Canadian government may block Nortel patent deal

An auction last week of intellectual property and patents held by bankrupt former Canadian technology company Nortel Networks netted US$4.5 billion for the company's creditors, but they shouldn't pop the champagne just yet.

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An auction last week of intellectual property and patents held by bankrupt former Canadian technology company Nortel Networks netted US$4.5 billion for the company's creditors, but they shouldn't pop the champagne just yet.

According to a report  by The Canadian Press, the auction may come under government scrutiny. Industry Minister Christian Paradis has reportedly asked his department to examine how the Investment Canada Act could apply to the auction. If the auction us found to be reviewable under the act, Paradis could potentially block the sale if it's found to not be a "net benefit" to Canada.

This provision was used to approve the acquisition of some Nortel assets by Avaya and Ciena, but also used to blocked a takeover bid by BHP Billiton in the eneregy sector.

A Canadian company with troubles of its own, Research in Motion, was part of the consortium that won the bidding for the Nortel's patents. RIM's share was reported at $770 million, with other consortium members including Apple, EMC, Ericsson, Sony and Microsoft. They won out over a strong bid from Google.