DoJ ramping up antitrust probe of $4.5B Nortel patent purchase by Apple, others

Posted:
in General Discussion edited January 2014
Even as Nortel announced the completion of the sale of its 6,000 patents to a group of tech giants including Apple, Microsoft and Research in Motion, the U.S. Department of Justice is said to be intensifying an investigation into whether the deal would unfairly disrupt competitors.



Canada-based Nortel Networks announced Friday that its subsidiaries "have completed the sale of all of Nortel's remaining patents and patent applications to a consortium consisting of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony." The group, which called itself Rockstar Bidco, won the auction last month with a bid of $4.5 billion, a number more than three times the price expected by analysts.



U.S. and Canadian bankruptcy courts had already approved the deal several weeks ago.



However, The Wall Street Journal reports that the Justice Department is deepening its probe of the deal, with particular interest to whether the purchasers could use the patents to "unfairly hobble" devices running Google's Android mobile OS. The search giant placed the initial bid in the auction, but was unable to outbid its competitors once Apple teamed up with the other companies.



According to the report, the DoJ can still "impose conditions" on the companies even though the deal has already been completed. Earlier this year, the federal agency put pressure on a deal that would have seen Microsoft, Apple and Oracle purchase patents from Novell, instead forcing Microsoft to license the patents.



The Justice Department is particularly interested in whether "there's an agreement, implicit or explicit, among the members of the Rockstar consortium to collectively hinder the adoption of Android," said antitrust lawyer Thomas Ensign.



People familiar with the matter said the agency had individually approved all of the companies to participate in the auction, while reserving the right to "take a fresh look" if it had concerns afterward. Potential issues could be the fact that Apple joined the Rockstar consortium late into the auction and the high final price, the sources indicated.



Google general counsel Kent Walker said this week that the Rockstar bid was "a sign of companies coming together not to buy new technology, not to buy great engineers or great products, but to buy the legal right to stop other people from innovating."



As a younger company with a relatively small patent portfolio, Google has run into trouble as competitors, including Apple and Microsoft, have sued Android vendors for infringement. The Mountain View, Calif., company recently shored up its IP collection with the purchase of a batch of patents from IBM, which included inventions related to "memory and microprocessor chips, computer architecture and online search engines."



Rumors that Apple and Google may also compete to purchase InterDigital drove the company's value up by 50 percent earlier on speculation that a bidding war would result in a higher sale price.
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Comments

  • Reply 1 of 61
    galbigalbi Posts: 968member
    Wow, major win for Google.



    A conditional patent portfolio buyout.



    Hope those $2 Billion + was worth it for Apple. Lets be honest here, its intent in jumping into the patent race was to stifle competition.



    This is what is meant by "stifling competition": malicious intent on using patents to kill off a competitor.



    Yup, fits the bill of anti-competitive measures to me.



    The DOJ is doing the work for Google.
  • Reply 2 of 61
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by AppleInsider View Post


    Google general counsel Kent Walker said this week that the Rockstar bid was "a sign of companies coming together not to buy new technology, not to buy great engineers or great products, but to buy the legal right to stop other people from innovating."



    Funny how Google never learned the difference between 'innovating' and 'stealing'.



    Don't they teach that in Kindergarten in California?
  • Reply 3 of 61
    island hermitisland hermit Posts: 6,217member
    I hope the DOJ is bright enough to see this from both angles. As much as bought patents could allow one company to hinder the progress of another, those same patents in turn could allow one company to steal the work of another company without consequence.
  • Reply 4 of 61
    hmurchisonhmurchison Posts: 12,129member
    The DoJ hasn't done anything of note in years. Basically this is shuffling papers around on a desk.
  • Reply 5 of 61
    galbigalbi Posts: 968member
    Quote:
    Originally Posted by hmurchison View Post


    The DoJ hasn't done anything of note in years. Basically this is shuffling papers around on a desk.



    Because all of it being done behind closed doors without much media coverage.
  • Reply 6 of 61
    Quote:
    Originally Posted by Galbi View Post


    Wow, major win for Google.





    The DOJ is doing the work for Google.



    I'd say that just about sums it up. Google is such a whiner; just like the annointed 0ne. I wouldn't trust them as far as I can throw, Chris Christie - and I am a fan of the governor.
  • Reply 7 of 61
    mbarriaultmbarriault Posts: 237member
    Wait, didn't both American and Canadian governments approve of this purchase?
  • Reply 8 of 61
    island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by mbarriault View Post


    Wait, didn't both American and Canadian governments approve of this purchase?



    The Canadians just want the cheque... I think Steve stuck it in the mail...
  • Reply 9 of 61
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by mbarriault View Post


    Wait, didn't both American and Canadian governments approve of this purchase?



    The bankruptcy courts approved it, but the DoJ operates under a different set of principles, so they are entitled to examine it too.



    It was always clear that they would, though whether they'll decide that they need to change the terms of the sale is less likely. This is a very different market from that in the Novell purchase

    .
  • Reply 10 of 61
    hmurchisonhmurchison Posts: 12,129member
    The difficulty for the DoJ is this.



    1. Patents exist to protect the profitability of intellectual property



    2. They'd need some sort of written collusion that the "Rockstar" group willfully intends to

    go after Android



    So Apple's group isn't doing anything wrong by purchasing patents and the defense of those patents is not wrong either so long as they don't stray into anti-trust gray areas. Of course the DoJ is looking at this scenario but unless they find a "smoking gun" they will have little to investigate.
  • Reply 11 of 61
    sflocalsflocal Posts: 4,334member
    Don't think for a moment that Google is trying to keep this "fair". They, along with any other company, including Apple will use the patent to keep out others. Like it or not, that's what the patent system - especially in mobile technology - is being used for.



    What's the government going to do? Abort the sale and let Google buy it? How's about sell it to Lodsys? Guess what Google will do if they find out another player uses technology it has a patent for?



    If their truly is a concern, the government should take the patents and put them in the public domain where anyone can use it. Not on my tax dollars though.



    How's about if a company goes bankrupt, the patents automatically become public? They should not necessarily be allowed to be bought and sold like tangible property.



    I think we're at a point now where there are so many patents causing so much overlap, one cannot innovate without violating some obscure patent.



    Just my 2 cents. It's a mess.
  • Reply 12 of 61
    esoomesoom Posts: 155member
    Sounds about right for Google, a company based on software patents to demand a rule change now...
  • Reply 13 of 61
    agramonteagramonte Posts: 345member
    nice to have friends in high places
  • Reply 14 of 61
    patranuspatranus Posts: 366member
    Schmidt has to get some payback for his vocal support of Obama.
  • Reply 15 of 61
    ltmpltmp Posts: 204member
    Quote:
    Originally Posted by Galbi View Post


    Wow, major win for Google.



    A conditional patent portfolio buyout.



    Hope those $2 Billion + was worth it for Apple. Lets be honest here, its intent in jumping into the patent race was to stifle competition.



    This is what is meant by "stifling competition": malicious intent on using patents to kill off a competitor.



    Yup, fits the bill of anti-competitive measures to me.



    The DOJ is doing the work for Google.



    Another way to look at this is that Nortel would have sued Google if they were still able to do so.



    If the Rockstar group go after Google, they are only doing what Nortel would have done anyway.



    Google stole IP, Google should pay.



    I'm not saying that I agree with this view. I find that when I take a close look at the issues, they are far more complex than they seem at first glance.
  • Reply 16 of 61
    cloudgazercloudgazer Posts: 2,161member
    Quote:
    Originally Posted by hmurchison View Post


    The difficulty for the DoJ is this.



    1. Patents exist to protect the profitability of intellectual property



    2. They'd need some sort of written collusion that the "Rockstar" group willfully intends to

    go after Android



    So Apple's group isn't doing anything wrong by purchasing patents and the defense of those patents is not wrong either so long as they don't stray into anti-trust gray areas. Of course the DoJ is looking at this scenario but unless they find a "smoking gun" they will have little to investigate.



    That's not actually relevant. They had no smoking gun in the case of the Novell purchase but they still imposed significant restrictions.



    You see there's a fundamental difference between the standards of evidence for an anti-trust action to break apart a monopoly and the standard of evidence to block or restrict a merger that could result in a monopoly.



    There's a good chance that the purchase will be allowed to go through, but this isn't cut and dried.
  • Reply 17 of 61
    steven n.steven n. Posts: 1,081member
    Going against Google on the purchase. I think

    This will really help Apple's case.
  • Reply 18 of 61
    mdriftmeyermdriftmeyer Posts: 7,183member
    There is nothing to see here. The DoJ will do an extensive investigation and side with Apple.



    This will then silence the next auction that Apple wins on.



    This is standard procedure for high stakes.
  • Reply 19 of 61
    Quote:
    Originally Posted by mdriftmeyer View Post


    There is nothing to see here. The DoJ will do an extensive investigation and side with Apple.



    This will then silence the next auction that Apple wins on.



    This is standard procedure for high stakes.



    I think your prediction is a sound one.
  • Reply 20 of 61
    SpamSandwichSpamSandwich Posts: 30,398member
    Quote:
    Originally Posted by Patranus View Post


    Schmidt has to get some payback for his vocal support of Obama.



    Uh, but I think Steve supported Obama also... no one's perfect.
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