DoJ ramping up antitrust probe of $4.5B Nortel patent purchase by Apple, others
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.
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.
Comments
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.
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?
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.
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.
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...
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
.
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.
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.
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.
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.
This will really help Apple's case.
This will then silence the next auction that Apple wins on.
This is standard procedure for high stakes.
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.
Schmidt has to get some payback for his vocal support of Obama.
Uh, but I think Steve supported Obama also... no one's perfect.