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2008: Decision Year for RIAs - October 20-22, 2008 San Jose


Googlerola Misusing Patents, EC Sends SO
The EC said Motorola’s behavior “amounts to an abuse of a dominant position prohibited by EU antitrust rules”

A year after opening a formal investigation into how Motorola Mobility enforces its patents, the antitrust arm of the European Commission has sent the company an SO or statement of objections saying it's misusing the standard-essential patents (SEPs) it's got on mobile phones.

The misuse comes from seeking injunctions in Germany that would legally bar allegedly infringing Apple products from being sold.

The EC said Motorola's behavior "amounts to an abuse of a dominant position prohibited by EU antitrust rules."

The EC's decision is "preliminary," and Googlerola can defend their actions either in writing or at a hearing although it's not likely to sway the regulator.

Apple complained last year that Motorola was demanding ludicrously steep license fees for IP that was supposed to be available on fair, reasonable and non-discriminatory (FRAND) terms.

Microsoft made the same complaint about a different set of standard-essential patents.

Motorola took both companies to court in different actions seeking injunctions and claiming patent infringement because neither would bow to its licensing terms.

The EC said Monday that what makes Motorola's conduct an antitrust violation is the fact that Apple is willing to license the patents on FRAND terms.

Motorola could get away with it if Apple was unwilling but Apple has agreed to let a German court decide what FRAND royalties should be.

In this case, the EC said, Motorola, the dominant SEP holder, was using injunctions to "distort licensing negotiations and impose unjustified licensing terms on patent licensees. Such misuse of SEPs could ultimately harm consumers."

Google bought Motorola for $12.5 billion for its patents and has stood behind its outsized licensing demands.

A US district court judge decided a few days ago that Motorola could only charge Microsoft $1.8 million a year for the patents it has been trying to license.

Motorola has been asking for 2.25% of Microsoft's retail sales or $4 billion a year.

The US judge said Motorola's contribution to the standard didn't provide "significant technological value to Microsoft's products," which is exactly what Apple and Microsoft have been arguing.

Europe's antitrust chief Joaquín Almunia said that "The protection of intellectual property is a cornerstone of innovation and growth. But so is competition. I think that companies should spend their time innovating and competing on the merits of the products they offer - not misusing their intellectual property rights to hold up competitors to the detriment of innovation and consumer choice."

The Motorola SEPs in question relate to the European Telecommunications Standardization Institute's (ETSI) GPRS standard, part of the GSM standard, which is a key industry standard for mobile and wireless communications.

The EC's decision recalled that "When this standard was adopted in Europe, Motorola Mobility gave a commitment that it would license the patents which it had declared essential to the standard on FRAND terms. Nevertheless, Motorola Mobility sought an injunction against Apple in Germany on the basis of a GPRS SEP and, after the injunction was granted, went on to enforce it, even when Apple had declared that it would be willing to be bound by a determination of the FRAND royalties by the German court."

As far as the EC is concerned, Apple submission to the court proves that it's really willing to license the patents.

About Maureen O'Gara
Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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