Nortel may have to negotiate another legal obstacle before it can realise the value of its patents sales
The Nortel patents sale to a consortium that includes Microsoft, Apple and RIM is signed and sealed but it may not be delivered. The office of Canadian industry minister Christian Paradis is studying whether investment law was properly applied.
Under the Investment Canada Act, the government must review any foreign investment or purchase of Canadian assets worth over Canadian $312 million (£204 million) or more. Paradis’ team is checking to see if the Nortel patents auction is reviewable under the act. If so, the deal could be blocked if it is not found to be a “net benefit” for Canada.
Done But Needs Dusting
The consortium – comprised of Canada’s Research In Motion, Apple, EMC, Ericsson, Microsoft and Sony – offered US$4.5 billion (£2.8bn) for Nortel’s 6,000 patents to win the auction last week. The bidding, mainly against Google, reached such a high sum because the consortium believes that the patents cover Long Term Evolution (LTE) technology, that will be the backbone of 4G wireless networks for the next decade.
On a conference call, Paradis was asked if he had any specific concerns. “No, the point is just to make sure… that we are compliant with the law,” he said.
Paradis was not willing to say when the ministry will review the deal or how long the validation process would take
Based in Ottawa, Nortel was a major force but it has fallen on hard times and sought protection under the Canadian Companies’ Creditors Arrangement Act in January 2009. Since then it has held several auctions for its various divisions and assets, all of which were approved under the Investment Canada Act.
The patents are the last major asset in Nortel’s hands and a joint hearing to approve the sale will be held on 11 July by the courts in Canada and the United States, who are overseeing the sale of the Nortel assets.