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DOJ Clears Google Buying Nortel Patents

The unprecedented auction is set for Monday, June 20, at the law office of Cleary Gottlieb Steen & Hamilton in New York

The sealed first-round bids for the Nortel patent trove had to be in by 4 p.m. Eastern Time Monday, the same day that Microsoft, HP, Motorola Mobility, Nokia, AT&T and Verizon Communications separately objected to the terms of the apparently winner-takes-all sale.

The unprecedented auction is set for Monday, June 20, at the law office of Cleary Gottlieb Steen & Hamilton in New York.

Google's put in a $900 million "stalking horse" bid but apparently the best of the sealed bids - perforce an amount better than Google's - will be the opening bid and Nortel has to name it by noon on June 19.

Microsoft told the bankruptcy court in Delaware overseeing the Nortel Networks dissolution that it has "a worldwide, perpetual, royalty-free license to all of Nortel's patents that covers all Microsoft products and services, resulting from the patent cross-license signed with Nortel in 2006." It wants the court to make sure things stay that way and that existing agreements transfer to the company that emerges from the auction with the patents in hand.

Apparently, under the current terms of the sale, the new owner would have the right to terminate existing license agreements.

That eventuality would be catastrophic, Microsoft said, resulting "in considerable disruption in the development and enhancement of various existing technologies and give the prospective purchaser an unfair competitive advantage."

The Justice Department has been afraid the patents could be used to stifle competition or extract high-tech ransom demands, but Tuesday, after an investigation, it cleared Google's purchase of the IP, the Wall Street Journal reported.

The patent-poor Google, currently facing significant litigation, has suggested it wants the patents for defensive purposes but it has only agreed to buy the things "subject to" most existing licenses - and that includes standards bodies.

That language is too vague for HP's taste.

And suppose somebody else gets them.

Microsoft et al want their rights protected and will take up the issue with the court "in the event the final buyer of the Nortel assets seeks to disclaim any of these commitments.

The 6,000-odd patents and patent applications cover widely used or needed widgetry like LTE, the 4G mobile data technology, data and optical networking, wireless video, Wi-Fi, voice, Internet search, social networking and semiconductors. Experts figure they'll fetch several billion dollars, probably more than any other portfolio ever has.

It's not clear who might try to wrest the IP from Google. Names like Apple and RIM - which have reportedly talked to the DOJ - Oracle, Microsoft, Intel and China's ZTE Corporation have been bandied about and nobody would be surprised if patent-buying companies like Intellectual Ventures and RPX turned up, ready to re-license the stuff for a price.

If Google doesn't win it'll still get a $25 million breakup fee, but will look vulnerable.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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