Intel and patent blockbuster auction
Jul 15, 2019

Intel and patent blockbuster auction

In one of the highest intellectual property sales in recent years, Intel has launched a huge portfolio of patents related to cellular wireless connectivity on the auction block. The company is seeking to divest around 8,500 assets from its massive portfolio. The move reflects a change in Intel's intellectual property strategy and shows the company's efforts to adopt a similar approach to companies like IBM and Nokia to generate revenue through the sale and disposal of intellectual property.

The auction offering is comprised of two parts: 1) the cellular portfolio and a connected device portfolio which includes approximately 6,000 patent assets related to 3G, 4G, and 5G cellular standards and an additional 1,700 assets that read on wireless implementation technologies. 2) Almost 500 patents with broad applicability across the semiconductor and electronics industries.

The auction process is being handled by Nader Mousavi of Sullivan & Cromwell with the chip giant anticipating non-binding indications of interest from bidders by early August. It should be noted that Intel is launching the auction process for its wireless IP separate to its current efforts to sell its smartphone modem business. However, a prospective buyer may look to pick up both.

The size and strength of Intel’s portfolio means that this auction is likely to draw plenty of comparisons with the bidding process for Nortel’s patent assets back in 2011. That sale attracted a lot of interest from the giants of the mobile and broader tech world as the bankrupt Canadian telco sold off its grants at a time when rapid growth in the smartphone market meant that legacy operators and new entrants were looking to strengthen their IP positions. After a highly competitive auction process the assets were acquired for $4.5 billion by the Rockstar consortium comprising Apple, Blackberry, Ericsson, Microsoft, Sony and EMC. That group outbid Google for the portfolio.

It is worth mentioning that the growing competition between China and the United States in the field of advanced technologies and, in particular, the new generation of 5G communication technologies has led to the fact that President Trump has called for a US national champion in 5G and so it will be interesting to see how the US government reacts should an overseas company - and particularly one from China such as Huawei - emerges as the most likely buyer of the portfolio. Huawei’s licensing efforts in the US have recently been put under the spotlight after it emerged that it was pursuing a licensing deal with Verizon in which it was reported to be seeking as much as $1 billion in royalties.

Another point to be taken into account is the analysis of why Intel is acting on the massive sale of its IPs. It could be that Intel’s decision to sell its portfolio is part of a strategy to drum up interest in the modem business as a whole. That is exactly the strategy Toyota Corporation also pursued in the free assignment of 24,000 patents aimed at promoting more electric vehicles.

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