[Post updated at 1:45 p.m. with clarification of Microsoft’s rights to these patents under a previous licensing deal with Nortel.]

An executive with bankrupt Nortel Networks calls its intellectual property holdings “one of the most extensive and compelling patent portfolios to ever come on the market.” Of course, he’s inherently biased. But Google today suggested that it’s inclined to agree, emerging as the early leader in the bidding with a $900 million offer for the portfolio of 6,000 patents.

In technical terms, Google is the official “stalking horse,” which means its bid is the starting point for others. Microsoft is separately paying $7.5 million for 600,000 IP addresses out of the Nortel bankruptcy, and leading a consortium of companies seeking to acquire Novell’s patents. But the company isn’t yet commenting on speculation that it might try to outbid Google for the Nortel patents.

[Update: Microsoft points out that it struck a patent cross-licensing agreement with Nortel as part of an earlier strategic alliance. The company says in a statement, “Microsoft has a worldwide, perpetual, royalty-free license to all of Nortel’s patents that covers all Microsoft products and services, resulting from the patent cross-license signed with Nortel in 2006.”

Microsoft doesn’t say whether the license would transfer with a change in ownership. But if the company doesn’t bid, that could explain why.]

[Update II: A Microsoft spokesperson confirms that the company’s licensed rights to the patents would continue, even when ownership of the patents changes. Which means that Microsoft could effectively end up with a licensing deal for patents owned Google, if the search giant wins the bidding.]

The patents focus on “wireless, wireless 4G, data networking, optical, voice, internet, service provider, semiconductors,” according to Nortel.

In a blog post today, Google general counsel Kent Walker explained why the search company decided to bid.

If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community — which is integrally involved in projects like Android and Chrome — continue to innovate. In the absence of meaningful reform, we believe it’s the best long-term solution for Google, our users and our partners.

Separately, Microsoft recently filed a lawsuit against Barnes & Noble and the manufacturers of its Nook e-reader, alleging that its use of Google’s Android operating system violates the Redmond company’s patents.

Also today, Microsoft announced its support for patent reform legislation in the U.S. House.

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  • Anonymous

    Oh wow, OK this looks like it might just work dude. Wow.


  • http://twitter.com/Vroo Vroo (Bruce Leban)

    It’s not surprising that Microsoft supports so-called patent “reform.” It gives big companies the advantage by proposing a “first to file” system rather than “first to invent” while doing nothing to curb bogus patents. The PTO routinely believes that even if “X” is well-known and obvious “X on a computer” is not.

  • http://www.facebook.com/people/Dan-Schuh/100001249273147 Dan Schuh

    If Microsoft had a cross -icensing agreement with Nortel, and Google buys the Nortel patents, and Microsoft keeps the cross-licensing agreement, this seems to imply that Google would get cross-licensing of Microsoft patents. Which is interesting, and maybe sort of another win for Google out of the deal, if it goes through. I’m guessing that Apple may find it strategic to at least run up the bid a little; they have a lot more cash on hand and may find it strategic to do so. I think Apple has shown some inclination to patent warfare in the past.

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