DoJ ramping up antitrust probe of $4.5B Nortel patent purchase by Apple, others

Canada-based Nortel Networks announced Friday that its subsidiaries "have completed the sale of all of Nortel's remaining patents and patent applications to a consortium consisting of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony." The group, which called itself Rockstar Bidco, won the auction last month with a bid of $4.5 billion, a number more than three times the price expected by analysts.

U.S. and Canadian bankruptcy courts had already approved the deal several weeks ago.

However, The Wall Street Journal reports that the Justice Department is deepening its probe of the deal, with particular interest to whether the purchasers could use the patents to "unfairly hobble" devices running Google's Android mobile OS. The search giant placed the initial bid in the auction, but was unable to outbid its competitors once Apple teamed up with the other companies.

According to the report, the DoJ can still "impose conditions" on the companies even though the deal has already been completed. Earlier this year, the federal agency put pressure on a deal that would have seen Microsoft, Apple and Oracle purchase patents from Novell, instead forcing Microsoft to license the patents.

The Justice Department is particularly interested in whether "there's an agreement, implicit or explicit, among the members of the Rockstar consortium to collectively hinder the adoption of Android," said antitrust lawyer Thomas Ensign.

People familiar with the matter said the agency had individually approved all of the companies to participate in the auction, while reserving the right to "take a fresh look" if it had concerns afterward. Potential issues could be the fact that Apple joined the Rockstar consortium late into the auction and the high final price, the sources indicated.

Google general counsel Kent Walker said this week that the Rockstar bid was "a sign of companies coming together not to buy new technology, not to buy great engineers or great products, but to buy the legal right to stop other people from innovating."

As a younger company with a relatively small patent portfolio, Google has run into trouble as competitors, including Apple and Microsoft, have sued Android vendors for infringement. The Mountain View, Calif., company recently shored up its IP collection with the purchase of a batch of patents from IBM, which included inventions related to "memory and microprocessor chips, computer architecture and online search engines."

Rumors that Apple and Google may also compete to purchase InterDigital drove the company's value up by 50 percent earlier on speculation that a bidding war would result in a higher sale price.