It’s over: Nortel bankruptcy patent auction results in biggest technology patent sale in history

The Nortel patent auction has ended with an Apple consortium (the “everyone but Google” gang) emerging with 6,000 patents expected to have strategic importance in the next generation of wireless technologies.  Nortel had described the package as: "… more than 6,000 patents and patent applications [in] wireless, wireless 4G, data networking, optical, voice, Internet, service provider, semiconductors and other patents.”

The folowing companies contributed to the winning bid of $4.5B (three times the expected proceeds), creating the largest sale of technology patents in history:

 Apple Inc., Microsoft Corp., EMC Corp, Research in Motion Ltd. (which reportedly contributed $770M to the deal), LM Ericsson AB (which reportedly contributed $340M to the deal), and SONY Corp.

In a side-note to valuators, the results of this auction again point out the folly of relying on the cost approach to value patents. In spite of the competitive bidding by strategic players and the clear positioning in the wireless world of the patent bundle, the surprising $4.5B winning bid nowhere approaches Nortel’s reported 15-year investment in those patents of nearly $40B.