Justice Department Investigating Nortel Patent Sale

Federal officials may be investigating the consortium of companies that purchased Nortel's patents, an indication the government is watching such deals with an eye towards unfair competition as patent infringement litigation intensifies.

Last month, six companies including Apple, Microsoft and Research in Motion teamed up to pay a winning auction bid of $4.5 billion for 6,000 of Nortel's patents. According to the Wall Street Journal, the U.S. Department of Justice is now reviewing the purchase by the consortium, called Rockstar Bidco, about its plans for the patents, which could be used to block Android wireless devices from competing in the growing 4G market.

Patent rights have emerged as a powerful commodity among wireless companies as legal battles continue, with holdings protecting companies as well as providing ammunition in court. Major tech companies have filed suit with one another over patent infringement, and many now seek to acquire valuable stores of intellectual property to arm themselves accordingly.

The Nortel patents, which mainly support 4G and Wi-Fi technology, are vital for the growing 4G market, and the companies owning the patents may use them to block companies from using them on devices powered with Google's Android system.

In the future, companies forming groups such as Rockstar may have more buying power in patent sales, leaving companies that offer sole bids far behind.

Even as consortiums like Rockstar become more powerful, government oversight may become even more commonplace as companies seek to buy up patents. While many companies amass patents to protect themselves in court, critics, such as Google, complain they buy them to "block innovation."

Google's mobile OS has already proven itself legally vulnerable, with the company facing suits against it directly from Oracle, or indirectly through cases against phone makers who use Android, such as Apple's suit on HTC. The government may be increasingly aware of the escalation of patent infringement suits in the industry, and may be keeping its eye out as the legal tactic emerges as a way for companies to quench competition outside the market.

The DOJ, which hasn't confirmed the probe, may keep watching patent deals for possible antitrust violations, if it can be determined that the sales are illegally hindering competition. While the DOJ might not interfere in the sales process, it still may refuse to approve patent sales such as Nortel's if it determines consortiums have an unfair financial advantage when it comes to winning bidding wars and cornering the market.

Increasing government regulation may also help ensure companies are using patents to drive technology, not as defense tools in the courtroom.

Justice Department Investigating Nortel Patent Sale originally appeared at Mobiledia on Mon Aug 01, 2011 11:58 am.

Source: http://www.mobiledia.com/news/100697.html

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