Microsoft Objects to Nortel’s Proposed Patent Sale to Google

Microsoft Corp. (MSFT) objected to Nortel Networks Corp. (NRTLQ)’s proposed bankruptcy sale of more than 6,000 patents, telling a judge the deal could give the proposed buyer, Google Inc. (GOOG), an unfair competitive advantage.

Microsoft joined computer maker Hewlett-Packard Co. (HPQ), smartphone maker Nokia Oyj (NOK1V), and other technology companies in filing objections to the proposed auction of the patent portfolio, in which Google is the lead bidder.

Microsoft and HP said the terms of the proposed sale should be modified to protect the rights of license holders and standard-setting bodies.

Without changes, the proposed sale “would result in considerable disruption in the development and enhancement of various existing technologies and give the prospective purchaser an unfair competitive advantage,” Microsoft said today in court papers filed in U.S. Bankruptcy Court in Wilmington, Delaware.

Nortel, a Canadian phone-equipment maker that filed for bankruptcy in January 2009, agreed to sell the patents to Google for $900 million unless a competitor bids more at the auction, scheduled for later this month. Today is the deadline for bids to be submitted.

The portfolio will give the winning bidder rights to control and license technologies including wireless-video that may be valuable for future generations of smartphones such as Apple Inc. (AAPL)’s iPhone and Research In Motion Ltd. (RIM)’s BlackBerry.

Purchase Contract

Whoever wins the auction should be required to clarify what rights companies and standard-setting groups may have to keep using Nortel’s patented technology, Microsoft, HP and Nokia said in court papers they filed separately.

In the proposed sale contract Google has agreed to buy the patents “subject to” most existing licenses, according to court papers.

That term is too vague to guarantee that every license Nortel granted related to the patents will be honored, HP said in its court papers.

Lisa M. Schweitzer, an attorney for Nortel, declined to comment.

Nortel’s 10 1/8th bonds due in 2013 rose more than 1 percent to 93.875, the highest price since the company filed bankruptcy according to Trace, the bond-price reporting system of Financial Industry Regulatory Authority.

The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.

To contact the editors responsible for this story: John Pickering at jpickering@bloomberg.net.

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