Joint Venture of Microsoft and Apple Win 6,000 Nortel Patents in Bankruptcy Auction

A joint venture of Apple and Microsoft, called Rockstar Bidco LP, won permission from bankruptcy court to purchase the patent portfolio of Nortel Networks Corp. for $4.5 billion, outbidding Google in the biggest patent auction in history.

In a joint hearing on June 11, 2011, U.S. Bankruptcy Judge Kevin Gross in Delaware and Ontario Superior Court Judge Geoffrey Morawetz in Toronto approved the portfolio sale. Over 6,000 patents and applications related to Internet and wireless technology are in the portfolio.

Nortel started selling its businesses after it filed for bankruptcy in 2009, raising approximately $3 billion before the patent auction. The patent portfolio was Nortel's last major asset to sell and will boost creditor recoveries.

The winning joint venture group includes Research in Motion and Sony Corp as well as Apple and Microsoft.

The auction had 19 rounds of bidding and opened with a bid from Intel Corp. Before the auction began, Google signed a contract to be the stalking-horse bidder with a guaranteed offer of $900 million. Intel exceeded Google's offer, entitling the search engine company to a breakup fee of $25 million plus expenses.

Apple initially was not part of the Rockstar group, but joined after five rounds of bidding. Intel dropped out, only to join with Google and stayed in the auction up to the 19th round of bidding when they lost out to Rockstar Bidco.

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