Friday, 14 August 2009

NORTEL's LTE Patents

There's a lot more going on about Nortel's patents and a lot of confusion about whether they have been sold or not. The latest message is that they have not been sold. The author erroneously picked up the story from another source and has since been corrected. The auction that took place after NSN's initial approach. The approach from Nokia Siemens Networks was a stalking horse and under US bankruptcy law any other bidders must bid for the same "package of assets" - which did not include the patent rights, as NSN did not want them.

There's a report over on seeking alpha that Canadian company Research in Motion are arguing that the LTE patents are a national treasure and should be kept in Canadian hands.

There's more about stalking horse bidders in US Chapter Bankruptcy over here.


Neil Wilkof said...


Do you know of any examples where patent rights have been characterized as a "national treasure" and such characterization has been taken into account by the court in disposing of patent assets in bankruptcy?

James Wagner said...

The 'National treasure' argument is based on Canadian competition law, which allows government intervention in any transaction over a certain amount if it would be contrary to national interests, or any transaction if contrary to national security.

The argument is something along the lines of A.) Canadian Government supported Nortel through tax breaks and R+D credits to tune of hundreds of millions of dollars B.) Patents have significant commercial value which should flow back into Canada C.)Selling patents will 'gut' company leaving only a scar in our high tech sector, while forcing Nortel to keep them (Or sell them to RIM as RIM is arguing) will maintain a significant tech, or enhance a significant tech company, in Canada.

It is unlikely that the Government will stop this sale, although they are 'reviewing' the matter.

These provisions have only been used once in recent history, to stop Macdonald Detwieler (Aerospace company responsible for CanadaArm)from completing a proposed sale to an American company which primarily supplied the US military.