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Old Jul 21, 2011, 08:55 AM   #1
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Apple Contributing $2.6 Billion Toward Nortel Patent Purchase







Earlier this month, an Apple-led consortium beat out Google in an auction of thousands of patents from bankrupt Nortel, bidding $4.5 billion for the entire package of patents. As noted by @SammyWalrusIV (via Business Insider), Apple 10-Q quarterly report filed with the U.S. Securities and Exchange Commission revealed that Apple's contribution to that effort totaled $2.6 billion.
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On June 27, 2011, the Company, as part of a consortium, participated in the acquisition of Nortel's patent portfolio for an overall purchase price of $4.5 billion, of which the Company's contribution will be approximately $2.6 billion. This asset acquisition is subject to approval by various regulatory agencies.
Apple's partners in the deal included EMC, Ericsson, Microsoft, Research in Motion, and Sony. Apple's $2.6 billion contribution represents 58% of the entire purchase price of the Nortel patent portfolio. The large number may add credence to the rumor to have paid $2 billion for "outright ownership" of Nortel's LTE (4G) patent technology.

And Apple may not be finished with its efforts to purchase intellectual property on the open market, as the company is said to be considering going up against Google again for a portfolio of 1,300 patents related to mobile phone technologies being offered by InterDigital.

Article Link: Apple Contributing $2.6 Billion Toward Nortel Patent Purchase

Last edited by arn; Jul 21, 2011 at 09:12 AM.
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Old Jul 21, 2011, 08:59 AM   #2
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Apple basically bought everyone's drinks. Nice.
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Old Jul 21, 2011, 09:06 AM   #3
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why not just buy nokia instead if apple need that much of the related IP?
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Old Jul 21, 2011, 09:09 AM   #4
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they will make that back in law suits
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Old Jul 21, 2011, 09:10 AM   #5
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why not just buy nokia instead if apple need that much of the related IP?
They don't want them. And Microsoft is already in bed with them. I predict the justice department will interfere with the InterDigital IP purchase. They won't want Apple controlling a majority/significant portion of 4G IP. But you never know.
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Old Jul 21, 2011, 09:21 AM   #6
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why not just buy nokia instead if apple need that much of the related IP?
Buying a dead company is one thing, buying a dying one is another matter completely. Keeping Nokia alive, or putting them down would cost very much more than what the initial price tag say and in Nokias case, that would be a tremendous amount.
According to Nokia's quarterly report Apple payed them $430 million to settle the ongoing battle.
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Old Jul 21, 2011, 09:37 AM   #7
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they will make that back in law suits
...or they could use the innovations these patents represent to make better product - but they probably won't.
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Old Jul 21, 2011, 09:41 AM   #8
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why not just buy nokia instead if apple need that much of the related IP?
Because the rest of Nokia is a waste.

And a company that doesn't want to be bought also causes difficulties for the prospective buyer.

Purchases and spending need to be accounted for, even if it doesn't seem like a lot of money
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Old Jul 21, 2011, 09:44 AM   #9
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Talked with a local high-tech patent lawyer the other night at a local event and he thinks what we're seeing is a shake out in the high-tech patents. His feeling is the method has become "implement someones IP" and then see if they try and protect it. Then hope in court you can dilute or dismiss their claims or obtain a reasonable cross license.

It does seem that protecting your IP and keeping others from implementing it is almost impossible these days. It will be interesting to see what happens.
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Old Jul 21, 2011, 09:49 AM   #10
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Kodak is also floating their patent portfolio. Sounds like a way to monetize them while retaining use of them and losing the unpredictable expense of litigating them. I wonder if Apple has enough money from THIS month's net to pay for them, cash.

BTW the more recent 10-Q is out which further details their self-financing and expansion efforts. Their entire new HQ project is covered by 1/8 of one fiscal quarter net income after taxes.

They pay over $2.5B per quarter in federal income taxes.

Rocketman

http://investor.apple.com/common/dow...2007.20.11.pdf

June 25, 2011 September 25, 2010
Cash, cash equivalents and marketable securities $ 76,156 $ 51,011
Accounts receivable, net $ 6,102 $ 5,510
Inventory $ 889 $ 1,051
Working capital $ 20,039 $ 20,956

Burn rate?
Cost of sales 16,649
figures in millions
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Last edited by Rocketman; Jul 21, 2011 at 10:09 AM.
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Old Jul 21, 2011, 10:16 AM   #11
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Battle of business models

Apple's walled garden and the licensing approach of MS and HP are IP friendly OS's whereas Google's Android OS almost requires poaching IP to keep overhead down and undercut Apple and the other players on price.

Some of these manufacturers have enough IP of their own so that they can negotiate moderate licensing terms, but the current reality is that only a single Android handset manufacturer, HTC, is even generating income from Android handsets.

The additional burden of IP licensing may force some of the current Android manufacturers to switch allegiance to the license model of MS or HP. This would be a blow to Google in its quest to attain some level of OS level control of a hardware platform and hence mobile advertising.

My personal thoughts are that Android as a competitive OS platform may have already seen its peak, and that over the next couple of years, MS and HP will win back market share primarily from Android.

This would leave Google's Chrome OS which must battle with MS's Window's platform and products which is well entrenched.

For Google, there's always Facebook to battle and Bing to fend off.
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Old Jul 21, 2011, 10:32 AM   #12
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Originally Posted by Rocketman View Post
Kodak is also floating their patent portfolio. Sounds like a way to monetize them while retaining use of them and losing the unpredictable expense of litigating them. I wonder if Apple has enough money from THIS month's net to pay for them, cash.

BTW the more recent 10-Q is out which further details their self-financing and expansion efforts. Their entire new HQ project is covered by 1/8 of one fiscal quarter net income after taxes.

They pay over $2.5B per quarter in federal income taxes.

Rocketman

http://investor.apple.com/common/dow...2007.20.11.pdf

June 25, 2011 September 25, 2010
Cash, cash equivalents and marketable securities $ 76,156 $ 51,011
Accounts receivable, net $ 6,102 $ 5,510
Inventory $ 889 $ 1,051
Working capital $ 20,039 $ 20,956

Burn rate?
Cost of sales 16,649
figures in millions
Gotta love it how in 10 short years Apple has become the 10,000 ton Gorilla of the tech world.
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Old Jul 21, 2011, 11:08 AM   #13
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Gotta love it how in 10 short years Apple has become the 10,000 ton Gorilla of the tech world.
It's all about Apple's approach to tech.

User Experience is job #1. Everything else be damned (even if it ends up costing you.)
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Old Jul 21, 2011, 11:39 AM   #14
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...or they could use the innovations these patents represent to make better product - but they probably won't.
Quoted for truth. Patents are NOT about innovation anymore, people. They're about legalized extortion. When the patent system lets you patent anything and everything, and then lets you sue everyone under the sun with it, we have a problem. Software patents should NEVER have been allowed. But now we have many, many companies, Apple included, using these patents, most of them utterly obvious and/or only SLIGHTLY different than something else, suing each other for licensing fees. There are also the patent trolls sucking up money too. Nobody wins but the lawyers. Consumers lose especially hard.

So thank you, Apple, for doing your part to abuse the already broken system. We really appreciate it. Ugh.
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Old Jul 21, 2011, 11:52 AM   #15
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Apple basically bought everyone's drinks. Nice.
I think the analogy is more like, they bought the bar and they're selling the drinks.
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Old Jul 21, 2011, 11:56 AM   #16
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So thank you, Apple, for doing your part to abuse the already broken system. We really appreciate it. Ugh.
So what was Apple's alternative? To allow Google to get the patents, and do their part to abuse the already broken system?
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Old Jul 21, 2011, 11:56 AM   #17
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Originally Posted by Durendal View Post
Quoted for truth. Patents are NOT about innovation anymore, people. They're about legalized extortion. When the patent system lets you patent anything and everything, and then lets you sue everyone under the sun with it, we have a problem. Software patents should NEVER have been allowed. But now we have many, many companies, Apple included, using these patents, most of them utterly obvious and/or only SLIGHTLY different than something else, suing each other for licensing fees. There are also the patent trolls sucking up money too. Nobody wins but the lawyers. Consumers lose especially hard.

So thank you, Apple, for doing your part to abuse the already broken system. We really appreciate it. Ugh.
So you see how we live in a litigious society. However I believe patents do have their place.
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Old Jul 21, 2011, 12:00 PM   #18
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It's all about Apple's approach to tech.

User Experience is job #1. Everything else be damned (even if it ends up costing you.)
I think you are right and as for judging that, I consider it a Good Thing-tm.

It certainly is a good thing for product uptake, consumer experience, and buzz.

It may not generate the most advanced hardware specs or device speed or network capabilities, but what if all those users were allowed to be tethered, view HD on mobile and generally blow through bandwidth?

Nobody would be able to reliably connect and do the basics.

If Apple does get a large number of 4G patents, they will be in a position to license them with caviats, such as inter-network compatibility and such. IF the government will let them without anti-trust issues. Apple wants to sell devices and have them do spectacular things on networks. They don't particularly care how profitable the networks are, just that they have a manageable manufacturing capability to address all of them. It's bad enough China and USA (TD-LTE) have different standards for 4G-LTE, with China widely recognized as the better standard (FT-LTE).

I am waiting for the day in 3-4 quarters when international sales account for over 85% of Apple sales. It is already about 62%!

I just want a data only phone that can access at least two different networks depending on where I am at the moment. I am willing to do VoIP for calls.

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Old Jul 21, 2011, 12:05 PM   #19
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So you see how we live in a litigious society. However I believe patents do have their place.
They do, but at the very least, they need to be limited to physical ideas, not software. The legal definition of prior art also needs to be greatly expanded.
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Old Jul 21, 2011, 12:06 PM   #20
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So what was Apple's alternative? To allow Google to get the patents, and do their part to abuse the already broken system?
Google has done less to abuse the system than Apple.
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Old Jul 21, 2011, 01:15 PM   #21
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I think the analogy is more like, they bought the bar and they're selling the drinks.
Unlike the Government that taxes bar owners, then provide free drinks for those that can't pay.
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Old Jul 21, 2011, 01:56 PM   #22
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Begun, this patent war has.
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Old Jul 21, 2011, 02:52 PM   #23
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Google has done less to abuse the system than Apple.
And Google has far fewer patents than Apple.

You really think that Google, if given the opportunity, would NOT behave the same way Apple does in regards to IP and patents?
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Old Jul 21, 2011, 06:53 PM   #24
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Google has done less to abuse the system than Apple.
really?? let's see. first they stole from yahoo to build a search engine, then they stole from apple create android and now they are stealing from facebook to make google plus. has google come up with one uniquely original idea in their entire existence? they simply stand on the shoulders of giants and add a tweek or two.google is the modern day microsoft. steal and license to anybody. just like there are plenty of inferior computers running windows there are a ton of cheap phones using android. i know they never would but IF apple licensed osx or ios there would be a ton of different, cheaply made mac clones and iphone clones. i'm very happy apple keeps it's software and hardware under it's banner only. i've never been disappointed when i by apple hardware or software. it all just works and works well!!

i love hearing schmidt, who was on apple's board say things like apple should innovate instead of suing. when was the last, or make it the first time google innovated anything???

Last edited by jaison13; Jul 21, 2011 at 06:54 PM. Reason: spelling
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