Legal Featured Article
August 24, 2011
Courts OK Price Cut on Nortel, Genband Deal
By Beecher Tuttle, TMCnet Contributor
Courts overseeing the liquidation of assets for bankrupt telecom equipment maker Nortel Networks approved a price reduction for the company's Internet telephony business, which was originally sold to IP communications specialist Genband in early 2010, according to Bloomberg.
Texas-based Genband asked the court to take another look at the formula that was used to determine the final sale price of $182.5 million, which closed in May of last year. A panel of judges from courts in the U.S. and Canada apparently agreed with Genband's challenge of the price formula, and approved a reduction of nearly $25 million.
Court records show that Genband and Nortel units in the U.S. and Canada approved a final purchase price of $157.7 million.
Although Nortel has been bankrupt for some time, the former telecom giant has been the source headlines throughout 2011. Earlier this summer, Nortel sold more than 6,000 patents at auction to a consortium of companies headlined by Apple, Microsoft, RIM, Ericsson (News - Alert) and Oracle.
The winning bid of $4.5 billion dwarfed Google's stalking horse bid of $900 million, leading many analysts – and Google – to believe that the group of competitors were looking to stock up on intellectual property and use it against the Android maker.
The Justice Department is reportedly looking into the acquisition to make certain that the consortium wants control of patents for the sake of innovation, rather than simply to launch infringement lawsuits against their competitors in the mobile space, such as Google.
The department will need to investigate "whether there's an agreement, implicit or explicit, among the members of the consortium to collectively hinder the adoption of Android," Thomas Ensign, an antitrust lawyer at Freshfields Bruckhaus Deringer LLP, told the Wall Street Journal.
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Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.
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