TORONTO - Ottawa will not intervene in a dispute between insolvent Nortel Networks and Canadian technology giant Research In Motion (TSX:RIM) over the bidding process for Nortel's prized wireless division, Industry Minister Tony Clement said Tuesday.

After a Calgary event, Clement said he hoped executives at Nortel would meet with RIM to discuss a bid for its wireless assets, though he insists that the final outcome is out of the government's hands.

"It is a process where a court determines where the assets are going to be disposed, and which buyer will be successful, so I cannot interfere with that process," the minister said.

Nortel, which filed for court protection from creditors in January, has been selling its divisions piece by piece in an auction sanctioned by the bankruptcy court.

Such a bidding process is meant to generate the highest price for Nortel assets as rivals bid against each other, providing as much money as possible to repay creditors of the Toronto-based telecom equipment company.

Nortel has already received separate bids from European and U.S. companies for its wireless and corporate telephone systems unit. But under the auction rules, RIM is not allowed to bid for all the assets it wants, even though it says it is willing to fork out up to US$1.1 billion for the wireless division and related Nortel operations.

Late Monday, RIM issued a terse statement saying that it has been prevented from making an offer for the wireless division. The company asked Ottawa to review the bidding process, suggesting that it has been unfairly shut out because of its desire to buy other Nortel assets as well.

Nortel said that if RIM wants to bid on its wireless division, it would be subject to a "standstill provision" that allows Nortel to either approve or deny future bids for its other assets by RIM over the next year.

RIM said Tuesday that it believed believes that Nortel's wireless business and certain IP assets have significant value and engineering talent in key areas that would be beneficial.

"It appears to RIM that Nortel's efforts to block RIM from purchasing a broader mix of assets beyond Nortel's wireless business is driven by Nortel management's fixation on maintaining a simplified auction process," the company said.

The requirement would ensure that Nortel continued to hold the upper hand in the bidding process, and keep the company "directly involved in any future negotiations involving the sale of Nortel's valuable assets."

The stipulation soured RIM, whose co-CEOs Jim Balsillie and Mike Lazaridis have always tried to push the boundaries of the court processes.

Earlier this year, Balsillie launched a bid for the NHL's Phoenix Coyotes hockey team with plans to move it to southern Ontario. The decision was shot down by a U.S. bankruptcy court judge who said Balsillie's insistence on shifting the team to Canada complicated matters, while the NHL said it would rather keep the Coyotes in Phoenix.

RIM executives look like they're facing a similar uphill battle with Nortel's wireless assets.

Clement said he hopes RIM and Nortel "can actually get together in the same room and sort out misperceptions or misunderstandings and then the bid process could then proceed."

"If there is a way for a Canadian bid or bids to be at least considered by the process that would be something that would be desirable on behalf of Canadian people," Clement added.

However, neither company had announced a meeting by Tuesday evening.

Nortel fired out its own response suggesting that RIM executives were the ones being difficult because they refused to reach "acceptable confidentiality terms relating to Nortel's valuable intellectual property assets."

"Notwithstanding RIM's statement today, Nortel continues to be willing to provide RIM with the opportunity to participate in the auction," Nortel spokesman Jay Barta said in an email.

RIM lobbed it own shot at Nortel saying that it believes that the loss of Canadian ownership of Nortel's technology may have national security implications and that the federal government should review the situation.

Since the bidding process officially closed at 4 p.m. ET on Tuesday, it seemed like RIM might have to take a harder road, which could involve appealing to bankruptcy court next week after the registered bidders meet with Nortel and its lawyers on Friday for an informal auction process.

RIM will likely have a chance to state its case on Tuesday when a judge is expected to officially approve the winning bidder.

Marisa Conway, a spokeswoman for RIM, said the company does not consider the process closed.

"Nortel could seek to extend the deadline and the Government of Canada can intervene in a way that forces Nortel to reopen the process," Conway wrote in an email.

"Canada's economic and national security considerations justify further review, particularly given that the Nokia Siemens offer is already under review for national security considerations by the Committee on Foreign Investment in the United States."

Industry observers noted that a passive stance from Clement could mean that the government will miss a key opportunity to show a commitment to the Canadian economy.

"This is an opportunity for Industry Canada to put its foot down and establish Canadian leadership in a sector where we have traditionally led the world in innovation and creation of market," said Carmi Levy, a telecom analyst at AR Communications Inc on Tuesday.

"To sit idly by and do nothing while a Canadian suitor steps forward and is willing to write a very large cheque ... would be (similar) to the Canadian government walking away from its responsibilities to the Canadian people."

Outside of Canada, several bidders have emerged for the wireless division, including New York-based MatlinPatterson Global Opportunities, which offered US$725 million on Tuesday.

The U.S. private equity firm has expressed interest in acquiring various pieces of Nortel in an effort to help fix its financial troubles and form a "new Nortel."

Nokia Siemens, a joint venture of Finnish cellphone maker Nokia Corp. (NYSE:NOK) and German industrial conglomerate Siemens AG (NYSE:SI), previously made a US$650-million offer for Nortel's wireless division.

Waterloo, Ont-based RIM said it would be prepared to pay in the range of US$1.1 billion for the Nortel wireless CDMA business and Long Term Evolution Access business, which uses a fourth generation wireless standard that's gaining acceptance in the market.

The billion-dollar price tag would also include "other assets" which RIM didn't disclose, making it difficult to break out the actual price being offered for the wireless division.

TD Newcrest analyst Chris Umiastowski wrote in a note to clients that he believes RIM's interest in other assets could include pieces of the LTE business that might be sold off separately.

"RIM has a healthy appetite for acquiring patents, as everyone knows," he wrote.

"They've spent $688 million on intangible assets during 2009, and they've also spent money buying Certicom and IP from Visto more recently. The LTE intellectual property could help them to offset royalty payments they'd otherwise be making to other IP holders in the market."

Nortel has been selling off pieces of the business since filing for bankruptcy protection.

On Monday, the company announced that it had has struck a deal to sell Avaya Inc. most of its Enterprise Solutions unit for US$475 million.

The Enterprise unit supplies landline phone systems and other communications equipment to businesses and large organizations around the world.