M&A Environment in 2012

As pricing pressures continue, the need for protected technology and sustainable margins will continue to be imperative for survival. S. Jason Teele, Bankruptcy counsel for Lowenstein Sandler furthered this point with his prediction for 2012. "Patents promise to be a significant issue on the M&A front over the next 18 months, particularly in the context of asset sales in chapter 11. Given the behavior of so-called "patent trolls"—companies that acquire large portfolios of patents to obtain settlements from other companies that allegedly are infringing those patents—many companies have been forced to defensively "troll" and acquire patent portfolios in order to protect their business/manufacturing processes. As a result of the spending associated with defensive patent acquisition many companies find themselves strapped for cash and in need of financial restructuring. In the case of Nortel, the company's enormous patent portfolio generated substantial interest by several bidders, including giants such as Google and Apple, who were anxious to acquire the patents also for primarily defensive reasons. Similar interest could be generated if Kodak's patent portfolio is placed for sale in that company's pending bankruptcy case. Although Nortel and Kodak exemplify patent trolling on a grand scale, the practice is prevalent in companies of all sizes across a wide variety of industries."