Google, Nortel, and What is a Software Patent Worth

Nortel's Patents

Google has just announced that it is bidding for Notel's patent portfolio. It was reported that Google's $900 million bid for Notel's 4,000 patents is the stalking-horse bid. Equally interesting is that ZTE, Apple, and Huawei are said to be bidding for the same portfolio.

Given the mix of patents (fiber optic, long-haul switch, etc.) I can only assume that other telco players are not bidding because they already have similar patent or, at least, enough to force cross licensing. Of the four known bidders, they are all new entrants into this space. I cannot help but wonder if there would be a consortium whose plan is to break up the portfolio amongst its members if the consortium was successful.

Tellingly, in Google's announcement, it lamented the problems with software patents and confirmed its intention to play and are buying chips for a seat to the table.

Speaking of Software Patents

Traditional legal assumption has been that software cannot be patented because it is not a physical machine nor can a specific transformation be seen. But, over the years, software patents have been applied and granted. The most famous one is probably the case involving Single-Click Check Out patent by Amazon.

Given the traditional assumption and the advent of software patents litigation, all eyes were on the US Supreme Court to give guidance on if software is indeed patentable.

Bilski 2010

The US Supreme Court took up the Bilski case and decided that the physical and/or transformation tests are not the sole criteria for issuing a patent. These tests merely offer "useful and important clues". This sort of makes sense since it is not any less difficult to come up with software innovation than hardware. But, how this is applied in practice in the US will still take years of litigation in the court to establish the case law.

What is a Software Patent Worth

One thing is for sure, however. This means the software big boys have a new tool in managing their eco-systems. And, not to suggest Nortel's portfolio is not worth the money otherwise, I suspect this partly explained Google's willingness to fork out nearly one billion dollar for the portfolio.