Will Nortel live on through its patents?

The Canadian infrastructure company, which was worth about $250 billion in 2000 before the post-bubble economic recession began eating away at its business, filed for bankruptcy last year and has since sold off most of its operations in piecemeal fashion.

Managed today by a just anadviser or two, Nortel has finally whittled itself down to its last but most important assets: its intellectual property. The possible availability of the IP is tantalising potential buyers, which are already coming out of the woodwork in hopes of bidding on the goods. For the time being, however, interested companies must sit tight to await word from Nortel about its plans.

Whatever happens to its IP, one thing is for sure, and that is that Nortel’s situation is far from typical. In fact it is rare and perhaps unprecedented that an IP portfolio of its potential value might be put on the market. The portfolio represents several thousand patents from a company that had a tradition of technology leadership and produced high-quality inventions, including meaningful IP in the emerging wireless domain of LTE.

“This may be one of the all-time great opportunities,” said Lew Zaretzki, executive vice president for advisory services at ThinkFire, an IP advisory firm to major technology companies and investors. Nortel is not one of Zaretzki’s clients, but he is tracking it through this process.

“Whatever they do, in my industry of IP, it is likely to be historic,” he said.

Even the process Nortel is going through to determine the disposition of its IP assets is unusual. Normally a company’s executive leadership has the ultimate authority over what to do with its IP. And normally a company would conduct its licensing negotiations with the utmost secrecy. But in this case, Nortel does not have autonomy to make unilateral decisions and the process is being played out in the public domain through the courts.

Right now, Nortel’s advisers are going through their patents one by one to determine the portfolio’s value. That process should be completed this spring.