Friday, June 03, 2011, 08:40 pm

DOJ probes Apple's interest in Nortel patents

By Josh Ong

The U.S. Department of Justice is concerned about potential bids from Apple for a cache of patents being sold by Canadian telecom company Nortel, given the iPhone maker's legal track record.

The Wall Street Journal reports that the Justice Department is investigating companies interested in bidding on a collection of more than 6,000 patents from the now bankrupt Nortel including valuable intellectual property related to the 4G LTE standard.

The agency fears that U.S. technology giants, such as Apple and Google, could leverage the patents to block competition in the high-tech and wireless industries. According to people familiar with the matter, the DOJ hasn't found "major competitive issues" with Google, which has set the opening bid for the patents. However, officials reportedly have "greater concerns" about Apple. Sources said the company has been in talks with the Justice Department to address its concerns.

One legal expert called the trove "a stockpile of nuclear weapons as far as patents go." The auction is set to begin on June 20.

Late last year, Apple, Google, Nokia and Research in Motion were named as likely bidders on the patents. In April, Google's 900 million bid was accepted as a 'stalking-horse' offer.

“Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories,” Google general counsel Kent Walker said in April. “So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction."

RIM has reportedly seriously considered topping Google's bid. Co-CEO Mike Lazaridis has called Nortel's LTE patents a "national treasure" in the past. It has also been suggested that a group of technology companies, which could include RIM, may pool their resources to outbid Google.

The Nortel situation has drawn comparisons to regulatory reaction earlier this year to a consortium of companies looking to acquire patents from Novell. Apple, Microsoft, Oracle and EMC created a joint holdings company to purchase 882 Novell patents after the company was acquired by Attachmate.

However, the deal prompted criticism from open source advocates worried that the companies would use the patents to damage open source competitors. In April, the Justice Department forced the consortium to promise not to use the Novell portfolio to unfairly stifle competition. Microsoft was also required to license patents instead of buying them.