Ina Fried

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Defense Spending: Google Bids $900 Million for Nortel Patents

With patent lawsuits on the rise, particularly in the mobile space, Google is indicating it is willing to spend significant money to boost its intellectual property portfolio.

On Monday, Nortel announced that Google had bid $900 million to acquire the bankrupt company’s patent collection.

In a blog post, Google said the current litigious environment justifies the pricey bid.

“The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation,” said Google general counsel Kent Walker. “Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology.”

Google has been on the receiving end of a number of patent lawsuits, both directly and indirectly. Oracle, with its Sun acquisition, has sued Google over Android, while Microsoft has sued and threatened to sue Android handset makers, saying that the mobile operating system infringes on Microsoft’s intellectual property. Microsoft has already sued Motorola and Barnes & Noble and reached a licensing deal with Taiwan’s HTC.

Microsoft is looking to make the case that Google’s Android isn’t really free to handset makers and has been arguing both privately and through its legal actions that it believes it deserves royalties for any use of Android.

And it is not just Microsoft seeking to use patents as part of its smartphone battle. Apple has also sued HTC, while Nokia has also been active on the patent assertion front.

Walker argues that what is really needed is significant patent reform but–given the current situation–the company is best off trying to assemble a patent army of its own.

“Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories,” Walker said. “So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the ‘stalking-horse bid,’ which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community–which is integrally involved in projects like Android and Chrome–continue to innovate.”