Nortel Networks (“Nortel”) was a multinational telecommunications and data networking equipment manufacturer with global headquarters in Ontario, Canada. Nortel was regarded as a highly technologically innovative organization and at one point, was Canada’s largest publicly traded company. Despite its past success, Nortel struggled to remain competitive in the early 2000s and by the 2008 recession it was clear the firm would no longer be able to continue servicing its debt. In early 2009 the company filed for creditor protection and subsequently auctioned off its assets. These assets included the company’s business lines and nearly 2,500 associated patents, and ultimately, the remaining Nortel IP portfolio consisting of over 7,000 patents which was sold to Rockstar, a consortium of technology companies including Apple and Microsoft. These sales generated over $7 billion in proceeds while the claims submitted by creditor consortia from Canada, from the U.S., and from Europe, the Middle East, and Africa (“EMEA”) exceeded $35 billion. After several years of failed attempts to negotiate the allocation of sales proceeds, the parties proceeded with litigation.
Ocean Tomo was hired in 2013 by the EMEA debtors to assist with all valuation and allocation issues related to Nortel’s IP. In order to determine the appropriate allocation of sales proceeds, Ocean Tomo:
Performed an independent valuation of the ~2,500 patents and other IP which was sold along with Nortel’s various business lines;
- Performed an independent valuation of the 7,000+ patents sold to Rockstar;
- Determined the appropriate commercial life of Nortel’s IP portfolio;
- Determined the geographic distribution of the income expected from Nortel’s patents;
- Determined the relative inventive and financial contributions made by each debtor over a period spanning more than two decades;
- Determined the relative value of exclusive and nonexclusive license rights to all Nortel patents in numerous jurisdictions;
- Analyzed and interpreted dozens of Nortel’s inter- and intra-company agreements including numerous IP licenses and transfer pricing agreements.