DOJ Terminates 3 Investigations Into Acquisitions in Hi-Tech Sector

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Google Inc.'s acquisition of Motorola Mobility Holdings Inc., the acquisitions of certain Nortel Networks Corp. patents by Apple Inc., Microsoft Corp., and Research in Motion Ltd., and Apple's acquisition of certain Novell Inc. patents were given the green light on Feb. 13 by the Justice Department.

Details of Deals

Last August, Google agreed to acquire Motorola Mobility, a manufacturer of smartphones and computer tablets and the holder of a portfolio of approximately 17,000 issued patents and 6,800 applications, including hundreds of standard essential patents (SEPs) relevant to wireless devices that Motorola Mobility committed to license through its participation in standard-setting organizations (SSOs).

Rockstar Bidco, a partnership that includes Research in Motion Ltd., Microsoft, and Apple, was formed to acquire patents at the June 2011 Nortel bankruptcy auction and to license and distribute them to certain partners. Nortel's portfolio of approximately 6,000 patents and patent applications includes many SEPs that Nortel committed to license through its participation in SSOs and that are relevant to wireless devices (the Nortel SEPs).

Apple also proposed to acquire patents held by CPTN Holdings LLC, formerly owned by Novell, following CPTN's April 2011 acquisition of those patents on behalf of Apple, Oracle Corp., and EMC Corp. As a member of the Open Invention Network (OIN), Novell committed to cross-license its patents on a royalty-free basis for use in the open source “Linux system,” a defined term in the OIN.

No Objection

In an explanation of its decision to close the three probes, the DOJ reviewed products in the smartphone and tablet markets and the companies competing for business.

The DOJ also stressed the importance of standard setting in the wireless device sector. One important feature of the standard-setting process involves a common licensing requirement is to require SSO members to commit to license patented technologies essential to a standard on reasonable and nondiscriminatory (RAND) terms, usually inside the United States, or on fair, reasonable, and nondiscriminatory (FRAND) terms, usually for activities outside the United States.

After the Antitrust Division's staff review the three deals, the DOJ decided to close all the probes because it concluded that “each acquisition is unlikely to substantially lessen competition.”

The DOJ stated that the division's staff conducted an in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they proposed acquiring to foreclose competitors. The division focused on SEPs that Motorola Mobility and Nortel had committed to license to industry participants through their participation in SSOs. The staff focused on whether the acquiring firms could use these patents to raise rivals' costs or foreclose competition.

The DOJ concluded that no transaction examined by the division is likely “to significantly change existing market dynamics.”

Various principal competitors, the DOJ disclosed, made commitments about their SEP licensing policies. The division reduced the level of its anticompetitive concerns by receiving “clear commitments by Apple and Microsoft to license SEPs” on FRAND terms and other commitments not to seek injunctions in disputes involving SEPs.

“In light of the importance of this industry to consumers and the complex issues raised by the intersection of the intellectual property rights and antitrust law at issue here, as well as uncertainty as to the exercise of the acquired rights, the division continues to monitor the use of SEPs in the wireless device industry, particularly in the smartphone and computer tablet markets,” the DOJ cautioned.

The division, the DOJ declared, “will not hesitate to take appropriate enforcement action to stop any anticompetitive use of SEP rights.”

During the division's investigation of the Google/Motorola Mobility transaction, the DOJ cooperated closely with the European Commission. Furthermore, division staff conducted discussions with the Australian Competition and Consumer Commission, Canadian Competition Bureau, Israeli Antitrust Authority, and Korean Fair Trade Commission.

In connection with the division's investigations involving the Nortel patent assets, the DOJ worked closely with the attorneys general of New York and California, and with the Canadian Competition Bureau.

For More Information

DOJ's public statement on closing the three mergers investigations is at