Rockstar Consortium Launches Patent Attacks

Rockstar Consortium, the organisation formed to exploit the value of patents acquired from bankrupt Nortel, has begun negotiations with up to 100 potential licensees in the past two months, according to a report.

Rockstar initially took form as Rockstar Bidco, a group created by Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony last year to bid for a group of around 6,000 Nortel patents sold as part of the company’s liquidation. The company was later renamed Rockstar Consortium and is now run as an independent company seeking licensing arrangements based on the ex-Nortel patents.

Patent operation

The company has 32 employees, including 10 full-time reverse engineers and eight lawyers, according to a report by Wired, which revealed that the consortium has entered into negotiations with “as many as 100” firms over potential licensing arrangements since the patent buyout was cleared by the US Department of Justice in March.

“The entire industry has benefitted from Nortel’s groundbreaking innovations, and we are eager to work with them to establish licenses enabling the continued use of this technology,” Rockstar chief executive John Veschi said at the time.

Following the auction, which resulted in a $4.5bn sale price for the 6,000 Nortel patents, about 2,000 of the patents were transferred to Rockstar’s backers, with ownership of the remaining 4,000 transferred to Rockstar Consortium, according to the report.

The consortium is backed by five of the original backers, with EMC having severed its ties to the group, Veschi is quoted as saying. Three-quarters of Rockstar’s employees are reported to have originally worked for Nortel.

Rockstar is not the first organisation set up purely to seek patent licences, but it is the first to be set up on such a large scale and with such high-quality patents.

High-quality patents

The Nortel patents derive from the company’s research and development operations, dating back to the 1880s, and reportedly cover areas including wireless networking, telecommunications switching, internet routers, modems, PCs, search and social networking.

While IT companies such as Rockstar’s backers typically use patents to defend themselves against legal attacks by large rivals with similar patent arsenals, pure patent operations such as Rockstar can take a more aggressive stance because they have no products that might form the basis of a counter-suit.

Google had originally bid $900m for the Nortel patents, seeking to use them to protect its Android technology from lawsuits. Google has now acquired Motorola Mobility, which brings with it a similarly valuable patent portfolio.

Following Rockstar’s bidding success, David Drummond, Google’s chief legal officer, accused the group’s backers of plotting a “hostile, organised campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents”.

The DOJ’s Antitrust Division said in February that it did not believe Rockstar’s acquisition of the patents would change existing market dynamics. The division said its concerns about the anticompetitive use of standard essential patents (SEPs) were “lessened by the clear commitments by Apple and Microsoft to license SEPs on fair, reasonable and non-discriminatory terms”.

These commitments may not apply to Rockstar due to its independent status, however. “We are separate. That does not apply to us,” the report quotes Veschi as saying.

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