European Commission to Motorola: You’re Asking for It, Buddy
“I am considering whether we need to investigate these complaints formally to help bring more clarity into this area of competition control,” EU Competition Commissioner Joaquin Almunia said during a recent speech in Washington, D.C.
At issue here are the complaints made by Microsoft and Apple that the royalty rates Motorola is demanding from them for its standards-essential patents run contrary to the “fair, reasonable and non-discriminatory” licensing terms (FRAND) by which it is expected to abide. From Apple, Motorola has asked for “a maximum per-unit royalty of 2.25 percent” on each iPhone sold. And from Microsoft, Motorola is demanding royalties of $22.50 on every midrange laptop that makes use of patents on the H.264 video standard. Both companies insist that those rates are vastly inflated, and claim the reason for that is to improperly hamstring them.
Almunia seems to think there may be some merit to those allegations; enough to sound off about them in public, anyway.
“The holders of standard-essential patents have considerable market power,” he said. “This market power can be used to harm competition; in some cases, the holders of standard-essential patents can effectively hold up the entire industry with the threat of banning the products of competitors from the market. This is unacceptable, and I am determined to use antitrust enforcement to prevent such hold-up by patent holders.”
A somber warning to Motorola and its soon-to-be owner Google, which says it’s just fine with its acquisition’s patent tactics.