Level 3, FairPoint Face Lawsuits Over Acquired Nortel Networks Intellectual Property

Nortel Networks was once Canada’s high-flying telecom equipment giant with hundreds of billions of dollars in market value.

Bankrupt and out of business, Nortel’s remaining life is rooted in its formidable portfolio of patents owned by third parties who may sue others to obtain licensing fees and protect the intellectual property that Nortel once conceived.

Enter Spherix Inc., a scientific research company launched in the late 1960s. The company has filed lawsuits for patent infringement against Level 3 Communications, tw telecom and FairPoint Communications. The lawsuits, filed in the U.S. District Court for the District of Delaware, relate to a patent that Spherix explained is “closely associated with the practice of Institute of Electrical and Electronics Engineers (“IEEE”) networking standard that supports virtual LANs (VLANs) on an Ethernet network.”

Level 3, which closed its $7.3 billion acquisition of tw telecom in October 2014, said it doesn’t comment on pending litigation. A FairPoint spokeswoman told the Bangor (Maine) Daily News the company does not comment on pending lawsuits and has not yet submitted a response to Spherix’s complaint.

Spherix said the company acquired Nortel intellectual property from an affiliate of Rockstar Consortium, which paid $4.5 billion to acquire a number of patents. Spherix CEO Anthony Hayes indicated the company may file other lawsuits to protect its intellectual property.

“We previously announced to shareholders that we intended to expand our monetization efforts and these suits are an early part of that effort,” Hayes said. “The Company is dedicated to granting rights to use its portfolio of industry-leading inventions on fair and reasonable terms and welcomes inquiries from relevant industry participants to provide rights for use of such inventions without the necessity to access to the courts to enforce its rights and seek appropriate compensation.”

Hayes referenced provisions within the lawsuits offering Level 3, tw telecom and FairPoint “the opportunity to enter good faith negotiations for fair and reasonable licenses” as an alternative to Spherix “formally serving the defendants” with the complaints.

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