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Apple, RIM in group buying Nortel patents for $4.5B

Consortium including Microsoft and Sony buys 6,000 patents and patent applications from the bankrupt Canadian telecom equipment maker.

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Steven Musil is the night news editor at CNET News. He's been hooked on tech since learning BASIC in the late '70s. When not cleaning up after his daughter and son, Steven can be found pedaling around the San Francisco Bay Area. Before joining CNET in 2000, Steven spent 10 years at various Bay Area newspapers.
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Steven Musil
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Patents

A consortium comprising Apple, EMC, Ericsson, Microsoft, Research In Motion, and Sony has purchased Nortel Networks' remaining patent portfolio for $4.5 billion in an auction that began earlier this week.

The group purchased some 6,000 patents and patent applications encompassing technologies such as wireless, wireless 4G, data networking, optical, voice, Internet, and semiconductors, Nortel announced late Thursday.

Nortel, which filed for bankruptcy protection in June 2009, said in a statement it was pleased with the auction's outcome.

"The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world," George Riedel, Nortel's chief strategy officer and president of business units, said in a statement.

The sale was originally slated to occur in mid-June but was delayed due to what Nortel said was a "significant level of interest." Google offered more than $900 million for the patent portfolio from the bankrupt Canadian telecom-equipment maker in April, leading Nortel to place a deadline for others to bid higher.

However, the auction reportedly attracted the attention of the Justice Department, which was said to be looking into whether the winner would be gaining an unfair edge against the competition.

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The need for companies to have a so-called "war chest" of patents has become an increasingly important part of doing business. Mobile devices in particular have become the latest target of patent litigation, due to their combination of features that may have previously only been available in standalone electronics.

"The Nortel patent portfolio reflects the heritage of more than 100 years of its R&D activities and includes some essential patents in telecommunications and other industries. We believe the consortium is in the best position to utilize the patents in a manner that will be favorable to the industry long term," Kasim Alfalahi, chief intellectual property officer at Ericsson, said in a statement.

Ericsson said that its contribution to the transaction amounted to $340 million, while RIM said its portion was approximately $770 million.

The sale is subject to approval by U.S. and Canadian courts and is expected to close in the third quarter of 2011.