Nortel patents in play, drawing broad range of suitors

The carving up of the remains of Nortel has already shifted the balance of power among telecom vendors, with Ericsson buying its U.S. wireless business to expand operations, Genband using its VoIP assets to grow more than six times its original size and Ciena reporting just last week that Nortel remains are helping fuel new growth.

But now, according to a Reuters report, some of the bankrupt telecom vendor’s most-prized possessions are now on the table: a collection of patents and other intellectual property that could be worth more than $1 billion.

And being drawn into the bidding – which for now remains sealed – are not only traditional telecom industry players but reportedly new contenders as well such as Apple and Google, which could be looking to control key technologies in mobile areas in particular.

For now, all of these machinations are happening behind closed doors and in the form of sealed bids. Reuters reported, however, that Nortel has split up its more than 4000 patents into six groups of related technologies, with final bids due this month.

Nortel’s patents cover the areas where it had significant product and systems businesses, including optical and data networking, wireless infrastructure and handsets and more. Of particular interest for mobile players will likely be Nortel patents in the areas of 3G and 4G technologies, in particular as related to long term evolution (LTE) core technologies.

According to Reuters, Nortel owns seven of the 105 patent families likely to be essential to 4G technologies LTE. By comparison, Nokia holds 57 and Ericsson 14. Technology companies use patents to control the development of key technologies and to generate revenues via licensing arrangements.

Nortel filed for bankruptcy last year,, and has since been selling off parts of its business to the likes of Ericsson and others in order to pay back creditors. Nortel's patents are among the last of its holdings.

While the full application of its 4G patents was disrupted by those proceedings, the company indicated early on it believed its patents to be valuable and worthy of a hefty royalty rate.

Industry vendors began crafting cross-licensing pacts for key LTE patents back in 2008, at least in part helping to fuel the quicker-than-expected emergence of commercial LTE networks starting this summer and accelerating into 2011.