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Nortel Patent Sale Gets DoJ Review 109

Posted by Soulskill
from the use-your-powers-for-good dept.
gavron writes "The US Department of Justice will review the Nortel patent sale to the entity formed by Apple, Microsoft, and others. This is the same sale that the Canadian authorities declined to review because the $4B+ deal was valued by them at less than $328M. According to a (paywalled) Wall Street Journal report, 'The Justice Department wants to know whether [the consortium] intends to use them defensively to deter patent lawsuits against its members, or offensively against rivals.'"
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Nortel Patent Sale Gets DoJ Review

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  • Value... (Score:1, Insightful)

    by Anonymous Coward

    $328M = $4B+ ? Ain't Conservative math and fiscal responsibility wonderful?

    • Value is whatever someone will pay in the free market. As such, it's often quite subjective.

      • by jbengt (874751)

        Value is whatever someone will pay in the free market.

        :I'm sick of this meme. The value of something is not necessarily the same as its' market valuation. To think otherwise is to imply that the market is infallible. Equating value to "whatever someone will pay in the free market" is an irrational religious faith, not an observed fact.

        • by fiendy (931228)

          Value is whatever someone will pay in the free market.

          :I'm sick of this meme. The value of something is not necessarily the same as its' market valuation. To think otherwise is to imply that the market is infallible. Equating value to "whatever someone will pay in the free market" is an irrational religious faith, not an observed fact.

          It's not a meme, its economics.

          From Wikipedia:
          Fair market value (FMV) is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.

          If someone is willing to pay a given price - that is its market value. Whether the purchaser has determined the price rationally (as in dot-com valuations) is another matter for argument.

          Unfortunately, market distortions like speculat

          • by mug funky (910186)

            "knowledgeable, willing and unpressured"

            these patents were sold at auction. the consortium was formed to beat google's bid (they flippantly bid a few physical constants - certainly not a considered bid of what they thought the patents were worth, but a bid-as-a-statement). that sounds like reluctant, pressured and not all that knowledgeable to me.

            thus the free market ideal is absent, yet again. almost like it will never, and can never work in the real world.

          • by nog_lorp (896553)
            FMV != V. In fact, that is why there are two more letters in front of that first part!
            • by fiendy (931228)

              FMV != V. In fact, that is why there are two more letters in front of that first part!

              And you are more than welcome to not pay market price if you do not feel that it is reflective of a particular item or services value or intrinsic value. Given market distortions, that may not be possible or you could be waiting awhile.

              Value investing involves the belief that you should not pay more than a stock's intrinsic value (or at least not many multiples of it). Pulbic companies present their financial information for this reason. You can either make an actual assessment of what something is worth

    • Re:Value... (Score:5, Funny)

      by fractalspace (1241106) on Saturday July 30, 2011 @07:52PM (#36936294)
      That's how much $4B US will convert to Canadian dollars shortly.
    • by sconeu (64226)

      I think it was because Nortel valued them at $328M, so even though MicroApple bid $4B, Canada thought they were worth $328M.

      • If Nortel had booked them as a $4B asset, would they have had to go into bankruptcy in the first place?
        • by fiendy (931228)

          If Nortel had booked them as a $4B asset, would they have had to go into bankruptcy in the first place?

          It would have made their balance sheet look a whole lot better, but it unlikely that they could have revalued intangibles upwards without a firm plan to dispose of them. (In reality - the patents were a large portion of the company's worth, the result of all the past R&D - selling the patents was the end of the company's cash generating assets.)

          I don't know they nitty-gritty accounting details around Nortel, but as is usually the case, I'm guessing poor cash flow and eventual insolvency is what final

  • by sprior (249994)

    This was is so obvious that even the DOJ couldn't ignore it...

    • by drinkypoo (153816)

      If this goes anything like the last time Microsoft was in front of the DoJ then they'll be found guilty under this president and then pardoned under the next one.

      OK, so it's more than Microsoft this time...

  • The Justice Department wants to know whether [the consortium] intends to use them defensively to deter patent lawsuits against its members, or offensively against rivals. Well, it's good that the justice department is taking a closer look at patents. But what about taking a closer look at the IP trolls that are using their patents offensively in both senses of the word (against an opponent and in a disgusting manner).
  • And then change their mind later, what then? While I'm on the subject, is it just me, or has the mood on Slashdot changed lately? I doubt I'll see one post in defense of these patents, and I don't see as much of the 'ole libertarian bias as I used to. After 11 years of us tech workers getting screwed and having our jobs shipped overseas, maybe we finally got it [rawstory.com]. :).
    • by SuperKendall (25149) on Saturday July 30, 2011 @07:30PM (#36936218)

      There are still libertarians here, they are just rarer and drowned out by the noisier people with ideals and no common sense or understanding of how humans work.

    • by sjames (1099)

      And then change their mind later, what then?

      Then they'll be required to pay the additional bribe money for blatant anti-competition and won't get the earlybird discount.

    • by gl4ss (559668)

      apparently best defense is attack anyways.

      "defensive" use would be blocking competitors from entering market, of course.

      the state of technology manufacturing is ridiculous now, it's much worse than in medieval times with vatican saying what's ok and what's not. sure, everyone has the information how to do and manufacture very, very advanced things. but you can't, because of patents, the new global state religion. same applies to copyright.

      even if both of those were thrown into garbage bin, people would stil

  • by Karhgath (312043) on Saturday July 30, 2011 @07:29PM (#36936216)

    How are either offensive or defensive patents better than the other really? They both make a joke of the patent system. The question should be: do they intend to use them to innovate or not? Isn't that the reason we have patents?

    Buying defensive patents is, IMHO, worse than buying submarine patents and suing someone. I mean business-wise. You are spending millions to buy something that will not even help you make money or be more profitable. Use that to do R&D and innovate. Don't they have shareholders? At least patent trolls have a clear business plan...

    This is the (corporate) cold war all over again: My arsenal is bigger than yours!

    At least there's a silver lining there if we get to the state of Mutually Assured Destruction: they will stop attacking each others with patents and we will move on with our lives. Or so we can hope...

    • by Anonymous Coward

      At least there's a silver lining there if we get to the state of Mutually Assured Destruction: they will stop attacking each others with patents and we will move on with our lives. Or so we can hope...

      Your hope is empty. You can't sue a troll as the troll has no products to infringe on your "defensive" patents.

      Also "barrier to entry". Whilst MAD may prevent the likes of Google and Microsoft from suing each other, it won't stop them from suing new startup companies who haven't got defensive patents (no cash to burn on frivolous bullshit). Yay for the tool which "encourages science and the useful arts" forming an anti-innovation death wall against new competitors.

      Captcha: unsolved. Poignant.

    • No, if they get to the state of Mutually Assured Destruction, then the (non-Military) Industrial Complexes of both sides will heavily tax us all to keep up the parity.

      These are fricking lawyers we are talking about, after all. All a lawyer really is is a private-sector politician.

    • by nedlohs (1335013)

      And spending money to secure your computers is silly too right? You are spending money to buy something that will not even help you make money or be more profitable... Worked well for Sony after all.

      • Actually, the answer to the question is "YES!"

        Let's imagine that you had a pretty secure operating system, to start with. And, that you employed "best practices" in deployment and operation of that operating system. Further, you employ "best practices" in your networking design, and in the operation of that network. We'll go one step further, and actually educate the users about the dangers of phishing, spearphishing, and the dangers of running untrusted executables, while at the same time setting and en

        • by nedlohs (1335013)

          But you're spending money on educating those users, which is money that isn't helping you make money or to be more profitable.

          Hiring the more expensive sysadmin instead of the kid just out of high school to run those uniz machines is also spending money which isn't helping you make money or to be more profitable. Same with the programmers. Sure, sure the cheap ones will screw up and somebody might hack in and steal hundreds of millions of credit cards numbers, names, and addresses; then again the more expen

      • by Karhgath (312043)

        It's not silly, but then again you just don't BUY computer security (especially at $4B+), you spend resources to implement and develop it. You can follow that spending, compare it to profit, take decision (like decrease funding) and audit the effectiveness. You are able to put a "value" on it. There are profit centers in business, but also cost centers (regulations, security, support, etc.) so this isn't new.

        You cannot manage $4B+ of defensive patents. You put that in your spending column, and then they'll

    • by artor3 (1344997) on Saturday July 30, 2011 @08:15PM (#36936370)

      Yes, everyone agrees that the patent system as it currently exists is insane. But it is what it is. Ignoring that reality and not stocking up on defensive patents is foolish.

      Guns exist. Buying guns to hurt people is bad. Buying guns to protect people from bad guys with guns is okay. It would be nice if guns didn't exist at all, but they do, so we have to deal with it.

      • Yes, everyone agrees that the patent system as it currently exists is insane. But it is what it is. Ignoring that reality and not stocking up on defensive patents is foolish.

        Pooling patents does not give you increased defence. In fact, having them in a 3rd party company is even weaker defensively than holding your own. The only plausible explanations are joint licensing of the lot - like H-264, or to make offensive strikes like MPEG LA was trying to do against WebM. I don't see the commonality between the

    • Unless you are Google, which is responsible for the Android operating system, which is hated by Apple. If you don't have defensive patents, you are going to get sued into oblivion. Hell, the ITC might even rule that your products cannot be shipped into the United States because of infringement. I mean, Apple currently has HTC over a barrel. Do you think that HTC shareholders wished they had a few defensive patents to use against the iPhone?

      The law might suck, but businessmen have to play by the law.

      • by webheaded (997188)

        The law might suck, but businessmen have to play by the law.

        Man that statement is cute. I laughed a little when I read it. I mean I get the context, but still. Lol.

    • by Anonymous Coward
      It is not about patent law... This particular DOJ is much more about Department Of and less about Justice - at the end of the day approval of the deal will depend on how much protection money gets paid.
    • by Asic Eng (193332) on Saturday July 30, 2011 @08:45PM (#36936466)

      Well, given that innovation usually means to build new concepts on top of older ideas, or to extent older ideas - innovation means you'll have to defend yourself against other's patents.

      Nobody is using actual patent *texts* in order to innovate though:

      • Patents are basically unreadable for technical people, they are legal not technical documents. If something is actually valuable you've heard about it through other sources.
      • Patents are usually trivial, to read through the patent document takes more time than to come up with an equal or better solution.
      • Patents are usually too old. By the time they are actually granted the methods described in them have been in common use for years.
      • Reading patent literature is dangerous - if you violate a patent knowing that it existed, then your fine could turn out much higher. If you have read about an idea before, you may well use it when encountering a suitable problem - even if you don't remember where or that you read it.

      Regarding "Mutually Assured Destruction" - that can only work if there are two parties. If you have hundreds or thousands of parties involved, it's impossible that they could all be balanced against each other. In this case the patent portfolio prevents newcomers from entering the market, so it's very one-sided. And of course a patent portfolio provides virtually no defense against a company which doesn't produce anything - e.g. a law firm which buys patents.

      • by Karhgath (312043)

        I have to say that, after waking up this morning, I realize my point about innovation is flawed. You cannot innovate on top of a patent, you are absolutely right. You can try to make something covered by a patent differently (and innovate in parallel) but then again, you do not even have to own the patent for that.

        The rest of my point, that defensive patents are silly, is still valid. There's one kind of patent: offensive. You want to make money out of it (either by buying a patent you know you infringe upo

      • by Cable (99315)

        Patents can create monopolies as well. If shared tech did not exist, Microsoft would not have written DOS for IBM and Apple would not exist as the MOS 6502 was based on the Motorola 6500 series.

        The MOS 6501 was pin compatible with the Motorola 6500 but the 6502 had to change some pins. My point is that shared tech leads to lower prices and innovation. Not just the OS but hardware as well. This is what the FOSS movement is all about.

    • How are either offensive or defensive patents better than the other really?

      The thing that amazes me is that people don't seem to understand what that even means. A patent is, as the analogy goes, a nuclear weapon. It is not a missile defense shield. Its defensive use exists only in the sense that having it will cause your competitors to fear your retaliation if they attack you. It remains the case that you can either assert it or not, and taking the option off the table would make the patent worthless defensively as well as offensively.

      More importantly, the idea of using an inhere

    • Alright - I'm running some theories and scenarios through my head, trying to make sense of your statement. I'm not arguing, just asking.

      How do defensive patent portfolios hurt innovation? Let's say that someone like Google makes it clear that they are holding a nice bag of patents "Just in case". Captain Nemo* manages to incorporate a patent or more into a new product to help him locate great whites more reliably. Nemo even makes arrangements with some small factory to produce these things, and they sta

      • by Karhgath (312043)

        Defensive patents do not hurt innovation because... well, they don't exist. That's kind of the point. Defensive patents makes no sense by definition. A patent is, in and of itself, offensive: you use it to make money out of someone who infringe or you prevent someone from using your ideas.

        In this case, they are buying it either to sue Google, or prevent Google from defending against other legal actions because they do not have a big enough "arsenal" to retaliate. How can that be defensive?

        Thing is, patent t

    • by sprior (249994)

      There's one thing about one company buying a patent to use it defensively. It's kinda another situation when every company but one enters into an agreement with each other for the express purpose of keeping patents away from just one of their collective competitors. That sounds to me like collusion.

    • I think it's a tacit admission that the patents are for obvious ideas and have no innovative value.
  • even though they're a bunch of greedy, fat-cat hypocrites, liars, and other sorts of assholes, i believe they should have the right to just say: "screw you, no, we're not going to court unless we've been shown to have already broken some kind of law. the answer is we're using them PRIVATELY, for WHATEVER THE FUCK WE WANT.'

  • google ip theft (Score:2, Insightful)

    by kiwirob (588600)
    The end to Google's IP theft is, known as Andriod is coming. Whether you like it or not there are 1000's of patents covering aspects of Andriod which Google knowingly ignored when it released the software as Open Source.

    Google is a blatant IP theft and idiots who have fallen for their "open" agenda are just pawns. If Google was really Open it would make available it's Search Engine, Page Rank patents and software for everybody to use. It doesn't do that because it is EVIL and seeks to commoditize th
    • by codepunk (167897)

      Actually where google really screwed themselves is using java in it in the first place. Android will be forever playing performance catch up not to mention the patent issues surrounding it.

    • by JAlexoi (1085785)
      IP theft(a.k.a plagiarism) and patent infringement are not the same thing. If you had written any sizeable amount of software, I bet you had infringed on at least 1000 patents... That is the ridiculous beauty of it.
  • We just made independent invention an absolute defense against patent infringement. If your idea is truly innovative then there should be little risk to someone independently inventing it.

    • by sconeu (64226)

      Mod parent up.

    • by kiwirob (588600)
      Yes I agree with you there. But independent invention clearly can not be somebody purchasing your product, looking how it works, copy your products features then claim independent invention.

      Those stupid Ecommerce patents for shopping carts etc. and business process patents which follow the model, (well known business process) "on the Internet" are clearly garbage.

      What about something like the bounce you get when you scroll an iPhone to the bottom of a web page? If it was granted a patent, which I th
  • Corporate Competition:

    I demand Zillions for purchasing patents. Not a cent for debt relief and no taxes. This is war and we must be productive to achieve victory!

    Citizen's Political Power in the U.S.
    http://i-voter.tripod.com/ [tripod.com]

  • I called it as soon as I heard the deal was closed and it wasn't Google who won the patents. There is no way that Google or the government was going to let that go unchallenged.

  • by erroneus (253617) on Saturday July 30, 2011 @09:45PM (#36936636) Homepage

    In the context of business one must "defend or lose it." So asking if they plan to become patent trolls will not give the answer they seek. Further, even if they say "no, we will be nice" there is nothing to stop them from changing their position in some way or even better, to sell patents to go trolling to another shell to go about trolling. Just asking them in advance if what their intentions are is just about useless.

    If we want the patent and other IP systems to work the way they should, copyright, patent and trademark ownership should not be transferable away from the original creator. And in the case of a corporation, I think rights should remain with the original creators as well which is to say the people employed by the company at the time who were involved in the creation. This would result in the instant death of patent trolling and the instant reform of the copyright industry. It would force companies to be loyal to their employees once and for all instead of treating them as disposable peons while they reap the benefits for the life of the corporation + XX years. And the copyright industry, unable to rape artists now and in the future, will have to play nicely with the talent for a change.

    If the patent system is supposed to benefit the inventors, then restore it to suit that purpose. If the copyright system is supposed to benefit the artists, then restore it to suit that purpose. If not, then I would rather the system and the people operating it stop lying to the people about what it is and what it is for.

  • The real world cost is a loss to everyone but attorneys. They walk away fat and happy, no matter which side wins.

    Meanwhile, the money spent on legal fees is not spent on the following: R&D, manufacturing, hiring, capital equipment purchase, advertising, stock dividends, salaries, stock value increases.

    Ultimately, no matter which side prevails, the total wealth generated is less then it should be due to the patent system. Patents were intended to reward innovation. Now all they do is keep high priced l

    • Patents, as formed in the US founding documents are intended to reward disclosure. They are a monumental failure at that: they are not written in a language that laymen can understand, and they are usually not even written in a language that an engineer would use...

      Frankly, I think it would be quite generous if we allowed patents to exist for five years before pruning: Any patent not quoted or referenced in a scholarly journal or textbook in its field should expire.

  • The Justice Department wants to know whether [the consortium] intends to use them defensively to deter patent lawsuits against its members, or offensively against rivals.

    As opposed to "innovatively, for the common good".

    I don't have access to the paywalled article, but isn't this the DoJ publicly admitting that patents only serve two purposes, neither of which are the ones they're intended to serve?

  • by Anonymous Coward

    Must be nice for Eric Schmidt to have Obama's ear.

  • by sunfly (1248694) on Sunday July 31, 2011 @01:01AM (#36937286)
    Why would they care... is using patents offensively illegal? (not that I think it's right)
    • by wrook (134116)

      Likely considering a monopoly position. If you hold a large number of the key patents to a technology, you can effectively shut down all your competition. As bizarre as it sounds, my guess is that buying a monopoly position through buying key patents may be considered unfair competition.

  • If you cannot out innovate them out litigate them. Apple VS everyone else. "APPLE disgusts me"
  • This is the Axis of Evil we're talking about. Of course they're going to say, "We would never dream of using these patents offensively -wink, wink-. We would only use them defensively -chuckle, chuckle-.

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