Apple Has Outright Ownership of Nortel's LTE (4G) Patents?

MacRumors · Jul 3, 2011

Robert Cringely claims to have some details of the deals that were in place for the $4.5 billion acquisition of Nortel's patent portfolio. The patents were ultimately won by a consortium that included Apple. The auction drew interest of many of the major players in mobile today due to Nortel's large portfolio of Long Term Evolution (LTE, also known as "4G") related patents.

Reuters recapped some of the behind the scenes maneuvering amongst the players. The bidding began with 5 different parties: Apple, Intel, Google, a consortium of Ericsson, RIM, Microsoft and EMC, and a consortium led by RPX. As the bidding increased, partnerships formed and Apple joined up with the Ericsson/RIM/Microsoft/EMC consortium. Meanwhile, Intel partnered with Google whose bidding "tapped out" over $4 billion. The patents were ultimately won for $4.5 billion.

Cringely claims that within the consortium were different arrangements for each party. RIM and Ericsson reportedly put up $1.1 billion together and includes "fully paid up" license rights to the portfolio. Microsoft and Sony also put up another $1 billion with unspecified terms, while EMC contributed $400 million for a subset of patents.

Meanwhile, the largest contributor of the consortium was said to be Apple who put up $2 billion "for outright ownership of Nortel's Long Term Evolution (4G) patents as well as another package of patents supposedly intended to hobble Android." Apple obviously has a large interest in LTE/4G for future iPhones and iPads. Apple recently settled with Nokia and agreed to a license of their patents for use in Apple's mobile devices. Nokia is also said to have a significant number of LTE related patents. Ownership of such patents could give Apple leverage and/or provide licensing fees from other mobile manufacturers that offer LTE technology.

Article Link: Apple Has Outright Ownership of Nortel's LTE (4G) Patents?

res1233 · Jul 3, 2011

How strange.

neilw · Jul 3, 2011

Wow, titanic legal battles loom. I wonder how much the Apple legal staff has grown since getting into the phone business....

wordoflife · Jul 3, 2011

I wonder if Apple would actually make other manufacturers license LTE. I'm not sure how good that would be.

soco · Jul 3, 2011

Am I the only one who got immediately sick of hearing the word consortium? It's like the sports stations overusing the term platoon lately.

iRobby · Jul 3, 2011

4G/LTE on iPhone or no 4G/LTE on iPhone which one is it now?

xxBURT0Nxx · Jul 3, 2011

iRobby said:
4G/LTE on iPhone or no 4G/LTE on iPhone which one is it now?

at some point it will obviously support 4G/LTE, probably won't happen with this generation.

I'm personally hoping that they are delaying the iPhone 5 until september so that they can add LTE support and att has time to roll out the service.

Either way, I'll probably be switching to vzw when 4g is supported on the iPhone because their rollout is much faster and more ambitious than what att has planned by the end of the year. too little, too late imo.

*LTD* · Jul 3, 2011

Talk about a power position. Wow.

rman726 · Jul 3, 2011

I'm a fan of Apple, but I think it's pathetic that Apple (or Google) would buy patents to "hobble" their biggest competitor. The iPhone is a better phone because of the competition with Android. I have no problems with them protecting their own intellectual property like they are doing with Samsung and their blatant ripoff of the iPhone. But to buy patents for the sole purpose of hurting the competition is anti-competitive, and wrong IMO.

I do realize that in the end, it's not really Apple's fault and that they are just playing by the rules of the game. If they hadn't ponied up the $2B, then Google would have done the same to "hobble" Apple. So I don't blame Apple entirely, and instead blame the entire environment created by the awful existing system. But in the end, the consumers lose, which sucks.

Worksafe · Jul 3, 2011

The face of wireless just got convoluted

If it was'nt already, the wireless industry is now becoming extremely convoluted and trying to figure out who has the clear advantage at any given moment is a moving signal, but if Apple does have "outright ownership" of Nortel's Long Term Evolution (4G) patent the next two years will see a major player crowned king.

xxBURT0Nxx · Jul 3, 2011

^^ so you think companies should sit back and let their competitors buy the patent set????

That would be a terrible business decision. All of their competitors were bidding on them for the same reasons, would have been stupid to pass on trying to obtain these patents.

Winni · Jul 3, 2011

rman726 said:
I have no problems with them protecting their own intellectual property like they are doing with Samsung and their blatant ripoff of the iPhone.

Have you ever used a Samsung Galaxy S2? In case you do, don't be surprised when you sell your iPhone and switch to the Galaxy -- I did. Not only the hardware of the Galaxy is superior to Apple's hardware, the software is also better in every aspect - and unlike iOS, Android does NOT try to restrict the user whenever and wherever possible.

Apple has lost the leadership and no longer has the better products; iOS 5 and iCloud are "me too" designs that basically only implement features that Android has had for a long time now. Since being good is not sufficient when somebody else is better, Apple is now trying pathetic legal games to regain the pole position.

NebulaClash · Jul 3, 2011

wordoflife said:
I wonder if Apple would actually make other manufacturers license LTE. I'm not sure how good that would be.

Not Apple's style to do that. This strikes me as a defensive purchase. This is how it would go:

Competitor: "Aha! Pay up, Apple. We own these patents that cover the iPhone!"

Apple: "Don't think so. We own the LTE patents. Nice LTE phone you have there, shame if anything were to happen to it."

Competitor: "Never mind."

Rodimus Prime · Jul 3, 2011

Of all the companies on the list and going after the patents the one that I wanted to own them the least was Apple. Reason being is Apple has a long history of not licencing out patents and doing damage long term but it could be after talks with the DOJ Apple could easily already be required to licence them out at a set rate and my guess what it is currently before they were sold and required to do it for who ever request them at that same rate.

NebulaClash said:
Not Apple's style to do that. This strikes me as a defensive purchase. This is how it would go:

Competitor: "Aha! Pay up, Apple. We own these patents that cover the iPhone!"

Apple: "Don't think so. We own the LTE patents. Nice LTE phone you have there, shame if anything were to happen to it."

Competitor: "Never mind."

Chances are legally Apple can not do it. I would not be surpised if Apple has some pretty stick guide lines it agree to with the DOJ. Going against it would mean some pretty heavy fines.

840quadra · Jul 3, 2011

Are we talking true 4G (LTE-Advanced), or the much slower current system Marketed as 4G (LTE)?

NebulaClash · Jul 3, 2011

Rodimus Prime said:
Chances are legally Apple can not do it. I would not be surpised if Apple has some pretty stick guide lines it agree to with the DOJ. Going against it would mean some pretty heavy fines.

You may well be right. They did have a chat with the government about this, I recall, so maybe the government will require Apple to license the LTE patents. It's not their style, but when you have such a key patent I guess it has to be shared.

xxBURT0Nxx · Jul 3, 2011

Winni said:
Have you ever used a Samsung Galaxy S2? In case you do, don't be surprised when you sell your iPhone and switch to the Galaxy -- I did. Not only the hardware of the Galaxy is superior to Apple's hardware, the software is also better in every aspect - and unlike iOS, Android does NOT try to restrict the user whenever and wherever possible.

Apple has lost the leadership and no longer has the better products; iOS 5 and iCloud are "me too" designs that basically only implement features that Android has had for a long time now. Since being good is not sufficient when somebody else is better, Apple is now trying pathetic legal games to regain the pole position.

I actually do enjoy android, but the galaxy phones are very similar spec wise to iphones, typically using the same cpu, just different branding.

Jailbreaking also unrestircts apples walls which makes iOS actually usable.... but android is just as hampered. phones are still being released with fryo when there has already been two other versions of android released and ice cream announced.

MattInOz · Jul 3, 2011

NebulaClash said:
Not Apple's style to do that. This strikes me as a defensive purchase. This is how it would go:

Competitor: "Aha! Pay up, Apple. We own these patents that cover the iPhone!"

Apple: "Don't think so. We own the LTE patents. Nice LTE phone you have there, shame if anything were to happen to it."

Competitor: "Never mind."

Wouldn't be surprised if Apple had control on the grounds that they add these to the patent pool for LTE and get themselves and all the players of the consortium better terms for use of the overall pool. (even maybe better terms on the 3G pool to boot).

Take some of the sting out of Nokia's tail in defining Fair and Reasonable terms to the industry.

Yep it seems like a defensive/negotiation tactic.

Rodimus Prime · Jul 3, 2011

xxBURT0Nxx said:
I actually do enjoy android, but the galaxy phones are very similar spec wise to iphones, typically using the same cpu, just different branding.

Jailbreaking also unrestircts apples walls which makes iOS actually usable.... but android is just as hampered. phones are still being released with fryo when there has already been two other versions of android released and ice cream announced.

As far as I know only 1 more version of Android for phones. Honeycomb is not for phones.

I agree releasing with Fryo at this point is not really acceptable. A reasonable time frame from release of Android to it being updated for the phones in my book is 3 months. That is enough time for the manufactures to get all there crap installed on the phone. They do not have to change the radio stuff so it not like AT&T and others should have any real say in it.

SandynJosh · Jul 3, 2011

It's interesting to me how rapidly Apple has advanced in the phone business.

Four years ago it entered what was called the upper part of the phone market with aspirations of capturing 5%. They had no patents relating to phones per sec. just some UI patents.

Within that first year Apple became the phone to own, and they were only on one network in one country. Now, Apple is greater then 5% worldwide, and a third of the USA market for smart phones. The iPhone 4 and 3GS are the number one and two selling phones, and now Apple owns a portfolio of important communications patents other manufacturers would love to have.

I cannot think of a similar market that has been so rapidly transformed by a new player as the smart phone market. Maybe the tablet market, but nothing else comes to mind.

CommodityFetish · Jul 3, 2011

Why does it make sense for them to have patents for LTE/4G? They aren't a carrier. Are they going to build a 4G network that only Apple devices can use? (That would be in character for them, wouldn't it...?) Or are they just going to sit on them and extract fees for their use, just because they can, and it increases their power in the business? (Oh, right, that's how business works...)

I know I'm skeptical that having these patents in Apple's hands will be a good thing for consumers. Especially given their track record in terms of working with other companies, or the rates they offer their developers and content providers.

I'm still not convinced that our patent system does more good than harm.

Swift · Jul 3, 2011

Mr. Pink said:
Am I the only one who got immediately sick of hearing the word consortium? It's like the sports stations overusing the term platoon lately.

Only a group of companies bidding on property? A consortium.

ThisIsNotMe · Jul 3, 2011

CommodityFetish said:
Why does it make sense for them to have patents for LTE/4G? They aren't a carrier. Are they going to build a 4G network that only Apple devices can use? (That would be in character for them, wouldn't it...?) Or are they just going to sit on them and extract fees for their use, just because they can, and it increases their power in the business? (Oh, right, that's how business works...)

I know I'm skeptical that having these patents in Apple's hands will be a good thing for consumers. Especially given their track record in terms of working with other companies, or the rates they offer their developers and content providers.

Apparently you didn't read the article.
The point was not because they wanted the underlying technology the patents protect rather they wanted to keep the patents away from Google so Google wouldn't have leverage over them.

CommodityFetish said:
I'm still not convinced that our patent system does more good than harm.

Ya.....being the most innovative culture this planet has ever seen is a real negative.

(Hint: Out patent system is why America is the most innovative culture this planet has ever seen)

840quadra · Jul 3, 2011

CommodityFetish said:
Why does it make sense for them to have patents for LTE/4G? They aren't a carrier. Are they going to build a 4G network that only Apple devices can use? (That would be in character for them, wouldn't it...?) Or are they just going to sit on them and extract fees for their use, just because they can, and it increases their power in the business? (Oh, right, that's how business works...)

I know I'm skeptical that having these patents in Apple's hands will be a good thing for consumers. Especially given their track record in terms of working with other companies, or the rates they offer their developers and content providers.

Remember the phones themselves need to have radios in them to work on whatever network they are attaching to. If broad patents are issued for those radios in both the phones and towers, than the phone manufacturers would need to have a license, or own the patents to avoid a lawsuit.

I'm still not convinced that our patent system does more good than harm.

I fully agree. IMHO the fact that there are so many lawsuits, judgments, and violations is an indication the system is more broken, than it is useful.

xxBURT0Nxx · Jul 3, 2011

SandynJosh said:
It's interesting to me how rapidly Apple has advanced in the phone business.

Four years ago it entered what was called the upper part of the phone market with aspirations of capturing 5%. They had no patents relating to phones per sec. just some UI patents.

Within that first year Apple became the phone to own, and they were only on one network in one country. Now, Apple is greater then 5% worldwide, and a third of the USA market for smart phones. The iPhone 4 and 3GS are the number one and two selling phones, and now Apple owns a portfolio of important communications patents other manufacturers would love to have.

I cannot think of a similar market that has been so rapidly transformed by a new player as the smart phone market. Maybe the tablet market, but nothing else comes to mind.

the iPod was really the first successful and well known portable media player. There were a lot of mp3 players before it, but for whatever reasons the iPod was and still is by far the most successful.

Quite interesting how it became so popular, I remember my first iPod and I had to upgrade my OS to win xp and buy a fw card to put in it because they didn't have usb cables in the beginning. oh how times have changed, can't even use firewire with iPods anymore!

Apple Has Outright Ownership of Nortel's LTE (4G) Patents?

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