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7/29/2009
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Ericsson Nortel Deal May Face Patent Hurdles

RIM and Nortel pensioners group continue to complain about the deal; now the value of LTE intellectual property is at issue.

Ericsson's acquisition of Nortel's prized CDMA/LTE unit may look like a done deal after US and Canadian courts approved the acquisition Tuesday, but a whole new set of issues has surfaced.

For starters, RIM is stepping up its campaign for Canadian government agencies to intervene in the agreement and Nortel employees want to know what will happen to their pensions. At the same time, the value of Nortel's LTE patents -- perhaps its most valuable remaining asset --is taking on new importance.

While intense jockeying continued in Ontario, a bankruptcy judge in Delaware connected via video to counterparts in Ontario, approved Ericsson's $1.13 billion acquisition of Nortel's CDMA/LTE unit. The court proceedings were so smooth that, according to media reports, the Delaware judge said: "It's rare for a bankruptcy judge to allow himself to be enthusiastic, but I'm enthusiastic about this process."

However, there was much less enthusiasm over the acquisition in Ontario where both Nortel and RIM are headquartered. "The bankruptcy courts in the US and Canada have no mandate or authority for considering Canada's national interest," RIM said. The BlackBerry maker has complained that it was unfairly blocked from participating in the auction for Nortel's assets -- a complaint dismissed by Nortel.

Also urging Canadian government agencies to intervene in the sale of the Nortel assets is the Nortel Retirees Protection Committee, whose officers have said they fear some $500 million earmarked for Nortel pensioners may be in jeopardy.

The value of LTE intellectual property has been gaining more visibility in recent days, even though the next-generation wireless technology hasn't begun to be deployed. During bankruptcy proceedings Tuesday, a Nortel attorney said that of Nortel's 5,500 patent portfolio, some 125 are involved with the Ericsson deal. Ericsson will license some valuable patents, not own them outright.

It's likely RIM may be more interested in Nortel's LFE and CDMA patents than in operating the Nortel CDMA/LTE unit, because the company has been caught up in patent litigation and has been required to pay hundreds of millions of dollars in patent fees in recent years. Many of the patents were acquired by patent-trolling attorneys who have purchased patents and then taken RIM to court. Valuable LFE intellectual property would help RIM fight off future patent claims.

The Reuters news service reported this week that RIM has held talks for months with Nortel over the bankrupt firm's LTE patents.


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