Six of Google's rivals tied up recently to prevent Google from buying a critical trove of telephony patents, at Nortel's wireless technology patents auction, with judges in the United States and Canada approving the $4.5 billion transaction.
The American Antitrust Institute has asked the US Department of Justice to intervene and to probe whether the tech-giants' tie-up against Google is lawful. Apparently AAI believes the coalition is illegal and points out that the consortium, which called itself Rockstar Bidco, bid five times as much as Google's opening bid for the wireless technology patents.
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Nortel, which went bankrupt recently, has been in phone manufacturing business for decades, which means they owned patents that cover some of the most basic technology features in telephony. These patents would prove noxious to rivals, as most mobile device makers invariably use some of these basic technologies.
Since the rivals bid five times as much as Google at the high stake auction, it seems the companies had a complete plan of action in place even before acquiring the patents, to use them as a weapon for achieving what they haven't been able to achieve through a fair market competition.
Even among the Google rivals, Apple does get sued every now and then; Microsoft too had been a target for several lawsuits and leveling things in court isn't unprecedented among tech companies. What is somewhat unprecedented here is the coalition set up with almost all major non-Android makers to fight Android.
While a section is crying foul about the dysfunction of US patent system, more often than not, acquiring basic patents for sky high prices seem to work for bigger corporations in court. Sheer amount of litigation is enough to smother a rival, who will be forced to spend resources to fight it out till the end.
For instance, Apple filed motion for Preliminary Injunction in US District Court in San Jose, last week, to halt the sale of four Samsung devices, Infuse 4G, Galaxy S 4G, Droid Charge, and Galaxy Tab 10.1. Granting Apple's motion is speculated to have disastrous effect on the sales of Samsung's flagship Android-based products which will force Samsung to take the four mobile devices out of US market.
Though the Apple- Samsung patent dispute is an altogether different story, this is a clear example of what a court case can do to businesses.
By acquiring an injunction on the lawsuits, until the AAI and DoJ investigation is settled, Google could save itself for the time being. In case AAI thinks that the coalition and auctions were fair enough, Google might have to fight it out in a court again.