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More questions than answers in the strange case of Rockstar’s Apple assignments

News agency Yonhap reported last week that 1,024 patents and applications have been transferred from NPE Rockstar to Apple over the past six months. According to the bulletin, 695 of the assets in question are US-registered patents and the rest are applications.

Back in May, Wired reported that, of the approximately 6,000 patents that Apple, Microsoft, Ericsson, RIM, EMC and Sony jointly acquired from Nortel following the June 2011 auction of the bankrupt telecom company’s patent portfolio, around 2,000 were divided up between them. The remainder were assigned to Rockstar, the NPE created by all the members of the consortium with the exception of EMC and principally staffed by members of Nortel’s patent group.

It is unclear what role, if any, the other Rockstar shareholders played in the Apple transfers. Interestingly, a report from Business Insider features a quote from Mike Dunleavy, the NPE’s general counsel. Though he declined to comment on the reported assignments, he did respond to Yonhap’s claim that Apple holds a 58% stake in the NPE, stating: "No one shareholder owns a controlling interest in Rockstar Consortium."

Apple reportedly contributed $2.6 billion to the winning bid in the Nortel auction – well over half of the total. Perhaps these subsequent patent assignments have been necessary to reflect the ownership structure of Rockstar. If none of the shareholders has a controlling stake, then maybe Apple is being recompensed for its outlay in patents. But if that is the case, why were the patents assigned to the NPE initially, and not just handed to Apple after the auction when a third of the Nortel portfolio was divvied up between the bidding partners?

FOSS Patents blogger Florian Müller suggested in the immediate aftermath of the Nortel auction that the bankrupt Canadian company’s impressive trove of wireless standards-essential patents (SEPs) may have been one of the major motivations behind Rockstar BidCo’s purchase. Apple has little in the way of wireless SEPs, while its competitors and frequent courtroom opponents, Motorola Mobility and Samsung, possess a substantial number.

Perhaps the 1,024 assets that Apple has received from Rockstar over the past six months include a significant number of wireless SEPs that could bolster the company’s leverage. That may explain why Apple has taken full ownership – if this was only about offensive monetisation then that could have been done just as well by Rockstar, with Apple licensed to use them and out of the direct picture with regard to any controversial assertions. After all, that is what privateering is all about. However, if Apple requires the patents for defensive purposes, having them remain in the Rockstar portfolio is not realistic: instead Apple will want to have full freedom to deploy them as and when it sees fit.

All in all, these assignments raise plenty of questions to which right now there are few concrete answers. However, one thing that can be said for sure is that they underline the opacity of the relationship between Rockstar and its founders. That lack of transparency will provide further food for thought for the competition and antitrust regulators who are growing increasingly interested in the activities of NPEs and their connection to operating companies.


Jack Ellis
IAM Magazine
20 November 2012

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Competition/antitrust, IP management, IP litigation, Patents, IP business

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