> I don't think it was that simple, considering that the Nortel portfolio covers a wide array of different technology areas and industries. What other feasible choice did they have? Transfer the patents to themselves?
They could have. But the most significant choice they had and chose against was to use the patents defensively rather than offensively.
> Even if they did divvy up the portfolio somehow, they certainly weren't going to keep them lying around, not after paying so much for them -- They had to be licensed.
The state of North Korea fails. China spends really quite a lot of money to secure all of their nuclear and chemical weapons. Do they then "have to" sell them to terrorists who promise only not to use them against China?
> Splitting the portfolio would not only make it weaker, but it would mean multiple individual licensing efforts.
Even if the courts don't allow them to assert every patent anyway? What good is it to have thousands of overlapping patents if you can only assert a small number in practice?
> If you read the document linked in the comment I cited, no, those patents were not licensed to anybody meaningful until the auction.
I'm not talking about before the auction.
When a set of patents goes up for sale, the incumbents in the industry have three primary options to buy patents to avoid them getting into the hands of a troll that will try to shake them all down:
1) All band together and buy the patents. This is asking for antitrust trouble, both because all the incumbents are colluding in a way that prevents upstart competitors from procuring defensive patents that would be usable against the incumbents, and because they're conspicuously forming an effective cartel to buy patents instead of bidding against one another. And on the other side of the coin, it's paying the Danegeld collectively, and the sum total paid to the troll by the collective has to be more than what any individual entity would otherwise pay else the seller could sell to that entity for use against its competitors. Which encourages more trolls to "offer" to sell you more patents and gives them more money to procure them with. This is really the patent "communism" option, and is likely to fail for the same reason: You're taking money from productive businesses to give to patent trolls, encouraging the proliferation of more patent trolls which suck more of the life out of productive businesses. That isn't sustainable. It also defeats any benefit of the patent system to actual practicing entities, because they need all their competitors to coordinate to buy the patents of failed businesses, which means you can't use your own patents against them or they'll not cooperate with you and instead buy the patents themselves for defensive purposes (or do (3) to your detriment in retaliation).
2) They can individually take turns placing a bid on patents only when the current high bid is a trolling entity, and then use them only defensively. This is the patent "cold war" option. Each incumbent has to place a bid periodically to maintain their respective arsenals as older patents expire and to make the arrangement stable, but they don't get into bidding wars with one another so nobody ever has to pay excessive amounts. If improvidently granted patents do fall into the hands of a troll who demands excessive royalties then everyone has the duty to fight the good fight to invalidate those patents to make sure that sort of parasitic enterprise is unprofitable. This also makes the patent system not useful for software because any patent assertion against an incumbent invokes mutually assured destruction, but it's probably the most effective way to mitigate the damage of large collections of patents falling into the hands of aggressive trolls.
3) They can buy the patents, immunize themselves, then let them loose to a troll to be used against competitors. Thermonuclear war. Every time patents come up for auction you now get a bidding war because nobody wants to have to fight a lawsuit against a troll funded with competitors' money, which means everybody will soon be overpaying for bad patents while continually fighting suits from patent trolls set up by competitors. Meanwhile building a defensive portfolio becomes next to useless because competitors attack collaterally through trolling entities that can't be asserted against, so instead of nominally wasteful cross-licensing you get monstrously expensive prolific patent litigation. This is the one they chose.
> Well, they paid billions for these patents. Is it fair to them that other infringers get away scott free?
Sure, you just let the competitors pick up the tab for the next round the next time a company full of patents goes bust.
> Google makes pretty much no money directly from Android. This inherently makes it difficult to extract damages from them.
So try to get an injunction. If you theoretically had a solid, valuable patent that Android infringed then Google would subsequently have the incentive to license or avoid it to prevent the injunction, and this would eliminate the duplicative litigation against every individual Android OEM, creating efficiencies for everyone.
It just proves their intent. It isn't to stop these "infringers" from doing something wrong in particular, it's to harass in general the competitors who do well in the market. Creating waste and mutual costs is a benefit to the larger entity that can better absorb the cost, and they know it.
> If different patents and/or different products are involved, the cases are not overlapping, so it's not the same apple that they're getting bites at.
It kind of is, because the thing they're getting more chances at is getting a judge or jury who will significantly over-value at least one of their large arsenal of patents. It's a game the defendants have to win every time but the plaintiffs only have to win once -- one billion dollar award will pay for years and years of unjustifiable patent trolling with low quality patents.
[note: responding in two comments because it said "that comment is too long"]
They could have. But the most significant choice they had and chose against was to use the patents defensively rather than offensively.
> Even if they did divvy up the portfolio somehow, they certainly weren't going to keep them lying around, not after paying so much for them -- They had to be licensed.
The state of North Korea fails. China spends really quite a lot of money to secure all of their nuclear and chemical weapons. Do they then "have to" sell them to terrorists who promise only not to use them against China?
> Splitting the portfolio would not only make it weaker, but it would mean multiple individual licensing efforts.
Even if the courts don't allow them to assert every patent anyway? What good is it to have thousands of overlapping patents if you can only assert a small number in practice?
> If you read the document linked in the comment I cited, no, those patents were not licensed to anybody meaningful until the auction.
I'm not talking about before the auction.
When a set of patents goes up for sale, the incumbents in the industry have three primary options to buy patents to avoid them getting into the hands of a troll that will try to shake them all down:
1) All band together and buy the patents. This is asking for antitrust trouble, both because all the incumbents are colluding in a way that prevents upstart competitors from procuring defensive patents that would be usable against the incumbents, and because they're conspicuously forming an effective cartel to buy patents instead of bidding against one another. And on the other side of the coin, it's paying the Danegeld collectively, and the sum total paid to the troll by the collective has to be more than what any individual entity would otherwise pay else the seller could sell to that entity for use against its competitors. Which encourages more trolls to "offer" to sell you more patents and gives them more money to procure them with. This is really the patent "communism" option, and is likely to fail for the same reason: You're taking money from productive businesses to give to patent trolls, encouraging the proliferation of more patent trolls which suck more of the life out of productive businesses. That isn't sustainable. It also defeats any benefit of the patent system to actual practicing entities, because they need all their competitors to coordinate to buy the patents of failed businesses, which means you can't use your own patents against them or they'll not cooperate with you and instead buy the patents themselves for defensive purposes (or do (3) to your detriment in retaliation).
2) They can individually take turns placing a bid on patents only when the current high bid is a trolling entity, and then use them only defensively. This is the patent "cold war" option. Each incumbent has to place a bid periodically to maintain their respective arsenals as older patents expire and to make the arrangement stable, but they don't get into bidding wars with one another so nobody ever has to pay excessive amounts. If improvidently granted patents do fall into the hands of a troll who demands excessive royalties then everyone has the duty to fight the good fight to invalidate those patents to make sure that sort of parasitic enterprise is unprofitable. This also makes the patent system not useful for software because any patent assertion against an incumbent invokes mutually assured destruction, but it's probably the most effective way to mitigate the damage of large collections of patents falling into the hands of aggressive trolls.
3) They can buy the patents, immunize themselves, then let them loose to a troll to be used against competitors. Thermonuclear war. Every time patents come up for auction you now get a bidding war because nobody wants to have to fight a lawsuit against a troll funded with competitors' money, which means everybody will soon be overpaying for bad patents while continually fighting suits from patent trolls set up by competitors. Meanwhile building a defensive portfolio becomes next to useless because competitors attack collaterally through trolling entities that can't be asserted against, so instead of nominally wasteful cross-licensing you get monstrously expensive prolific patent litigation. This is the one they chose.
> Well, they paid billions for these patents. Is it fair to them that other infringers get away scott free?
Sure, you just let the competitors pick up the tab for the next round the next time a company full of patents goes bust.
> Google makes pretty much no money directly from Android. This inherently makes it difficult to extract damages from them.
So try to get an injunction. If you theoretically had a solid, valuable patent that Android infringed then Google would subsequently have the incentive to license or avoid it to prevent the injunction, and this would eliminate the duplicative litigation against every individual Android OEM, creating efficiencies for everyone.
It just proves their intent. It isn't to stop these "infringers" from doing something wrong in particular, it's to harass in general the competitors who do well in the market. Creating waste and mutual costs is a benefit to the larger entity that can better absorb the cost, and they know it.
> If different patents and/or different products are involved, the cases are not overlapping, so it's not the same apple that they're getting bites at.
It kind of is, because the thing they're getting more chances at is getting a judge or jury who will significantly over-value at least one of their large arsenal of patents. It's a game the defendants have to win every time but the plaintiffs only have to win once -- one billion dollar award will pay for years and years of unjustifiable patent trolling with low quality patents.
[note: responding in two comments because it said "that comment is too long"]