Patent News | "InterDigital Calls Off Patent Sale"

Category: Patent News

5:43 p.m. | Updated InterDigital confirmed on Monday that it has called off its patent sale. Terry Clontz, the company’s chairman, said in a statement: “The process over the past six months, although not resulting in an offer for the whole of the company, has helped to reaffirm our belief in the breadth and depth of the patent portfolio, the strength of the R&D team, and our technology vision for the future.

InterDigital plans to announce Monday that it has called off a sales process for its patent portfolio, months after the wireless technology company put its holdings up for auction, people briefed on the matter told DealBook.

The decision by InterDigital followed months of talks with several prospective buyers, following a surge of interest by tech companies in buying up patents. But InterDigital was unable to fetch an offer for the entire portfolio of 20,000 patents, one of these people said.

That portfolio included patents that covered wireless data technology used in smartphones, including the iPhone and various Android devices. InterDigital had sought at least $3 billion for the collection, this person said. They have generated more than $3 billion in revenue through last year.

The market had held talks with potential buyers, which have included the likes of Intel and Samsung, as recently as this weekend, this person said. But the bids from suitors, some of whom had teamed up, came in below expectations.

InterDigital and its advisers decided that the company was better served by ending the auction and focusing on selling off pieces of the portfolio, this person said. Any such deals are still weeks away from completion, however, and those transactions are likely to fetch only low hundreds of millions of dollars at most.
At the same time, the company will seek to strike cross-licensing arrangements for those patents, this person added. That process had also been held up by the sales process, as potential partners awaited the fate of those patents.

As InterDigital collects proceeds from patent sales or licensing agreements, the company may turn around and buy additional patents for newer wireless technologies, this person said.

InterDigital said last summer that it had hired Evercore Partners and Barclays Capital to run a sale of the patents, hoping to seize on growing interest in intellectual property. Last July, the bankrupt Nortel Networks sold more than 6,000 patents to a group led by Apple and Microsoft for $4.5 billion in cash. And in August, Google agreed to buy Motorola Mobility for $12.5 billion, in large part for the phone maker’s horde of patents.

The Motorola deal was in some ways bad news for InterDigital, however. It removed Google as a potential bidder, limiting the impetus for other players to bid up for the InterDigital patents, this person said. And unlike Nortel, whose asset sale had a specific timetable imposed by the bankruptcy process, InterDigital could not wield the cudgel of a hard deadline against potential buyers.

Shares in InterDigital were down 2.9 percent in late afternoon trading on Monday, at $44.63. They have fallen nearly 39 percent over the last six months, as investors grew pessimistic about the chances of a patent sale. As of Monday afternoon, the company had a market value of about $2 billion.