EU Kicks Motorola While It's Down, Opens Official Antitrust Proceedings
April 3, 2012 9:10 AM
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The next step in this process is typically a billion dollar fine
It has been a pretty bad week for new Google Inc. (
and top Android phonemaker Motorola Mobility. On Monday it learned that a senior U.S. Circuit Court of Appeals judge had ruled that Apple essentially has
an exclusive patent on any functional mobile touch device
(any device with error checking or "heuristics", as Apple calls it) until 2028. The ruling clears the way for Apple to potentially ban all Motorola U.S. handset sales.
Now to add insult to injury, the European Union has
that it is opening proceedings against Motorola for FRAND patent abuse, following an initial probe phase.
against Microsoft Corp. (
) and Intel Corp. (
) have resulted in
billion dollar fines
Following complaints by Apple and Microsoft, the Commission will investigate, in particular, whether by seeking and enforcing injunctions against Apple's and Microsoft's flagship products such as iPhone, iPad, Windows and Xbox on the basis of patents it had declared essential to produce standard-compliant products, Motorola has failed to honour its irrevocable commitments made to standard setting organisations. In these commitments, Motorola engaged to license those standard-essential patents on fair, reasonable and non-discriminatory (FRAND) terms. The Commission will examine whether Motorola's behaviour amounts to an abuse of a dominant market position prohibited by Article 102 of the Treaty on the Functioning of the EU (TFEU).
Motorola is between a rock and a hard place here. On the one hand some nations -- including the U.S. -- are about
ready to ban its handsets
thanks to very vague and broad interface patents granted to Apple. On the other hand, Motorola's patent library is largely tied up in mobile standards -- patents that have mandatory licensing under the "fair, reasonable, and non-discriminatory" (FRAND).
It's been a very bad week for Android phonemaker Motorola. [Image Source: Jack Agency]
Motorola gambled and sued Apple using its FRAND IP anyways; Samsung Electronics Comp., Ltd. (
) -- another top Android phonemaker -- made a similar move. While one might think these suits to be reasonable, on the premise that that it's impossible to have "fair" and "reasonable" licensing with a company that's trying to remove you from the market with punitive patent litigation, the
EU court system does not see it that way
Both Microsoft (
also sued by Motorola Mobility
) and Apple filed EU complaints against Motorola over alleged FRAND abuse. Microsoft's attorneys accused Motorola of asking for 1,125 times the industry standard for its video codec patents.
filed a similar allegation
against Samsung (Samsung
agreed to license Microsoft's patents
). The EU has not announced yet whether it will open formal proceedings against Samsung.
But to all appearances the worst-case scenario just became a whole lot worse for Android. While it still has legal options to avoid such a doomsday scenario, the worst case is it could see itself banned from sale in the U.S., while two of the top Android phonemakers are forced by the EU to pay billion dollar fines.
This is a very wild and chaotic time in the market (and intellectual property). It should be interesting, if a bit disturbing, to see how this all plays out.
EU [press release]
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What happens now to the motorola/google deal?
4/4/2012 9:39:06 AM
Google were supposed to be buying motorola for their patents, but their non-FRAND patents have been nothing more than a minor inconvenience to apple/MS, and trying to use their FRAND patents has resulted in an anti-trust investigation.
So the patents aren't worth $12bn surely. What's left? An unprofitable company that's not exactly setting the market on fire. Should google spend $12bn on that, or walk away with a loss of $3bn (I think that's what they agreed to pay if the deal fell through).
"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997
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