After the successful Nortel bid, Rockstar Bidco’s members founded and funded a new troll entity, Rockstar Consortium. Apple and Microsoft transferred certain key patents (which Wired called “warheads”) to the consortium, which serves its members by attacking their competitors with frivolous patent infringement lawsuits as a way of bleeding other companies dry. The organization also pays a percentage of its licensing and royalty revenue back to the founding companies.
The Department of Justice’s approval of the Nortel transaction, and its subsequent inaction in light of the transfer, appears to have had the unintended consequence of sanctioning the use of patent trolls. These firms no longer see the need to create shell operations. Instead, Apple and Microsoft have cut to the chase and openly enlisted the most aggressive and troubling of the patent trolls to collect and wield patents against their competitors.
Apple’s participation in this new unholy trinity is especially hypocritical. In litigation before the International Trade Commission earlier this year, the company alleged, and convinced the ITC, that various patents in the Kodak portfolio are invalid. Now, despite its past representations, Apple wants to acquire these patents to attack the Android ecosystem.
Meanwhile, a rival bidding group has formed in the Android ecosystem. Its members include HTC, Samsung, LG Electronics, Google and the patent aggregator RPX Corporation, whose business model is devoted to defensive patent licensing to fend off attacks from trolls.
The decision to pursue the Kodak patents should put to bed any argument that Apple and Microsoft are merely protecting their own innovations. These companies are working together to stockpile patents from other innovators to not only prevent Google and its partners from defending themselves, but also to mount further attacks against Android through transfers to patent trolls.
If there was any doubt that Microsoft and Apple are toxic to innovation and cancer on the technology industry as a whole.