The leader of the Open Invention Network has put out an all-call to help it fight the pending sale of Nortel's patent portfolio to a consortium of vendors led by Apple and Microsoft. Keith Bergelt, CEO of OIN, wants developers and users to step up and share their viewpoints and stories with the US Department of Justice, which is investigating the sale. The pending sale is currently under regulatory approval but the consortium hopes to close the deal in the third quarter.
At issue is if the new owners of the patents would use the patents to sue for patent infringement in order to hinder the growth of Android and other up-and-coming open source mobile devices. If so, this could lead to injunctions against Android, or could force companies into paying licence fees. Bergelt believes that competitors of Android, particularly Microsoft and Apple, are angling to use patents to create a "tax" on open source mobile platforms. Their fees would be much higher than the cost of licensing Windows Phone 7, he says.
"The licence fee is US$15 for WP7. These companies are looking for $30/$40/$50 of licensing 'tax' to try and change the behaviors of device makers and carriers. There's a point where Android becomes uneconomic," he told attendees of LinuxCon during a session entitled "Patents and the Latest in Consumer Electronics."
The pending sale, announced in July, includes more than 6,000 patents and patent applications spanning wireless, wireless 4G, data networking, optical, voice, Internet, service provider, semiconductors and other patents, Nortel said. Bergelt says that 2,700 of these are U.S. patents. The consortium beat out Google to win Nortel's nod. Google offered $900 million for the patents in April.
Bergelt says that the price paid for the patents is far more than the licensing revenue they could generate. Indeed, the Nortel patents sold for $4.5 billion and this is more than the total Nortel earned when selling off the products created with those patents. When adding up all of the previous deals for Nortel's four key product groups -- Enterprise, Carrier VoIP, Wireless and Metro Ethernet -- the bankrupt company netted just about $4 billion. Ergo, Bergelt believes these vendors could only want the patents as a weapon to harm Android.
The reason for the concern is that the vendors involved in the consortium are, for the most part, not friends of Android. The consortium consists of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony. Apple reportedly put up half the money toward the purchase. Ericsson said it would contribute $340 million to the transaction. RIM said its portion was about $770 million.
However, Bergelt hopes that the DOJ can be swayed to rule on this sale the way it ruled on Microsoft's purchase of Novell's patents. In April, the DOJ limited the sale of Novell's patents by making the patents subject to both the GPL and the OIN license. This essentially converted them into defensive patents only. Patents covered by the OIN cannot be used to collect royalties.
Key to this is if the DOJ hears from the developer, device maker and IT communities about their concerns for open source should the sale proceed. Bergelt says of particular value are stories of coercive behavior, such as threats to developers of losing authorized status, or price increases to users, or any hint that using or working on the Android platform would affect the relationship with any of the companies in the consortium.
These company's intention is "coercing people," Bergelt warned. "Threatening, illegal behavior is illegal behavior." He said Microsoft prefers "working hand in hand in a conspiratorial fashion with companies they understand, like Apple. They would rather have a duopoly then have the gross uncertainty of open source. They don't understand Linux, don't have the capacity to compete long term with Linux platforms."
The conditions of the Novell sale of patents was an unprecedented move for the DoJ. It usually operates in a reactive manner, says Linux Foundation attorney Karen Copenhaver. "When the DoJ looks at these acquisitions, it likes to sit and wait until things play out. It is looking to us as to why it needs to play out before there's litigation. We need to help the Justice Department demonstrate the impact on the market prior to these patents being asserted."
Bergelt says that should proprietary vendors with a history of suing be allowed to stockpile patents, the consequences will affect more than Android. "Until MeeGo or webOS mature, mobile Linux is Android. We are looking to build a community of choice. We should make sure that Android is sustainable and not pulled off shelves and stopped from coming into country," he said.