DOJ Investigation of Apple Nortel Patent Buying Shifts into Overdrive

Posted by at 8:58 am on July 31, 2011

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.

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