Tech giants are lining up to buy patents held by bankrupt telecommunications company Nortel Networks, but a formal auction has been delayed because nobody will pay the price the company's liquidators would like to see.
Four sources involved in the prolonged process -- talks started last May and there's no end in sight -- said there was still no "stalking horse" bid, which would set a minimum price for more than 4,000 patents.
The latest round of discussions with two or three interested parties started in January and a bid was initially due to be chosen by early February, one source said.
An auction is expected by mid- to late March, two sources said.
Nortel's creditors hope to recover as much as US$1 billion for the patents, which cover technologies in wireless handsets and infrastructure, optical and data networking, Internet, Internet advertising, voice and personal computers.
"If there was any interest anywhere close to US$1 billion they would have picked a stalking horse in the original timeframe, a month ago," one source said.
Multiple sources told Reuters in December that final bids were due within weeks for blocks of patents owned by the once mighty telecom equipment giant.
Bidders included Apple, Google, Ericsson and RPX, or Rational Patent Exchange, which licenses patents on behalf of member clients for a fee.
Google was directly involved in a solo bid in the first round, while Apple bid through RPX, one source said.
RPX is seeking to raise US$100 million in an initial public offering.
Its members include Samsung, Verizon, Sony, IBM, Hewlett-Packard and Research In Motion, which sought Nortel's wireless patents in mid-2009, arguing that the Canadian government should not let valuable domestic assets go to foreign hands.
The patent sale is a last gasp for Nortel, which has raised around US$3.2 billion for creditors by selling assets.
Apple, RIM and RPX declined comment, while Google was not immediately available. The four sources declined to be identified because the process is confidential.
Serious bidders can come late
Bidders can also wait until bidding has opened before stepping into the auction.
The process is complicated because Nortel's intellectual property covers so many technologies, which sources say have been split into six "buckets" to make the bid process easier.
Technology companies use patents as a source of revenue and to increase their bargaining power in cross-licensing deals. Lawsuits are common. Member-based companies like RPX acquire patents to take them out of play for litigation.
A stalking horse bidder, likely for the entire portfolio of patents, would open the door for bids from other interested parties, who would use that offer and its terms as a starting point for their own proposals.
A stalking horse bidder typically receives a break-up fee if its bid does not go through, and it can use that fee in subsequent auction rounds.
Canadian patent licensing firm Wi-LAN, which struck a slew of licensing deals in January with some of the biggest names in computing, said on Thursday it had made an initial bid and would join later rounds.
"We did look at the Nortel patents," Chief Executive Jim Skippen told analysts. "We were told that our bid was viable and we were encouraged to be there for the second round."
One source said Chinese players such as Huawei and ZTE were likely to bid, either alone, or as part of a "China Inc" consortium.
In addition to the 4,000-plus patents filed with the United States Patent and Trademark Office, the main global depository for evidence of intellectual property, Nortel has more than 1,500 patents granted or pending with the Canadian Intellectual Property Office.
Previous auctions of Nortel's physical assets were conducted behind closed doors. The patent sale process, run by Lazard and Global IP Law Group, was started in May last year, two sources said in December.
(Writing by Alastair Sharp in Toronto, additional reporting by by Alastair Sharp and Abhiram Nandakumar; editing by Janet Guttsman and Rob Wilson)