Google suffers major blow in Nortel patent loss

Google, which initiated the bidding war for precious Nortel patents in April, has suffered a huge blow with an Apple-led consortium walking away with 6,000 patents for $4.5 billion last week.

The bidding process for 6,000 patents and patent applications began in April, with Google offering a $900-million stalking horse bid.

Apart from Apple, BlackBerry maker Research In Motion (RIM), Microsoft, Ericsson, Sony and EMC make up the winning consortium.

According to analysts, the patent auction is a big blow to Google as the search engine was willing to pay any price to beef up its bank of patents – which is the smallest among major wireless players.

As Google is also involved in more than 45 patent lawsuits – the biggest against any major player – it wanted Nortel patents badly to protect itself against such lawsuits in the future.

Since Nortel-patented technology is used in RIM’s BlackBerry, Apple’s iPhone and Google Android smart phones, the buyer of these patents now get the rights to license this technology to secure royalties and gain market influence in the multi-trillion-dollar technology field.

So with these patents now in the hands of its rivals Apple and RIM, Google could be in trouble in the smart phone market where its Android-powered devices are becoming very popular.

As details of the biggest patent auction in history emerge, Google reportedly opened the bid for the patents with an offer of $1.05 billion. Then it was Google versus Apple till the $2-billion mark.

After that point, Apple joined hands with RIM, Microsoft and others to snatch the patents from Google with their $4.5 billion bid.

The Apple-led consortium has not yet given details of shares of each member, but RIM is reportedly paying $770 million for its share of the patents.

The auction also marks the end of the once mighty Nortel which at its peak was well over $250 billion and employed over 90,000 people worldwide.