Microsoft, Apple, Others Obtain Nortel Patent Sale Approval

Microsoft, Apple, Others Obtain Nortel Patent Sale Approval

Jul 11, 2011
2 minute read
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A consortium led by Microsoft and Apple further cemented their victory over Google in a high-stakes auction for Nortel’s wireless technology patents, with judges in the United States and Canada approving the $4.5 billion transaction.

U.S. Bankruptcy Judge Kevin Gross, in Wilmington, Del., and Ontario Superior Court Judge Geoffrey Morawetz signaled their approval in a joint session, according to Bloomberg. The case itself is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Other companies in the Rockstar Bidco LP consortium include Sony, Ericsson and EMC. The group ended up battling a combined Google and Intel for the 6,000 patents and patent applications at issue.

Nortel filed for bankruptcy in January 2009, and began selling off pieces of the company. After selling off most of its businesses, Nortel still had thousands of viable patents in reserve for the right bidder. “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,” Kent Walker, Google’s senior vice president and general counsel, wrote in an April 4 posting on the Official Google Blog.

In April, Google offered Nortel some $900 million for those patents, with the idea of creating an intellectual-property moat for its Android mobile operating system. Android has been the target of increased litigation by Microsoft, Apple and other companies that have fired off lawsuits at manufacturers loading the open-source software onto their mobile devices.

In recent weeks, 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 it 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.

Just to make things a little more interesting for Google, the search-engine giant finds itself the target of a massive lawsuit by Oracle, which claims Android violates its Java-related patents and copyrights; a loss in that case would have widespread repercussions for Android’s spread.

Google does not sell Android to the manufacturers who load the operating system on their devices, but it does make money off selling mobile ads. Google has previously stated that its mobile ad business operates at a run-rate of $1 billion.

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 with cover as it seeks to repel all these legal challenges. With the ball now firmly in the hands of its rivals, though, it remains to be seen whether Google’s position now becomes that much more precarious. Certainly, the intense legal battles over Android will continue unabated.

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