War of Tech Giants Unfolds With Multi-Billion Dollar Patent Auction

A high-stakes intellectual property war is brewing between some of Silicon Valley's biggest tech giants.

Six unlikely high-tech allies — Apple, Microsoft, RIM, Ericsson, EMC, and Sony — walked away in June with the winning bid in a hard-fought IP auction that upended public and private markets for patents and left Google, another bidder, high and dry.

The Apple-led group, known as “Rockstar Bidco,” triumphed by agreeing to pay a record-breaking $4.5 billion for thousands of wireless, networking, and other patents from bankrupt Nortel Networks.

The staggering sum offered up for this collection of IP rights may signal the beginning of a patent buying boom.

“Every day I see more people talking about patents who’d never paid much attention to them before the Nortel sale,” said Ron Laurie, Managing Director of Inflexion Point Strategy, an intellectual property investment bank and advisory firm. As George Riedel, Nortel’s Chief Strategy Officer and President of Business Units, emphasized, "The size and dollar value for this transaction is unprecedented.”

The Nortel auction also figures prominently in ongoing disputes over Google’s Android smartphone platform. David Drummond, Google’s Senior Vice President and Chief Legal Officer, has just accused two Rockstar bidders and a third computer giant of launching improper IP attacks on Google’s prized communications technology.

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