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Google left out of $4.5bn Nortel patent deal

Android left nude as enemies shrug on extra IP armour

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Apple, Microsoft, RIM, EMC, Ericsson and Sony all chipped in to buy the patents, which cover critical 4G and wireless broadband technologies, leaving Google empty handed.

The companies announced the purchase last night, with RIM admitting it had thrown $770m in the pot and Ericsson pegging its contribution at $340m. The amounts contributed by the other parties aren't yet known but all will share in the ownership of the patents and, perhaps more importantly, the protection from litigation they offer.

Google had bid $900m for the portfolio, which is the last remnant of former telecommunications-giant Nortel – everything physical having been stripped down and sold off following the company going titsup in 2009.

The patents are certainly valuable, but these days the real value is in owning a bigger pile of patents than everyone else, as Google so eloquently put it when buying up the patent portfolio of failed phone manufacturer Mudo last month:

"One of a company's best defenses ... is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services," the company said at the time.

But clearly the chocolate factory didn't consider it worth $4.5bn to protect Android and the Android ecosystem, which is under attack from various patent-holders, including Microsoft. Patent-watcher Florian Mueller concludes that this means Google isn't serious about Android, which seems a little harsh, but it does indicate a limit to the protection that Google is willing to provide.

The real danger is that patents like these fall into the hands of a company that needs no defence, such as Lodsy: a company that makes nothing (so needs no patents) so can sue claimed infringers of its patents with impunity. Most of the mobile (and IT) companies survive on the Mutually Assured Destruction (MAD) mechanism, it served us well during the Cold War but only works as long as everyone has a roughly equivalent portfolio and an interest in staying alive.

The consortium should keep everyone in business, but we'll have to wait and see if the members decide that the best form of defence is a significant offence. ®

The smart choice: opportunity from uncertainty

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