Google’s top lawyer claims that Google made the bid for Nortel because it wants its corporate frenemies to stop suing it:

“Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology,” wrote Google General Counsel Kent Walker in a blog post today. “But as things stand today, one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio.”

Bloomberg News reminds us of some of the context:

‘Oracle filed a patent and copyright infringement lawsuit against Google last year over its mobile Android software, citing technology gained from the acquisition of Sun Microsystems Inc. Apple Inc. (AAPL) filed a complaint with the U.S. International Trade Commission last year against HTC Corp. (2498) for alleged patent infringement with its Android-based phones.’

Stalking horse indicates that this is the first of what will probably be many bids for Nortel’s treasure trove of patents, which BetaNews says includes everything “from integral 4G wireless technology to semiconductors, to search and social networking.” The blogosphere has suggested that Google will be up against Apple, Nokia, Huawei, ZTE and potentially even Microsoft.

What’s going on here? Is this just an expensive legal safety cushion for Android and Chrome development? Is it somehow related to Google’s fiber broadband project (for which Kansas City was just announced the first city for deployment)? Or does Google actually intend to start selling data networking gear? The latter is hard to imagine for a number of reasons–not least of which being its embarrassing Nexus One flop.

Chime in with your conspiracy theory in the comments section below or send us an email.

Competitor A puts in bid, Competitor B drives it up, someone wins, courts say OK, everyone goes home and puts out press release promising this is a great fit and the merger will be nice and smooth.

Paging Jack McCoy! Please breathe some life into this!

Until this week, the auction for Nortel’s optical and carrier Ethernet business, Metro Ethernet Networks, seemed to be following the usual script. United States and Canadian bankruptcy courts were moments away from approving the $769 million bid for one of the most prized jewels in the fallen Canadian vendor’s crown. The deal would be $530 million in cash plus $239 million in convertible notes, due 2017.

Enter Nokia Siemens Networks, which along with its private equity partner, One Equity Partners, had driven up the bidding while it was still on the chopping block.

But apparently Nokia was hemming and hawing for a week over how badly they really wanted the assets. After declining to top Ciena’s bid more than a week ago, Nokia Siemens decided Tuesday it could pay Nortel $810 million in cold, hard cash, as Reuters reported.

That set up Wednesday’s fight in court, with Nokia Siemens and some creditors arguing the auction should be reopened, in part because Ciena’s convertible securities were overvalued.

After roughly seven hours of argument, testimony and cross-examination, Nortel’s attorney said his team had a reached a deal in the hallway outside the court that would lead to the withdrawal of the last major objection.

Judges in Delaware and Ontario accepted the Ciena/Nortel deal and “declined to hold up the acquisition,” the Associated Press reported.

Guess money doesn’t always talk.

Ciena was chosen as the winning bidder for Nortel’s optical and carrier Ethernet assets after putting in the original $521 million bid more than six weeks ago. Unfortunately, there’s no Buy it Now button in bankruptcy court and someone drove the bid up for the bankrupt Canadian vendor’s assets.

A little birdie talking to the Reuters wire service seems to think it was Nokia Siemens Networks.

The final bid by Nokia Siemens Networks, which had teamed with private equity firm One Equity Partners, came “very close” to Ciena’s offer, the source said.

Despite the press release love-fest between the two vendors, the tech desk at Barron’s points out Ciena shareholders are not going to be happy with the IOU part of this deal.

The purchase price will be $530 million in cash plus $239 million in 6% senior convertible notes due 2017. The interest rate on the notes will ratchet up to 8% if the stock price falls below $13.17, Friday’s closing price. (Which it already has, by the way.)

But enough of the horse race. What’s next for carriers?

Light Reading says there will be a significant overlap between Ciena/Nortel products, particularly in WDM transport. Editor Craig Matsumoto also points out Ciena will likely get a leg up in the gigabit Ethernet world, but notes the long-term worth of the merger for Ciena is still anyone’s guess.

Whether it’s all worth it to Ciena is still up for debate, though. In the year since Nortel first tried to sell MEN, some of the shine has come off, says Simon Leopold, an analyst with Morgan Keegan & Company Inc.

“Buying this Nortel asset is like buying a used car. You know it’s a used car, but you’re not sure: Has it been in an accident? Is everything working right? We know some talent has left, and we know that the value’s declined. We know it’s damaged goods, but we don’t know by how much,” Leopold says.

Of course, Hitachi will face lots of LTE competition from other vendors. Despite that, the insolvent Toronto-based vendor said:

Under the agreement, the assets include software to support the transfer of data over existing wireless networks and the next generation of wireless communications technology, including relevant non-patent intellectual property, equipment and other related tangible assets, as well as a non-exclusive license of certain relevant patents and other intellectual property.

Nortel said the agreement excludes legacy packet core components for its global system for mobile communications (GSM) and universal mobile telecommunications system (UMTS) businesses. Its GSM and GSM-Railway businesses are slated for an open auction on Nov. 9.

While Monday’s announcement did drop some new information on the asset front, the song remained the same for Nortel’s embattled shareholders.

Nortel Networks Corporation today confirmed that it is in advanced discussions with Ciena for the planned sale of substantially all assets within its Optical Networking and Carrier Ethernet businesses globally. The outcome of these discussions is uncertain and subject to negotiation of definitive agreements. Any agreements would be subject to a competitive bidding process to be approved by the United States Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice.

The announcement comes as Nortel’s latest sale — to Avaya for its unified communications (UC) business — has hade barely any time to cool off…

Finally, Nortel has some advanced discussions going on for these units. Read IDC carrier infrastructure
Eve Griliches’ column on why takers for Nortel’s assets have been few and far between. Maybe Alcatel-Lucent’s recent talk of converging network layers has made Nortel’s optical and Carrier Ethernet divisions a more appealing proposition for Ciena.

And while Ericsson eventually emerged victorious in bidding, industry watchers were left scratching their heads, and legislators seem to at least be considering the merits of RIM’s complaint. What if the Waterloo-based BlackBerry maker was successful in a re-auction and it won?

The company has given little indication of why they are so intent on the Nortel wireless assets, beyond the stated desire to keep Nortel Canadian, but RIM does have experience in building out some infrastructure in order to power its central NOC. Perhaps the company has seen infrastructure as a critical competitive asset, and one that will further separate it from the pack just as its e-mail advantage has in the past. Another theory is that RIM is trying to jump on the LTE bandwagon early, and it sees the Nortel opportunity as the perfect way to jump past its competitors in this area.

Whatever the motivation, with Canadian national pride and billions of dollars in local jobs at stake, the supposedly final Ericsson purchase might not be so final after all.

“There’s synergies, there’s scale, and both of them are part of the Verizon network to move to LTE,” said Akshay Sharma, research director at Gartner. He said both companies would benefit from being able to offer Verizon a smoother upgrade path to LTE, which could win some business from Alcatel-Lucent which already has as a strong advantage when it comes to LTE deployments.

According to the Wall Street Journal, Ericsson could be quite serious about capturing that advantage. “We are pursuing the deal because it seems to be an interesting opportunity and we are always looking for ways to create value for Ericsson,” the paper quoted a Ericsson statement, adding “we will pursue this opportunity to the point it makes sense.”

Further Reading:

• Nortel wireless fire sale delivers North American footprint to NSN
More LTE vendors join the 4G party (but no cake for Nortel!)
• Will Verizon’s LTE rollout stumble over a little DoJ review?

NSN stands to gain Nortel’s CDMA and LTE assets. Nortel’s CDMA unit earned $700 million a year – and that was while it was in decline, according to WSJ. The big 4G LTE migration is supposed to start next year, and NSN is gathering firepower for that.

Why the excitement about CDMA as the hype builds about 4G LTE and WiMax? “The synergy for NSN is in the CDMA positioning that Nortel has and the presence in key accounts in North America where NSN has very little footprint,” CIMI Corp. President Tom Nolle told us.

Of major importance is Nortel’s long-term relationship with Verizon Wireless. In 2007, NSN won a contract award from Verizon Wireless for IMS, and the Nortel acquisition could only build on this relationship.

While Nortel accepted the NSN offer late last week, plenty of other players are interested in the Nortel wireless business, particularly Ericsson and Huawei, Nolle added. But will they intercept NSN’s bargain-basement win?

“It’s pretty likely that Nortel had discussions with both prior to “accepting” this bid. But the law requires that there be an auction here, and there is always a chance someone else will enter a higher bid than the current NSN offer. If that happens, though, I’d expect that NSN would just bid higher,” Nolle said.

All of this means that NSN could easily make its money back in a year, and is getting a wireless research organization in the bargain. As part of the deal, an estimated 2,500 Nortel employees could transfer to NSN, and about 400 of them conduct LTE research and development.

Lately, 4G is starting to seem like (relatively) easy money for everyone … or rather, everyone but poor, beleaguered Nortel, which is starting to remind me of Milton from Office Space, never getting a piece of the cake even as they watch it distributed all around them:

Nina: Now Milton, don’t be greedy, let’s pass it along and make sure everyone gets a piece.
Milton Waddams: Yeah, but last time I didn’t receive a piece. And I was told…
Nina: Just pass.
[while the cake passes Milton mutters - eventually everybody but Milton gets a piece]
Milton Waddams: [muttering] I could set the building on fire.

Today, Verizon announced that Giesecke & Devrient will be the supplier of the telco’s LTE smart cards, one step closer in bringing its planned 4G juggernaut to the masses. It will be a long, long time until we see LTE phones, of course, but already G&D and other suppliers are starting to see the 4G stimulus roll in.

Verizon also announced today Gemalto would offer the company’s OTA platform for LTE.

Meanwhile, FierceWireless notes a UBS report that claims AT&T has shortlisted Ericsson, Alcatel-Lucent, and Huawei for its LTE trial.

Unsurprisingly, Nortel didn’t make the cut, but it would have been headline news if they had at this point. Even back at this year’s Mobile World Conference, when Verizon announced Alcatel-Lucent and Ericsson as its primary LTE partners, Nortel was considered a long shot, and their being passed over was more a sign of the times than a big deal.

And all this despite Nortel proudly boasting “leadership in 4G-enabled technologies“. Lately, that’s more and more looking like leadership for sale, if and when they can find a buyer: Nokia Siemens is trying to swoop in on the LTE action, the Wall Street Journal reports, while Alcatel-Lucent, NEC and ZTE have also been signaled as possible suitors.

Further Reading:

• At Mobile World Congress, 4G fortunes being made
• Verizon’s LTE vendor selection boosts nascent IMS market
• Nortel’s bankruptcy isn’t the end, but the vultures are circling
• Without revenue-per-bit stabilization, is telecom a time bomb?

Telecom Timeout: Video Investments covers the latest on Nortel’s application delivery business sale to Radware, Cisco’s lay offs, a continued evaluation of Alcatel-Lucent’s future plans, as well as AT&T’s self-investment and the beginning of the process to distribute the broadband stimulus grants. Futher coverage also highlights the future plans involving IPTV by service providers, as unified communications, development of the 802.11v standard and new legislation for an updated Internet Safety Act.

Keeping you up-to-date on the latest in telecommunications industry news, views and strategy, Telecom Timeout and its weekly video blog track the highs and lows of the industry. Join us daily on Telecom Timeout for conversations on developing telecom trends and in-depth analysis of service providers, VoIP, wireless, IPTV, telecom regulation, and more.