Looming RIM-Ericsson Showdown for Nortel’s LTE Patents

I never fully understood why Canada’s federal government would intercede on RIM’ s behalf to review or thwart Ericsson’s successful bankruptcy auction bid for Nortel’s wireless business unit. It didn’t make sense for the Canadian government to intrude, and, for a nice change, good sense won the day.

RIM’s appeals to Canadian patriotism were thin covers for self-serving motives. For RIM, the objective always was to get its hands of Nortel’s LTE patents and the licensing rights that accompany them. It wasn’t happy that Ericsson’s winning bid for Nortel’s wireless assets came with non-exclusive licensing rights to the LTE intellectual property.

With acquisitive designs on the patents, RIM wanted to control the terms and conditions of licensing agreements. In RIM’s view, what is the point of having a cow if the guy from Sweden can milk it whenever he wants?

RIM still wants the LTE patents, and so does Ericsson. Nortel owns about 100 LTE patents, royalties from which could generate as much as $2.9 billion over the lifespan of the technology, according an estimate provided by JPMorgan Chase & Co. estimated in late June.

China’s rising telecommunications-equipment star, Huawei, claims to have 147 LTE patents and counting. Even so, the Nortel patent portfolio is attractive, perhaps conferring more in quality than in quantity.

Nortel creditors, who’ve already done well at auction, are licking the lips with anticipation as an LTE-patent showdown looms between RIM and Ericsson — with others likely to join the fray.

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