Microsoft and Apple are among the targets of an apparent Justice Department probe into whether a host of former Nortel Networks patents will be used to attack Google Android.
Earlier this year, the two companies led a consortium in a winning $4.5 billion bid for the 6,000 wireless technology patents and patent applications. They were joined by Sony, EMC, Ericsson and others. Some of Nortel's patents covered the LTE (Long-Term Evolution) technology used by many smartphones currently on the market, and could have provided Google the cover it needed to repel intellectual-property lawsuits from its rivals.
Nortel filed for bankruptcy in January 2009, and began selling off pieces of the company. In April, Google offered Nortel some $900 million for a broad selection of viable patents, a fraction of the final price at auction. In July, U.S. Bankruptcy Judge Kevin Gross, in Wilmington, Del., and Ontario Superior Court Judge Geoffrey Morawetz signaled their approval of the deal in a joint session.
According to unnamed sources speaking to the Wall Street Journal, federal regulators are examining whether members of the winning consortium are planning to file additional patent-infringement suits against Android device makers: "The Justice Department wants to know whether it intends to use [the patents] defensively to deter patent lawsuits against its members, or offensively against rivals."
For its part, Google is already crying foul.
"Microsoft and Apple have always been at each other's throats, so when they get into bed together, you have to start wondering what's going on," David Drummond, Google's senior vice president and chief legal officer, wrote in an Aug. 3 posting on The Official Google Blog. "Fortunately, the law frowns on the accumulation of dubious patents for anti-competitive means-which means these deals are likely to draw regulatory scrutiny, and this patent bubble will pop."
He went on to claim that the Justice Department is "looking into whether Microsoft and Apple acquired the Nortel patents for anticompetitive means." Google is also actively trying to buttress its own patent portfolio in order to avoid litigation threats in the future.
In recent months, Microsoft has convinced several manufacturers to pay it royalties on their Android-based devices, and is currently locked in battle with Motorola and Barnes & Noble over what it claims are intellectual-property violations in those companies' use of Android on their mobile devices. Meanwhile, Apple is embroiled in lawsuits with HTC, Samsung and Motorola over the use of Android technology.