by Dennis Crouch
In most cases, patent enforcement actions and resulting license agreements (settlements) avoid antitrust scrutiny. However, both exclusive licenses and patent assignments are treated just like any other asset acquisition and are more likely to trigger antitrust review by the Department of Justice (DOJ) or Federal Trade Commission (FTC).
Earlier this summer “Rockstar Bidco” won the largest patent auction to-date by offering $4.5 billion for 6,000 patents held by bankrupt Nortel. Rockstar outbid Google, whose final offer was $100 million short. Rockstar is a collaborative shell company led by Microsoft, Apple, and Research-in-Motion. Its not surprising that the patents largely relate to high speed mobile networking.
The Market: In the US, these four players (Microsoft, Apple, RIM, and Google) currently own the market for smartphone operating systems. However, the Rockstar members relative market shares continue to drop as Google's Android system rapidly grows. As part of the background, these companies have been rapidly building their patent portfolios and exerting them as a mechanism to both earn royalties and shut down competitor activity. For example, earlier this month the US International Trade Commission (USITC) ruled that HTC phones running Google Android software infringe a number of Apple's patents. HTC already pays $5 to Microsoft for each of its Android phones.
Back to the Nortel Patent Purchase: The bankruptcy court has approved the sale after being told by Nortel that “there's no antitrust risk to the deal.” However, according to the Washington Post, the Department of Justice is still considering whether the purchase would violate US antitrust laws. In April 2011, the DOJ intervened in a similar (but much smaller) purchase of 882 Novell patents by Microsoft, Oracle, and Apple to require open source licensing of the patent rights in certain situations. In that case, however, Novell had already made open source commitments.
Google’s Own Antitrust Problems: I used three primary sources in writing this article: internet searching (i.e., Google search), e-mail correspondence (i.e., Google mail), and phone calls (i.e., Google Android phone). (Here is my Google+ page).