DOJ Approves Google-Motorola Acquisition, Apple’s Nortel Patent Purchase

by Matt Klassen on February 15, 2012

Just in case you thought in the wake of the AT&T/T-Mobile merger disaster that the U.S. Department of Justice was fundamentally against acquisitions, the Federal regulator opened a veritable sluice gate earlier this week, letting the approvals pour through.  

To that end, Google received antitrust approval in its acquisition bid for Motorola Mobility, a move designed to secure the latter’s patent trove as Google ramps up its intellectual portfolio in hopes of better defending Android from continued legal challenges.

Not to play favorites though, the DOJ also approved an Apple-led consortium in its purchase of a significant patent trove from defunct Canadian telecommunications giant Nortel Networks Corp and further approved Apple’s acquisition of patents formerly held by Novell Inc.

While these moves underscore the mad scramble by technology companies to secure a significant patent portfolio the obvious question remains, what are they going to do with them?

Although Google has secured regulatory approval from both the European Union and the U.S. for its acquisition of Motorola, the deal isn’t quite done yet, as approval still needs to come from Taiwan, China, and Israel before everything can be finalized. That being said, the deal is one big step closer to being complete, one that would put Google in the drivers seat of patent control in the mobile market.

Obvious as it may seem, the question in all of this is what is Google going to do with the patents it acquires from Motorola? While many may think that Google will go on the offensive, ratcheting up the licensing fees of its patents to hamstring its competitors and suing everyone and everything who comes close to violating its intellectual property, don’t be so sure.

Although the regulatory committees on both sides of the Pacific didn’t find any significant antitrust issues with the deal, both made it clear that Google must maintain fair and equitable practices when it comes to licensing so as to maintain healthy competition. The DOJ in particular made it clear that it “would not hesitate to take enforcement action” should Google look to manipulate the licensing of patents to its own advantage.

So as not to play favourites (or simply a matter of coincidental timing) an Apple-led consortium also got approval from both U.S. and Canadian courts for the acquisition bid in made in July for a large $4.5 billion trove of former Nortel patents, the last vestiges of the once mighty Canadian telecom giant. The patent trove contains intellectual property pertaining to almost every aspect of the modern telecommunications market.

In the end there was one clear message from the U.S. Department of Justice: Play Fair. Despite the fact that several acquisition approvals were made and that Google and Apple both added considerable ammunition to their respective patent arsenals, the DOJ acknowledged the latent potential for companies like Google or Apple to abuse the patent power they have now gained and promised that it would do everything in its power to uphold market competition, enforce fair competitive practices, and make sure everyone continues to play nicely.

So what are these companies going to do with all their new-found intellectual property? Despite the speculation that such acquisitions may spark an all out patent war the more likely course of action is that everything remains status quo, leaving these companies with new patent-related revenue streams, but under the watchful eye of the DOJ, little power to do anything else.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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