$4.5B Nortel IP Deal Still Under DOJ Review: Microsoft Exec
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"The deal is the first of its kind because there hadn't been a portfolio that large in the market, but it has since brought about a shift in which more portfolios are being offered for sale, such as those by Eastman Kodak Co. and InterDigital Inc., according to David Berten, a Global IP Law Group adviser to Nortel.
"It's becoming more of a buyers' market than when Nortel came up," he said. "Now buyers can be pickier and drive evaluations. It may mean that if a company can't sell or license [its portfolio], it may have to litigate to get value for it. We will have to see how that plays out."
The Nortel transaction also has helped the corporate community to better appreciate the value of IP as a separate asset, according to David Descoteaux, managing director of Lazard Ltd., Nortel's investment banker."
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"When Ericsson reviewed the enormous patent portfolio of Nortel, the telecom company knew it had to make a move based on the sheer scope of the patents, according to Kasim Alfalahi, chief intellectual property officer and vice president of Ericsson.
"Because of the breadth and importance of the portfolio, we couldn't just not do anything," Alfalahi said. "Nortel had very good assets there."
Microsoft had been attracted to Nortel's portfolio because it was interested in moving into the telecom space, according to Kaefer.
"Our company believes in patents all the way to the top of the company," he said. "For a good decade, our foundational IP strategy has been to think about the role of patents. The technology, scope and size of this deal are what got us."
While Kaefer told Law360 that deals involving major patent portfolios like Nortel's could come up in the future if they are put on the market right, Alfalahi said the transaction was unique because it involved such a range of significant patents.
"Nortel was one of a kind," he told Law360. "Even if a deal like it does come up, it may not involve the same breadth."
However, he noted that although many portfolios are not likely to consist of as many critical patents, companies will continue to pay a premium for assets they deem valuable."
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