Apple, Microsoft Patent Consortium Trying to Kill Android
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) clutches.
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.
The American Antitrust Institute sent a letter to the Justice Department asking 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 deal.
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 technology patents.
"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 or otherwise."
The 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.