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Nortel's patents would strengthen Google's standing in lawsuits

If Google acquires Nortel?s patent portfolio ? which is a possibility given that a governmental antitrust review saw nothing wrong with such a deal ? it will gain a leg up in future patent-infringement lawsuits.

Nortel's patent portfolio is scheduled to be sold at auction next week. Google expects the robust Nortel patent portfolio will provide a competitive advantage even if it does not use the patents other than in legal proceedings.

?I can?t tell you if these patents are a game changer but, this is just one of many examples where the size and depth of the patent portfolio is at least as important as what companies do and make when it comes to competition,? said Jonathan Ezor, counsel at Olshan Grundman Frome Rosenzweig & Wolosky LLP, New York.

Companies like Microsoft, AT&T and Verizon filed complaints with the Department of Justice, claiming the sale would give an unfair advantage to the auction?s winner.

It is not clear, however, if the nod from the Department of Justice improves Google?s chances of acquiring Nortel?s patents at auction.

Nortel?s portfolio of 6,000 patents ? many of which are mobile related ? are highly attractive for those in the mobile space.

?The major cell phone manufacturers and service providers are all suing each other over various patents in an effort to use their patents as competitive weapons,? Mr. Ezor said. ?What you get is each manufacturer has certain patents in its portfolio that can be used against competitors and can be used as shields in lawsuits.

Objects of desire
For Google, in particular, the portfolio is attractive because it has a relatively small collection of patents in the mobile space.

In response to a request for comment, Google pointed to a blog post the company wrote in April about its bid for the Nortel patents.

The post mentions the explosion in patent litigation. Barring patent reform, it says that one of a company?s best defenses against patent-infringement litigation is to have a formidable patent portfolio, which is why it wants to acquire the Nortel patents.

?If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community?which is integrally involved in projects like Android and Chrome?continue to innovate,? the post reads.

The move is similar to what HP did last year when it acquired Palm. Between HP and Palm they hold many of the patents for smartphones, per Mr. Ezor.

Nortel filed for bankruptcy protection in January 2009. The company?s bankruptcy auction will be held next week.

Technology companies are looking for ways to protect themselves against patent-infringement lawsuits because the damages can add up. Microsoft and BlackBerry are among the companies that have had to pony up significant fees in such cases.

?Patents are tiny little aspects of the mobile technology, but if one company can convince a court that a second company is using its patents, the second company has to stop or pay huge royalties,? Mr. Ezor said. 

?These technologies are moving so quickly and these companies are generating so many patents, it?s impossible to know what patents are out there that might be deemed similar to what you are doing,? Mr. Ezor said.