

  • exnt_x_2

    Peter Ashwood Smith is a traitor. I have friends who've lost their homes because of the likes of him.

    Let him swing with the rest. Nothing personal. It's justice.

  • less

    lol – Nortel managers are chronically glass-half-full kinda guys.

  • fabrice002

    Total liabilities and shareholders’ equity (deficit) $ 8 ,103 (14 Jan 2009)

    Now, maybe in Canadian dollars…..

    But sales are reported in USD…

  • fabrice002

    yes4aapl:

    also I don't understand why BK courts don't give creditors powers to decide about Nortel. The irony is that creditors want to restructure Nortel and BOD wants to sell all assets one by one

    … I believe they do; that's what the Creditor's Committe is for. I think they have to first approve every deal before it even gets to the BK judge. NE1 know fer sure?

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