DoJ Gives Apple, Microsoft, Rim, Ericsson, EMC and Sony Green Light on Nortel Patents


Now the fun begins.  With the expiration of the U.S. Department of Justice (DoJ) review period this week the Rockstar Consortium’s (composed of Apple, Microsoft, Rim, Ericsson and Sony) acquisition of the Nortel Networks patent portfolio from the defunct company’s bankruptcy estate is officially good to go. The question arises as to whether Pandora’s Box has been opened.

For readers who follow me, you know I have more than a passing interest and a huge concern about things relating to intellectual property. Fortunately or unfortunately, the handling and disposition of this type of IP will have as much if not more to do with deciding marketplace winners and losers than is likely come from actual innovation. After all, these IP wars are about using past innovations to block competitors from leveraging them with future enhancements to create new capabilities and differentiable value.

And, make no mistake about it, the consortium is going to want to recoup more than the $4.5 billion it paid to acquire the estimated 6,000 patents which cover foundational technologies in the areas of the Internet, 4G wireless, semiconductors, optical devices and voice communications just to name a few. This despite the kind words coming so far from consortium members that translate roughly into an appreciation that being reasonable with the portfolio will allow all boats to rise when the tide comes in.

If you do not think all of this is important, look no further in today’s news that Yahoo has decided to go after Facebook for infringement of patents that go to the heart of Facebook’s ability to generate revenues from advertising. And, it is almost impossible to tell anymore who is suing who, about what and in which countries regarding IP in the smartphone and tablet wars. Even Apple, an aggressor on several continents against the Android community, finds itself on the defensive in the use of the iPad name in the critical Chinese market.

At the end of the day this is about what it is always about:

1.       Money

2.       Money

3.       Money

4.       Competitive advantage and did I mention, money?

Getting FRANDly

I will repeat what was mentioned in a previous piece on Microsoft and Google trying to persuade European regulators that they respectively want to provide access to their technology on fair, reasonable and nondiscriminatory (FRAND) terms

The problem has been for those of us who watch the industry, and especially for those who try and regulate it, that one company’s FRAND often turns out to be another’s “are you kidding?” (AYK).   The fact of the matter is that a few dollars in licensing fees can make all of the difference literally in the world — fortunes to the fortunate and fits for the unfortunate.  

A story in the Inquirer quotes John Veschi, CEO of Rockstar as saying, "We are pleased to emerge from this review process, and are looking forward to working with technology related companies to provide them with access to Rockstar's technology. The entire industry has benefitted from Nortel's groundbreaking innovations, and we are eager to work with them to establish licenses enabling the continued use of this technology." 

This is going to be a case of “seeing is believing.” To many players outside of the consortium have way too much at stake to not want to challenge whatever Rockstar offers as its version of FRAND. The question is whether the licensing and rights of use of the Nortel portfolio end up being negotiated or in court is problematic. For example, do not expect Google sitting with its $12.5 B acquisition of Motorola Mobility and the future of Android hanging in the balance as a result of having lost its own bid for the Nortel portfolio, to remain calm for long if it looks like itself directly or its ecosystem partners are going to be marginalized by Rockstar intransigence or unreasonableness. 

This being March Madness time in the U.S., office and other “pools” abound along with bracketlologists to help the seemingly uninformed place their bets. Who knows, maybe someone is going to start a pool as to when the first lawsuit is filed that springs from this. Rockstar should take a cue from rock stars. Petulance can be harmful to your health. It is time to be FRANDly.

Edited by Amanda Ciccatelli
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