Nortel Patents Sold to Consortium which Includes Apple

[mjtomlin]

It's still against anti-trust laws to withhold a group of patents vital to an industry. That's why the government had a little talk with Apple before they bid in the auction. All the other companies have a long history of licensing patents. Apple does not.

Curious that you would say that about Apple, as they have a long history of licensing IP as well. They have been around 3 1/2 decades now. They've had a long standing cross-licensing agreement with Microsoft that dates back before Windows.

I also suspect this auction is involved with why Apple made a deal for Nokia licenses so suddenly. I think they were showing the government that they could play nice and/or it was a requirement to be a consortium member.

I don't think that has anything to do with it. As recently as December of 2010, Apple joined with Oracle, EMC and Microsoft to buy up some Novell patents. I think Apple's main goal here is to make sure these patents don't end up in the hands of a single entity. If you know anything of the Nokia/Apple battle, you'd understand why Apple doesn't want to go through that again.

I also suspect that the results of the Nokia/Apple case came about due to Apple buying up a couple hundred Freescale (Motorola) patents in May, that were related to radio communications, some of which may have been the foundation for some of Nokia's IP and were licensed to Nokia by Motorola. Personally I believe that's what the "cross-licensing" agreement was.

 

[jsjackso]

Nortel is such a disaster, I can't even believe they're still around. They're also cutting off all benefits to retirees and those on medical leave. When will they finally just go away?

They're barely still around. There are a lot of legal wranglings going on at the moment concerning long term disability benefits, pensions, and the substantial amount of severance pay they chose not to pay to the rank and file who were laid off in the US and Canada (not sure about severance in other countries). Browse through the docket over at http://chapter11.epiqsystems.com/NNI/docket/Default.aspx?rc=1 if you're curious about the proceedings. There are tons of lawyers getting rich off of this and eating up money that could go towards those with claims

 

[AppleMacFinder]

What an expensive paper

 

[dethmaShine]

Another piece of information -

http://tech.fortune.cnn.com/2011/07...rtunebrainstormtech+(Fortune+Brainstorm+Tech)

 

[roocka]

A Great Explanation

Nortel Networks, the bankrupt Canadian telecom company, came that much closer to disappearing completely yesterday with the cash sale of its portfolio of 6000 patents for $4.5 billion to a consortium of companies including Apple, EMC, Ericsson, Microsoft, Research In Motion (RIM), and Sony. The bidding, which began with a $900 million offer from Google, went far higher than most observers expected and only ended, I’m guessing, when Google realized that Apple and its partners had deeper pockets and would have paid anything to win. This transaction is a huge blow to Google’s Android platform, which was precisely the consortium’s goal.

Google is the youngest of these companies and has probably the smallest patent portfolio, most of which isn’t mobile or telecom related. This puts Google and Android at a legal disadvantage and explains the 45 patent infringement suits that one analyst says Google in presently facing in the mobile area alone.

Google would have preferred to win the auction, but with the consortium sitting on more than $100 billion in cash, the outcome came down to determination, not resources. Google stayed in it only long enough to make sure of the consortium’s intentions and to make the purchase more painful for them, if that mattered.

It certainly mattered to Google, because that $4.5 billion number will be at the heart of the inevitable anti-trust lawsuit Google will file almost immediately. Every good anti-trust lawyer in America just cancelled his or her July 4th holiday to prepare their pitch for Google, which will probably claim Restraint of Trade as well.

Given that the courts will shortly be involved, Google can probably operate unfettered for another 2-3 years, during which they’ll try to build their own mobile patent portfolio. Google may well be able to use the courts to slow the actual Nortel transaction, too, according to my lawyer friends.

So the “Android is dead” story here is way premature.

In the long run, remember, Google will probably be able to use its legal strategy to force the consortium to at least license some or all of the patents. They’ll get a royalty from Google, I suppose, and thus benefit from Android’s success, but then Google is unlikely to be completely deterred, either.

The story everyone seems to be missing here is who gets what in this consortium deal? Most journalists and bloggers seem to assume the winners will all share equally in the IP spoils. But I have people who know people and the word I am hearing it that’s not the way the consortium works at all.

Some consortium members get patents, some get royalties, and some just get freedom from having to pay royalties.

Notice Nokia isn’t in the consortium? The Finnish company is apparently covered by Microsoft, tying Nokia even more firmly to Windows Phone.

Here’s the consortium participation as I understand it. RIM and Ericsson together put up $1.1 billion with Ericsson getting a fully paid-up license to the portfolio while RIM, as a Canadian company like Nortel, gets a paid-up license plus possibly some carry forward operating losses from Nortel, which has plenty of such losses to spare. For RIM the deal might actually have a net zero cost after tax savings, which the Canadian business press hasn’t yet figured out.

Microsoft and Sony put up another $1 billion.

There is a reportedly a side deal for about $400 million with EMC that has the storage company walking with sole ownership of an unspecified subset of the Nortel patents.

Finally Apple 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.

At the end of the day this deal isn’t about royalties. It is about trying to kill Android.

 

[cmaier]

Nortel Networks, the bankrupt Canadian telecom company, came that much closer to disappearing completely yesterday with the cash sale of its portfolio of 6000 patents for $4.5 billion to a consortium of companies including Apple, EMC, Ericsson, Microsoft, Research In Motion (RIM), and Sony. The bidding, which began with a $900 million offer from Google, went far higher than most observers expected and only ended, I’m guessing, when Google realized that Apple and its partners had deeper pockets and would have paid anything to win. This transaction is a huge blow to Google’s Android platform, which was precisely the consortium’s goal.

Google is the youngest of these companies and has probably the smallest patent portfolio, most of which isn’t mobile or telecom related. This puts Google and Android at a legal disadvantage and explains the 45 patent infringement suits that one analyst says Google in presently facing in the mobile area alone.

Google would have preferred to win the auction, but with the consortium sitting on more than $100 billion in cash, the outcome came down to determination, not resources. Google stayed in it only long enough to make sure of the consortium’s intentions and to make the purchase more painful for them, if that mattered.

It certainly mattered to Google, because that $4.5 billion number will be at the heart of the inevitable anti-trust lawsuit Google will file almost immediately. Every good anti-trust lawyer in America just cancelled his or her July 4th holiday to prepare their pitch for Google, which will probably claim Restraint of Trade as well.

Given that the courts will shortly be involved, Google can probably operate unfettered for another 2-3 years, during which they’ll try to build their own mobile patent portfolio. Google may well be able to use the courts to slow the actual Nortel transaction, too, according to my lawyer friends.

So the “Android is dead” story here is way premature.

In the long run, remember, Google will probably be able to use its legal strategy to force the consortium to at least license some or all of the patents. They’ll get a royalty from Google, I suppose, and thus benefit from Android’s success, but then Google is unlikely to be completely deterred, either.

The story everyone seems to be missing here is who gets what in this consortium deal? Most journalists and bloggers seem to assume the winners will all share equally in the IP spoils. But I have people who know people and the word I am hearing it that’s not the way the consortium works at all.

Some consortium members get patents, some get royalties, and some just get freedom from having to pay royalties.

Notice Nokia isn’t in the consortium? The Finnish company is apparently covered by Microsoft, tying Nokia even more firmly to Windows Phone.

Here’s the consortium participation as I understand it. RIM and Ericsson together put up $1.1 billion with Ericsson getting a fully paid-up license to the portfolio while RIM, as a Canadian company like Nortel, gets a paid-up license plus possibly some carry forward operating losses from Nortel, which has plenty of such losses to spare. For RIM the deal might actually have a net zero cost after tax savings, which the Canadian business press hasn’t yet figured out.

Microsoft and Sony put up another $1 billion.

There is a reportedly a side deal for about $400 million with EMC that has the storage company walking with sole ownership of an unspecified subset of the Nortel patents.

Finally Apple 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.

At the end of the day this deal isn’t about royalties. It is about trying to kill Android.

People have some weird ideas about how antitrust law works.

 

[kdarling]

It's still against anti-trust laws to withhold a group of patents vital to an industry.

Says who?

I was speaking in the context of this thread; that is, buying up a pool of patents that have been in use for a while and then withholding their licensing. An example I recently read about such a situation was where...

"... one company purchased 72 dominant patents in the field; the court ruled that it was not possible for someone else to make a competitive product without infringing one of the patents. The court stated that while there was nothing inherently wrong with purchasing a patent and enforcing it against an infringer, the intent and underlying purpose of accumulating such a large number of patents amounted to a violation of antitrust laws and patent misuse."

Is that article incorrect? It jibes with several other, more in-depth, papers about patent misuse that I've spent time studying. Your insight is appreciated.

Curious that you would say that about Apple, as they have a long history of licensing IP as well. They have been around 3 1/2 decades now. They've had a long standing cross-licensing agreement with Microsoft that dates back before Windows.

IIRC, most of the cross-licensing with Microsoft was forced by court cases.

Otherwise, do you know of any examples of Apple currently licensing their tech?

When Apple posts a lawsuit against an iPhone competitor, they never state that they just want fair licensing fees. Instead, they always demand that no one else uses their patents.

That's why Apple (and Google) got extra scrutiny by the feds over this patent auction. The government wanted to make sure that Apple wouldn't simply use the patents to sue more competitors.

 

[cmaier]

I was speaking in the context of this thread; that is, buying up a pool of patents that have been in use for a while and then withholding their licensing. An example I recently read about such a situation was where...

"... one company purchased 72 dominant patents in the field; the court ruled that it was not possible for someone else to make a competitive product without infringing one of the patents. The court stated that while there was nothing inherently wrong with purchasing a patent and enforcing it against an infringer, the intent and underlying purpose of accumulating such a large number of patents amounted to a violation of antitrust laws and patent misuse."

Is that article incorrect? It jibes with several other, more in-depth, papers about patent misuse that I've spent time studying. Your insight is appreciated.



IIRC, most of the cross-licensing with Microsoft was forced by court cases.

Otherwise, do you know of any examples of Apple currently licensing their tech?

When Apple posts a lawsuit against an iPhone competitor, they never state that they just want fair licensing fees. Instead, they always demand that no one else uses their patents.

That's why Apple (and Google) got extra scrutiny by the feds over this patent auction. The government wanted to make sure that Apple wouldn't simply use the patents to sue more competitors.

I don't know what the "one court" was or when this occurred, but I've seen this argument fail multiple times (and haven't seen it succeed) - a judge poo pops this exact argument a few months back, in fact. As long as the patent is legally obtained and the owner doesn't try to extend the scope of the patent (as by tying to other products or by interpreting it in an invalid manner) I think it would be very difficult to sustain patent misuse under the current state of the law. The article you cite is very old, and it may have been some district court (and hence not precedent except in that district).

 

[kdarling]

As long as the patent is legally obtained and the owner doesn't try to extend the scope of the patent (as by tying to other products or by interpreting it in an invalid manner) I think it would be very difficult to sustain patent misuse under the current state of the law.

Thanks. Except how does that tie into why Dept of Justice antitrust regulators had to clear Apple and Google for bidding in the auction? Clearly the US government currently does believe in potential patent misuse under antitrust laws.

Moreover, the firms in the auction had antitrust lawyers involved.

In her 2008 remarks on The Increasing Role of Antitrust Principles in Defining Patent Rights, a DOJ assistant Attorney General commented: "Similarly, under certain circumstances, the acquisition of a patent could violate Section 7 of the Clayton Act, or patent licensing terms might constitute illegal tying or price-fixing. "

Hmm. Are you saying that even though the DOJ likes to bring up antitrust in relation to patents, that judges disagree?

 

[cmaier]

Thanks. Except how does that tie into why Dept of Justice antitrust regulators had to clear Apple and Google for bidding in the auction? Clearly the US government currently does believe in potential patent misuse under antitrust laws.

Moreover, the firms in the auction had antitrust lawyers involved.

In her 2008 remarks on The Increasing Role of Antitrust Principles in Defining Patent Rights, a DOJ assistant Attorney General commented: "Similarly, under certain circumstances, the acquisition of a patent could violate Section 7 of the Clayton Act, or patent licensing terms might constitute illegal tying or price-fixing. "

Hmm. Are you saying that even though the DOJ likes to bring up antitrust in relation to patents, that judges disagree?

Wasn't this in a bankruptcy setting? If so,the rules change, as the court would be able to take into account impact on consumers, the industry, etc. (of course, once the patents are disposed of, that's the end of that).

As for the doj thing, it's true, but the aquisition itself would have to be at issue. For example, the acquiring party leveraging a monopoly in order to acquire the patents. (give me your patent or I won't grant you access to the market I control).

And antitrust lawyers had to be involved because these consortia that were bidding could look a lot like collusion.

 

[squirrellydw]

Apple is now going to start or buy there own cell network. Then they can add and design the network to work with there phone.


You heard it here first.

 

[cmaier]

Apple is now going to start or buy there own cell network. Then they can add and design the network to work with there phone.


You heard it here first.

No we didn't. Others suggested this years ago, and they, too, were ignorantly ignoring that they sell phones throughout the world, not just in the U.S.

 

[jsjackso]

I was speaking in the context of this thread; that is, buying up a pool of patents that have been in use for a while and then withholding their licensing. An example I recently read about such a situation was where...

"... one company purchased 72 dominant patents in the field; the court ruled that it was not possible for someone else to make a competitive product without infringing one of the patents. The court stated that while there was nothing inherently wrong with purchasing a patent and enforcing it against an infringer, the intent and underlying purpose of accumulating such a large number of patents amounted to a violation of antitrust laws and patent misuse."

Is that article incorrect? It jibes with several other, more in-depth, papers about patent misuse that I've spent time studying. Your insight is appreciated.



IIRC, most of the cross-licensing with Microsoft was forced by court cases.

Otherwise, do you know of any examples of Apple currently licensing their tech?

When Apple posts a lawsuit against an iPhone competitor, they never state that they just want fair licensing fees. Instead, they always demand that no one else uses their patents.

That's why Apple (and Google) got extra scrutiny by the feds over this patent auction. The government wanted to make sure that Apple wouldn't simply use the patents to sue more competitors.

I don't know anything about the antitrust angle, but the IEEE is worried about Nortel's previous arrangements with regards to their and others' uses of the patents in question. From the main document in docket #5816 on the Epiq site for Nortel: "The Institute of Electrical and Electronics Engineers, Inc. (“IEEE”) submits this limited objection to the Sale Motion. For clarity, IEEE states at the outset that it takes no position on which party should be permitted to purchase the patents at issue or on the terms of any purchase agreement. IEEE’s sole concern is that the bankruptcy process not be used in a way that permits a successor patent-holder to disavow the patent commitments that IEEE, other standards setting organizations (SSOs), entire industries, and end-users have relied upon."

 

[squirrellydw]

No we didn't. Others suggested this years ago, and they, too, were ignorantly ignoring that they sell phones throughout the world, not just in the U.S.

Wrong, the ignorant thing is thinking Apple has to do this in other countries, when has Apple ever launched a product in all the other parts of the world at the same time besides computers? it is usually rolled out after the U.S.

I doubt this will happen but you never know,

You heard it here first