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Tech giants view Nortel patents as key weapon

by Scott Bicheno on 24 June 2011, 17:44

Tags: Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG)

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On one level technology patents are stunningly dull. Every conceivable detail of how a piece of technology can be subject to a separate patent and we rely on specialists like FOSS Patents to sift through it all and get to the point.

But they become more interesting when the ownership of some patents enables one company to prevent its competitors from marketing a piece of technology, or at the very least forces them to pay a license fee and royalties in order to legally do so.

One example of this occurred earlier this week when many commentators got excited about Apple being granted a patent on a certain type of multi-touch functionality. It was suggested that Apple may use that patent to stop other device-makers from having touch interfaces on their products, but Nilay Patel of This is my next managed to keep himself awake long enough to read the patent and conclude it wasn't such a big deal.

The broader significance of this, and many other, patents is that it adds to Apple's arsenal of patents that can either be used offensively or defensively in battles with competitors. For example, if Apple's patent pile had been bigger it may have been able to horse-trade with Nokia in order to reduce, or even negate the subsequent settlement.

This seems to be the essence of the tech patent scene. If you have enough patents of your own then you can defend yourself from any infringement claims by counter-attacking with your own. And that's why the imminent auction of a bunch of patents belonging to the bankrupt Canadian telco giant Nortel is significant.

They cover all sorts of things concerned with networking, wireless and computing, but the prized patents are those that concern LTE - the standard for 4G mobile communications technology.

Google, which has relatively few technology patents, had bid $900 million for this cache of patents, which would come in quite handy in defending itself from the legal action it's facing from Oracle over Android, and maybe even help it defend its ecosystem from the likes of Apple and Microsoft.

Until recently that looked like a done deal, but Reuters reported recently that Apple has been been given the all clear by regulators to bid for the Nortel patents, as has Intel. All this last-minute interest caused Nortel to delay the auction by a week to next Monday, and the bidding looks set to be intense, with Reuters estimating bidding could go as high as $1.5 billion.

As if to further underline the importance of this auction Apple reportedly escalated its legal action with Samsung by suing it in South Korea. The cost of Apple's settlement with Nokia has been estimated to be in excess of a billion dollars, and that's just one company, so even as $1.5 billion the purchase of Nortel's patents could be cheap.

It all kind of reminds us of that scene in The Terminator when Arnie stocks up on some serious hardware. To paraphrase the classic line: "Any one of these is ideal for patent claim defence."



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