In the United States, we hardly think of Google-owned Motorola Mobility as a dominant force in the wireless world anymore. But in Europe it's a different story.
The European Commission is calling out Motorola for seeking -- and enforcing -- an injunction against Apple in Germany on the basis of its mobile phone standard-essential patents. As the EC sees it, the injunction is an abuse of a dominant position prohibited by EU antitrust rules. The commission opened the investigation in April 2012.
While recourse to injunctions is a possible remedy for patent infringements, the EC argues that these moves may be abusive where standard-essential patents are concerned -- and when the potential licensee is willing to enter into a license on Fair, Reasonable and Non-Discriminatory (FRAND) terms.
Misusing Intellectual Property?
The bottom line: It's about the consumers. The EC doesn't buy into Motorola preventing Apple from selling its devices based on a patent infringement in order to distort licensing negotiations and impose unjustified licensing terms on patent licensees, because it could ultimately harm customers.
"The protection of intellectual property is a cornerstone of innovation and growth. But so is competition," said Joaquin Almunia, commission vice president in charge of competition policy. "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."
Standards bodies in Europe generally require members to commit to license patents on FRAND terms when those patents are declared essential for a standard. The goal is to make sure all market players can access standards and to prevent a hold-up by a single standard-essential patent holder. Access to standard-essential patents is a precondition for any company to sell interoperable products in European markets to protect consumer choice and patent-holder royalties.
Moto Flexes Patent Muscle
The Apple case isn't the only example of Motorola flexing its patent muscle. The company recently won a ruling against Microsoft, though it was a small fraction of the amount for which Motorola sued. Despite Google's challenges extracting value from its Motorola patents in court, Ross Rubin, principal analyst at Reticle Research, told us that that doesn't undermine the value of the intellectual property.
"Motorola was a quick way for Google to boost its patent portfolio, but is hardly the last word. The idea was to provide something that could be used as a disincentive if not match the complete value of Microsoft's portfolio," Rubin said.
"Over time, we have heard more about Google reviving Motorola's hardware portfolio as well. While the handset space remains very competitive with tight margins, a revitalized Motorola could help Google maintain a better balance of power among Android handset vendors given Samsung's dominance."