A group including Apple, Microsoft and RIM is being accused of colluding to stop Google from buying Nortel Networks' patents to protect Android. Regulators are looking into it.
The ad-hoc patent group that offered $4.5 billion for bankrupt Nortel Networks' 6,000 patents
is facing antitrust
scrutiny for possibly conspiring to keep the technology from Google's (NASDAQ:GOOG)
Nortel June 30 sold its patents to Rockstar Bidco LP, the
consortium comprising Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Research In
Motion (NASDAQ:RIMM), Sony, EMC (NYSE:EMC) and Ericsson.
The sale was a blow to
Google, which started the bidding by
offering Nortel $900 million for the patents back in April
. Patent-poor Google desired the patents to protect its
Android mobile operating system from increasing litigation from Apple,
Microsoft and others trying to compete with the open-source platform.
American Antitrust Institute sent a letter to the Justice Department
antitrust officials to begin an investigation of the sale before July 11, which
is when courts in Canada and the United States are expected to approve or strike down
The AAI noted that the $4.5 billion purchase price is
five times what Google offered to start the auction bidding, raising questions
about why the consortium members could not act alone.
AAI in particular pointed to Apple, Microsft and RIM,
which all make smartphone software and each already owns a large portfolio of wireless
"Why, in this light, should ANY horizontal
collaboration among them (joined by three others with strong portfolios of their own as
well) be allowed with regard to the Nortel portfolio, particularly in the absence of any transparent
safeguards against anticompetitive effects from it?" noted the AAI.
"Three close competitors' shared control over 6,000
patents surely at a minimum creates significant risk of spillover collusion, tacit
Washington Post said federal antitrust enforcers
are scrutinizing whether the
companies unfairly colluded to block Google from buying technology patents that
would protect its open-source Android mobile platform. It is not clear whether the Department of Justice or Federal Trade Commission is looking into the matter.
Patent litigation against Android smartphone makers is
rampant and widespread. Apple is suing HTC, Samsung and Motorola over
technology included in their Android smartphones. Microsoft is suing Motorola
over its Android line.
Google itself is currently facing a serious lawsuit from
Oracle, which could enjoin it from offering Android and gain significant
damages if it wins the case.
Google had hoped Nortel's patents, which include those
for Long Term Evolution wireless technology increasingly used in smartphones
today, would provide some shields from the suits.
Without them, Google has little defense versus lawyers
seeking to exploit patent law that has yet to adequately compensate for the
fast-changing tech sector. Robert X. Cringely had more on the matter