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DOJ steps up investigation of Apple-led Nortel patent deal

updated 10:05 pm EDT, Fri July 29, 2011

Nortel patent deal closes but under DOJ heat

Nortel on Friday completed its selloff of patents to an Apple-led coalition but faced a much tougher Department of Justice investigation into antitrust issues. What the new steps involved wasn't certain, although it's likely to focus more closely on whether the group, which also included Microsoft, RIM, and Sony, planned a patent lawsuit campaign or would use the patents solely as a defensive measure. The WSJ sources blamed Apple's involvement in the group and the very high $4.5 billion winning bid as red flags.

The contacts revealed why the DOJ and other officials had approved the deal early on. The regulators didn't want to unfairly bias the auction results while the bidding was still under way, according to the tips. Even from the start, however, the DOJ had briefed Nortel and the bidders that it reserved the right to investigate again if there were antitrust risks.

Getting the 6,000 Nortel patents may have also created an effective cap on what the companies could do in the future. Any future patent bids might quickly trigger an antitrust investigation, the involved tipsters said.

None of the involved companies have said what, exactly, they hoped to do with the patent pool they now jointly owned. They could leave the patents in collective ownership and give everyone involved a safety net. Alternately, they could divide the patents up based on desire and make a pact not to use them against each other.

Many suspect the patent buyout was ultimately intended to conduct further legal campaigns against Android, particularly on the part of Apple and Microsoft. Both launched offensive lawsuits and ITC complaints against key Android supporters such as HTC, Motorola, and Samsung, with the intent of pushing the companies into accepting licenses that would raise the price of Android.

Apple has been conducting a narrow campaign aimed at the largest Android manufacturers and hasn't claimed any inherent ownership of the platform. Microsoft, meanwhile, has been attempting to attack every Android manufacturer on the assumption it owns patent rights to Google's OS. As an OS licenser, it's widely suspected of offering steep patent royalty discounts and possibly immunity in exchange for agreeing to make Windows phones.

by MacNN Staff



  1. TomMcIn

    Joined: Dec 1969


    Canadian Nortel

    Wasn't Nortel a Canadian company or were the patents US.

  1. LenE

    Joined: Dec 1969


    Isn't it interesting

    The DOJ is continually said to be worried about Apple, a company that actually produces products that will rely on these patents, but does nothing about the ludicrous Eastern District of Texas troll factory. This is all about Google being afraid of what is rightfully coming their way, and using friends to slow the inevitable. They set their partners up for a big fall, and a lot of goodwill will be lost when they cannot help their partners defend against the right-holders.

    The really bizarre part to all of this, is that there is no anti-trust issue, period. A patent is by definition, a government-granted, but time-limited monopoly on an implementation of something. If one person or entity owns all patents for one technology, they own it. Others may make improvements and patent those, but until the original expires, it must be licensed to implement the follow-on. That is the way it works. It doesn't matter if the current owner of the patent made the original filing, the owner must be paid by whatever terms they feel are correct. A high license fee encourages others to innovate around the patents, a low fee encourages widespread compliance and use of the patent. With or without litigation, none of this is an anti-trust issue.


  1. phillymjs

    Joined: Dec 1969



    Instead of worrying about whether those patents are going to be used as offensive or defensive weapons, how about focusing on the fact that the patent system is so screwed up in this country that weaponization of patents happens in the first place?!?!?

  1. lochias

    Joined: Dec 1969


    Not so interesting

    A dominant company, though its dominance has been fairly earned, may not buy its main competitor. It can't buy (the entirety of) its competitor's patents either.

    The period at the end of your "bizarre part to all of this, is that there is no anti-trust issue" is flagrant hyperbole (read: dead wrong).

    A patent is an asset like any other, and likely to be increasingly at issue in anti-trust prosecution.

  1. macentric

    Joined: Dec 1969


    Android has higher marketshare....

    I'm not sure how Apple is the dominant leader in the smartphone market when there are more Android phones than iPhones in the world. If anything it should have been an antitrust issue for Google to purchase these patents, as well as the IBM patents recently purchased, and the InterDigital patents they are looking to purchase.

    It really does seem a little strange that Google with all of its friends in government isn't actively being investigated for anything other than advertising.

    Also companies buy their competitors all the time. For example Brocade bough McData, Cisco buys everything it can, Oracle bought PeopleSoft, Oracle bought Sun (MySQL), etc... When company A buys company B the patents come along for the ride. Also companies do patent-license swaps frequently like Apple and Microsoft back in 1996. It is all for positioning.

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