

$4.5 B. Nortel Bid Shows the Disastrous State of Software Patents - bproper
http://www.betabeat.com/2011/07/01/4-5-billion-purchase-of-nortel-patents-is-a-potent-reminder-how-broken-the-system-has-become/

======
GHFigs
I don't understand. For one thing, Google wasn't "the early front runner",
they were the stalking horse bid--essentially the minimum. There seems to be
this retroactive meme going around to the effect that Google was expected to
win with that bid or that they somehow deserved to. It's an auction, folks.

It's not clear to me that that was their final bid, either. Maybe it was, but
I can't imagine Google letting something important to them climb at auction
from from $0.9 billion to $4.5 billion without staking another bid.

The second thing I don't understand is the connection between the price paid
by a consortium of major tech companies[1] for a collection of patents from a
formerly major tech company--only a few of which are even software at all--to
Fred Wilson ranting about Lodsys. Who is the troll here? Nortel? What is the
significance of the dollar figure? How does it "echo the sentiment" of Wilson?

[1]:BetaBeat says "...a coalition of Microsoft, Apple, RIM, and Sony...",
while the actual press release[2] states: "Apple, EMC, Ericsson, Microsoft,
Research In Motion and Sony."

[2]:[http://www.marketwatch.com/story/nortel-announces-the-
winnin...](http://www.marketwatch.com/story/nortel-announces-the-winning-
bidder-of-its-patent-portfolio-for-a-purchase-price-of-
us45-billion-2011-06-30?reflink=MW_news_stmp)

~~~
SoftwareMaven
The complaining was around companies needing to spend $4.5B in pre-emptive
legal defense. The $4.5B being pre-emptive is extrapolated by me (and I'm
assuming the author) from Google stating their $900M was.

Nowhere in the article did it even imply any of the players in this
transaction were trolls.

~~~
GHFigs
What was the point of saying that the size of the winning bid "echoes the
sentiment" of a rant about Lodsys?

~~~
SoftwareMaven
The whole article was about "Software patents are bad". The Nortel auction was
just one example of why patents are bad. Fred Wilson's comments were to back
up that theme. Lodsys is just another example.

Read it in that light, and things tie together much more smoothly. Whether it
is good writing (e.g. effectively conveying a point) is questionable, since it
obviously has cause confusion.

------
monochromatic
This article is awfully thin. It doesn't give any argument whatsoever for why
software patents are not a good thing. Here's a summary:

1\. Google, Microsoft, Apple, RIM, and Sony are willing to pay a lot of money
for a bundle of patents, including both software and hardware.

2\. Therefore, software patents are evil and a tax on innovation, rabble
rabble rabble.

It's not much of a syllogism.

~~~
inkaudio
The argument is simple, not thin. Instead of spending billions on new R&D, new
innovation, these companies have to spend money on the shenanigans of the
current software patent system.

~~~
Steko
The other side of the coin that no one has pointed out yet:

The innovation represented by these patents just made $4.5 billion. That's the
definition of rewarding innovation.

"Instead of spending billions on new R&D"

If it was legal for every KIRF to come in and use every other companies
innovations there would be much less incentive to invest in R&D to begin with.

~~~
kjksf
This money goes to pay the debts of a bankrupt company.

If the patents ("innovation") were so valuable, Nortel wouldn't have gone out
of business.

Successful companies can (and have been) successful without patents (or
without enforcing patents). Nortel was unable to be successful despite having
lots of patents.

Given those facts, the case for patents as a way to "reward" innovation is
thin.

There's only a weak correlation between success and patents in that successful
companies are forced to pile up patent portfolios, including paying $125k per
patent as in this case, not because they care about any of the technology, but
because they are afraid of being sued for even greater amounts of money by
some other patently rich company.

~~~
Steko
"This money goes to pay the debts of a bankrupt company."

Not disputed. Nortel was mismanaged into oblivion. That does not show that the
fundamental incentive in the patent system is broken.

"If the patents ("innovation") were so valuable, Nortel wouldn't have gone out
of business."

That's a total non sequitur. Any business can be driven off a cliff. The
patents _are_ that valuable and that's been clearly shown at auction.

"Given those facts, the case for patents as a way to "reward" innovation is
thin."

Your "facts" are better termed anecdotes and only disprove the straw men that
"you can't be successful without patents" and "patents guarantee success"
neither of which is being claimed by anyone.

------
yalogin
Isn't it better that a coalition won instead of Google? Now at least these
companies will not sue each other. Its much better that way. Google should
have joined the group rather than going itself.

Also Nortel was a really huge company and a really good one at their peak. So
its not surprising it amassed that many patents or that they fetch that much
value.

~~~
sorbus
Google expressed an interest in using the patents defensively, and implied
that it would share them with the open source community. If the coalition
intends to use the patents offensively, which is very plausible considering
the companies involved, then it is not better that it won.

~~~
brudgers
Nations express an interest in obtaining nuclear weapons for peaceful
purposes. One side effect of obtaining them is that it limits their neighbor's
options when the tanks roll into their back yard.

Google is no more benign than any other company.

~~~
kjksf
Actually, based on past history, it is.

As far as I know, Google hasn't sued anyone for violating their patents.

Apple, RIM, Nokia, Microsoft sued plenty of companies in clear attempts to
further their already strong position in the market.

Facts contradict your opinions.

------
og1
Probably coincidental, but the math lines up where Google could retroactively
buy into the group at the price of it's 900M bid. After that the 4.5 Billion
would be split evenly between the five companies.

Edit: Looks the BetaBeat article excluded EMC and Ericsson, so the split
wouldn't work so nicely.

------
sehugg
This Wikipedia article is an interesting read:
<http://en.wikipedia.org/wiki/Motion_Picture_Patents_Company>

It describes a strong-armed patent consortium formed around the turn of the
century which controlled filmmaking technology. Indie filmmakers reacted by
establishing new operations in a little place called Hollywood.

------
Caligula
I worked briefly at Nortel. It makes me sad reading these articles. Nortel was
a great company that still could have been successful today were it not for
terrible corrupt high level management.

------
kjksf
It seems like there is a simple tweak that would make everything better: DOJ
should force the "consortium" to allow Google to join at the same price. It
seems each company will pay $750 million. Google should be allowed to pay $750
million for the patents as well.

That way Nortel gets more money and Microsoft, Apple and RIM won't be able to
torpedo Android with lawsuits (as opposed to doing a better job).

------
petegrif
Lame poorly written piece without clear argument or even any remotely
convincing substantiation for its disconnected assertions.

~~~
bproper
The software patent system in this country is broken.

Google said so in its initial blog about the Nortel portfolio.

Many VCs have been expressing the same thing in recent weeks.

These two separate actions represent the very early and very late stage of the
technology game.

The fundamental problem, however, remains the same.

