Google Bid for Nortel Patents Gets DOJ OK

 
 
By Clint Boulton  |  Posted 2011-06-15
 
 
 

Over objections from rival Microsoft (NASDAQ:MSFT) and other rivals, the Justice Department OK'd Google's (NASDAQ:GOOG)  $900 million bid for more than 6,000 patents and patent applications owned by bankrupt networking giant Nortel Networks (NYSE:NT).

The DOJ concluded that Google owning the patents wouldn't raise any major competitive concerns, sources familiar with the matter told the Wall Street Journal. Google may open the bidding in Nortel's June 20 auction, which is also drawing interest from Apple (NASDAQ:AAPL), Research In Motion (TSE:RIM), and other concerns in the mobile sector.

The DOJ and Google declined confirm or otherwise comment on the DOJ's ruling.

Nortel Networks April 4 agreed to sell its remaining 6,000 4G LTE (Long Term Evolution) wireless, networking, social software and other patents to Google for $900 million in cash.

Google craves the patents, which Nortel said span "nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking," to stave off increasingly rampant patent litigation. Google is especially patent poor for its size.

"One of a company's best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services," wrote Google's Kent Walker, senior vice president and general counsel, in a blog post in April.

Apple, for one, has been quick to sue Samsung, HTC and others that make smartphones based on Google's Android mobile operating system in the mobile sector for the last two years.

The DOJ was reportedly concerned that if Apple won the patents it would wield them as sword to cut down rivals from competing in the mobile market.

Tech analysts believe that while Google may use Nortel patents as a shield to protect itself from lawsuit, RIM, Apple, Nokia (NYSE:NOK) and other hardware makers might make better use of Nortel's patent technology, which is actively used in RIM BlackBerry smartphones and Apple's iPhone.

While the DOJ sided with the search engine, Google's bid hasn't gone uncontested. Microsoft, HP (NYSE:HPQ), Nokia, Motorola Mobility (NYSE:MMI) AT&T (NYSE:T)and Verizon Communications (NYSE:VZ) filed objections to the sale because they believe it would give the winner an unfair competitive advantage over its rivals.

Microsoft, which claims to hold a perpetual license to use Nortel's patents dating to 2006, said any existing agreements should be transferred to any new owner of the intellectual property.

Rumors of possible bidders for Nortel's patents ignited shortly after the networking giant filed for bankruptcy in January 2009. Nortel had been selling off pieces of its company for the last few years.


 

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