John Paczkowski

Recent Posts by John Paczkowski

EU Regulators Stick Motorola With Two-Pronged Patent Probe

Evidently EU Competition Commissioner Joaquin Almunia’s recent remarks threatening an investigation into Motorola Mobility’s standards-essential patent licensing policies were less a warning and more a preannouncement. On Tuesday, the European Commission opened two antitrust cases against Motorola Mobility for possible patent abuses, following complaints by Apple and Microsoft.

“… The commission will investigate … 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 honor its irrevocable commitments made to standard setting organizations,” the Commission said in a statement.

Also subject to the Commission’s probe: Allegations by both Apple and Microsoft that Motorola has refused to license standards-essential patents on the fair, reasonable and non-discriminatory (FRAND) terms by both the Commission and standard-setting organizations.

Apple complains that Motorola has demanded from it “a maximum per-unit royalty of 2.25 percent” on each iPhone sold for the standards-essential patents used in the device. And Microsoft says Motorola is demanding royalties of $22.50 on every midrange laptop that makes use of its portfolio of 50 patents on the H.264 video standard. Both companies argue that those rates are vastly inflated compared to the rest of the industry. More to the point, they don’t seem fair or reasonable. But they do seem to run contrary to the principles of FRAND licensing commitments by which Motorola is expected to abide.

So it will be interesting to see how this all plays out. The Commission can fine companies up to 10 percent of their worldwide annual income if it finds them guilty of antitrust violations. It can also force them to change their business practices. In other words, the potential consequences here are quite serious, not just for Motorola, but also for Google, which is acquiring it.

“If and when Google closes the deal, it will effectively buy itself into two more EU antitrust investigations,” FOSS Patents’ Florian Mueller observes. “It’s time for some people in Mountain View to realize that a multi-front war against competition authorities, on three continents in parallel, is a war that they won’t be able to win.”

Google, for its part, is steeling itself for the double probe.

“We haven’t finalized our acquisition of Motorola Mobility, but will work with the European Commission to answer any questions they might have,” a company spokeswoman told AllThingsD. “We have longstanding concerns about patent abuses, including lawsuits and royalty demands targeting the Android ecosystem.”


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