That’s the day Microsoft will learn whether anything has come of its challenge to the $1.14 billion penalty the European Union slapped it with eight years ago for failing to comply with its antitrust decision.

In just over a month’s time, the EU’s General Court will rule on Microsoft’s appeal of the fine, the culmination of a long, contentious legal battle over interoperability. Issued after it was determined that Microsoft had failed to comply with a 2004 antitrust judgment that required the company to charge fair and reasonable rates for its interoperability protocols, the $1.14 billion fine was the largest ever imposed by the EU against a single company, and the very first to be meted out for noncompliance with an EU court order.

It was also, in Microsoft’s opinion, “unnecessary, unlawful and totally disproportionate.”

“This case would not have arisen if the commission had been as explicit with respect to rates which it wanted Microsoft to charge as it had been with all other terms of licensing proposed by Microsoft,” Microsoft’s attorney Jean-François Bellis told the EU General Court at the time the company filed its appeal. “How can the Commission fine Microsoft for failing to apply reasonable rates from June 2006 to October 2007 when the final parameters were only determined on October 22, 2007?”

In short, Microsoft says it failed to comply with the order because EU regulators didn’t give it the guidance it needed to do so. Interesting argument, but will it carry any weight with the EU General Court?

In a letter to Google chairman Eric Schmidt, European competition commissioner Joaquín Almunia outlined four specific antitrust concerns identified during the EC investigation.

The first: Google may be unfairly exploiting its market position by giving preferential treatment to its own services in its search results. The second: The company may have copied material from rivals’ Web sites. The third and fourth relate to search advertising and allegations that Google requires sites “to obtain all or most of their requirements of search advertisements from Google, thus shutting out competing providers of search advertising intermediation services.”

These are just preliminary conclusions, but because Google has been pushing for a settlement, Almunia is offering the company a chance to resolve them before the EC pushes ahead with what would inevitably be a protracted and unpleasant probe.

“I offer Google the possibility to come up in a matter of weeks with remedies,” Almunia said. “If Google comes up with an outline of remedies which are capable of addressing our concerns, I will instruct my staff to initiate the discussions in order to finalize a remedies package.”

Reached for comment, a Google spokesperson said the company has “only just started to look through the commission’s arguments.”

“We disagree with the conclusions, but we’re happy to discuss any concerns they might have,” the spokesperson said. “Competition on the Web has increased dramatically in the last two years since the commission started looking at this, and the competitive pressures Google faces are tremendous. Innovation online has never been greater.”

Google, a Silicon Valley giant that built its business on Web services, startled the tech industry last August by saying it would buy the company, a much older, Illinois-based maker of mobile devices and other hardware.

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The probe, which could take several months to complete, is initially focused on AdWords — Google’s flagship advertising product and main source of revenue. But the agency conducting the investigation, the Competition Commission of India, could expand it to scrutinize other Google services if it sees fit, the officials said.

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Google said in a quarterly regulatory filing that Argentina’s Competition Commission and South Korea’s Fair Trade Commission have each opened investigations into “certain business practices” at the Mountain View, Calif.-based company.

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The commission hasn’t decided whether to file a lawsuit against the Internet giant, but the hiring of Beth Wilkinson — a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP and former Justice Department prosecutor — sends a signal that the commission is prepared to take its case to court, if necessary. A Google spokesman declined to comment.

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Although intellectual property law exists to encourage innovation and invention, patents have become the one legal way private companies can exercise a monopoly over the market. Oversized patent portfolios and prolonged patent lawsuits translate into less consumer choice and higher prices. Effectively, patents become the end in and of themselves, and no longer a means for supporting innovation.

These lawsuits have caused real concern at the Department of Justice’s antitrust division, where the patent wars have raised the prospect of anti-competitive activities. The DOJ is charged with viewing the market as a whole. For that reason, the Department of Justice has invoked a little-known form of consumer protection in ensuring the Patent Wars don’t put new technologies out of the consumer’s reach.

It has been well publicized that the battles between tech powerhouses like Google, Apple and Microsoft go far beyond the features of their latest devices. As many of these companies continue to focus large amounts of time and treasure in the courtroom, there is a concern that innovation will take a backseat to genuine competition on tech. Since Google’s acquisition of Motorola Mobility last year, things have especially heated up among the three major players — a situation that can only worsen with Microsoft’s acquisition of AOL’s patent portfolio, which is a symptom of a patent “arms race.”

No longer obtained to protect a new technology or a particular state of art, patents are now used in the smartphone arena to block other players from entrance into the arena, or to stop one company from achieving a dominant position.

A patent-centric strategy works extremely well in the software industry because sets of international standards allow our mass communications devices to work together seamlessly. If a company obtains a patent governing one of these standards, or for technology that is widely relied upon (even if not directed to a specific standard), that company can put a chokehold on the market.

Specifically, rival companies have attempted to block Google’s Android operating system and handsets, which Google licenses to other companies for free, while Apple and Samsung have been engaged in a number of lawsuits over handset technology. One such lawsuit resulted in a suspension of iPad and iPhone sales in Germany.

In fact, when so many patents protect vital, standardized technologies with such broad language, lawsuits are certain to follow. And a glut of patent lawsuits can mean licensing deals, which in turn mean higher prices as the costs of production come to include those licensing deals. In a worst case scenario, a licensing deal can’t be reached and the technology is unavailable to the consumer.

And while the lawsuits have played out largely amid corporate attorneys and IP specialists, the consumer isn’t without an advocate as the patent wars rage. As leverage to avoid antitrust lawsuits, the Department of Justice has emphasized a little-known tool to regulate the cost of patent licenses. It can exert pressure to require that crucial patents be licensed under a set of terms known as FRAND (Fair, Reasonable and Non-Discriminatory) terms.

These terms set strict guidelines regarding the costs of licensing and prevent companies holding vital patents from setting exorbitant, unfair prices. For example, the DOJ recently pressured a consortium led by Apple to commit to FRAND licensing when it bought various Nortel and Novell patents. The government tacitly hinted that it would block the acquisition if the consortium didn’t agree to FRAND terms. If the DOJ hadn’t stepped in, the consortium would have been able to exert enormous leverage on the consumer electronics market.

Google is being required to maintain FRAND terms with the patents that it received upon purchasing Motorola Mobility. Google also bought patents from IBM under those terms.

In fact, companies holding patents which are considered to be crucial to a particular standard may be required to license those patents by the relevant governing standards body under FRAND terms.

Some companies do choose to license their patents widely, even without explicit FRAND requirements. Microsoft, for example, has chosen to license its patents widely, having reached licensing agreements with makers of more than 70 percent of the Android-based smartphones sold in the U.S. On the other hand, Steve Jobs famously threatened to do whatever was necessary to force Google to significantly change Android to remove features that Jobs felt were proprietary to Apple, refusing to even consider payment from Google to license Apple’s patents.

It’s likely the smartphone war will end in a variety of licensing agreements and cross-licensing agreements. Whether those agreements result in competitive prices for the consumer depends on how effectively the DOJ wields its “FRAND” sword.

D’vorah Graeser, Ph.D., is the founder and CEO of Graeser Associates International (GAI), an international intellectual property firm specializing in the preparation, filing and prosecution of medical device, biotechnology, pharmaceutical, bioinformatics and software patents. Dr. Graeser is a U.S. Patent Agent and is not an attorney at law; none of the above should be construed as legal advice.

In a ruling that came down late Wednesday (see the opinion below), Judge Lucy Koh ruled that the existence of agreements between the various companies not to “cold call” employees of the other supports a “plausible inference” that the agreements were signed off at the highest levels by senior executives of each company.

Plaintiffs in the case, all former software engineers who have worked for the various companies, have claimed that the late Apple CEO Steve Jobs, negotiating with Ed Colligan, the former CEO of Palm (now a unit of Hewlett-Packard), talked directly about the matter. Their complaint quotes Jobs as telling Colligan, “We must do whatever we can” to stop cold-calling efforts between the two companies.

The companies being sued are Apple, Intel, Adobe, Google, Intuit, Lucasfilm and Pixar, a unit of Walt Disney. The complaint alleges that the companies conspired to make it harder for employees to move to different jobs between the companies, thus limiting their ability to earn higher salaries. The companies had sought to get the case thrown out.

You can read Judge Koh’s opinion below.

Poaching Case Ruling

Approval by the European Commission, the European Union’s executive arm, would represent a victory for Sony, removing the possibility of a longer review of the deal’s antitrust implications. Such a review could add several months to the process.

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This morning alone, Apple shares fell more than 3 percent. And they’re down nearly 8 percent from last Monday’s close (caveat: The stock is still up well over 40 percent this year).

So what’s dragging the stock down?

Any number of things, really. The antitrust charges recently filed against Apple and major book publishers by the Department of Justice. Concerns that Apple’s carrier partners are tired of offering high subsidies on the iPhone and will soon begin to rein them in, cutting into the company’s high margins on the device.

Another thought: This could be profit-taking, plain and simple.

Or, as ISI Group analyst Brian Marshall suggests, the stock could just be cooling off a bit. “We believe this could be a simple ‘collapsing’ on its own weight given the year-to-date move (i.e., AAPL up ~45 percent vs. S&P 500 up ~10 percent).”

The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.

Apple’s response is similar to ones made by Penguin Group and MacMillan, two of the five publishers named in the suit. The three other publishers — HarperCollins, Hachette and Simon & Schuster — signed settlements with the DOJ immediately after the suit was filed Wednesday morning. (News Corp., which owns HarperCollins, also owns this Web site.)

It’s worth noting that Apple’s pricing policy with books and apps differs from the setup it has with the music industry. In that relationship, Apple pays the music labels a wholesale price for their digital assets, and then sets the retail price itself.

The gist of the Department of Justice’s lawsuit against Apple and five major book publishers: The publishers, assisted by Apple, conspired to fight back against Amazon’s pricing power in the growing e-book market.

The Wall Street Journal, which has been on the story for some time, has plenty of background here. And there’s some great, baroque detail in the DOJ’s complaint, which you can read over here. (New York venues of choice for alleged antitrust meetings: The “Chef’s Wine Cellar” at Picholene, and Alto, a now-defunct Italian restaurant.)

But there’s also this odd, scintillating, throwaway line in the middle of the complaint, where the DOJ casually mentions that before Apple thought about fighting with Amazon, it thought about a different strategy: Ruling the world in concert.

From the complaint:

In addition to considering competitive entry at that time, though, Apple also contemplated illegally dividing the digital content world with Amazon, allowing each to “own the category” of its choice — audio/video to Apple and e-books to Amazon.

Really? So how would that work? And why didn’t Steve Jobs and Jeff Bezos end up conspiring to work together? The DOJ doesn’t explain any of this — it simply moves on to the rest of its argument.

And here’s where we need to point out that it’s not uncommon for lawsuit complaints to contain big helpings of theatrics, with accusations and context that won’t end up having any bearing in court, if it gets that far.

Indeed, several of the publishers that the DOJ is suing this morning are expected to settle with the government this afternoon — can’t get more theatrical than that. (Actually, they’ve already settled, says Bloomberg.)

Still, that’s an especially juicy bit of red meat to dangle in front of the public, so if the DOJ has more to say about the alleged would-be conspiracy, we’d love to hear about it. Apple declined to comment, but I’ll update if that changes.

(Image courtesy of Shutterstock/Everett Collection)

The lawsuit, filed in Manhattan federal court by the U.S. Department of Justice’s Antitrust Division, alleges Apple and the publishers reached an agreement where retail price competition would cease, retail e-books prices would increase significantly and Apple would be guarantee a 30% “commission” on each e-book sold.

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Apple Inc., another target of the investigation, and two publishers appear reluctant to settle on the terms sought by antitrust authorities in both the U.S. and Europe, those people said.

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“… 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.”

Without mentioning Apple Inc. or the five publishers that are the target of the investigation, Sharis Pozen says she won’t hesitate to act against “collusive behavior at the highest levels of companies.”

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Is that good for consumers? There’s an obvious fear that when two big utilities agree to work together, the end result will be higher prices and fewer choices for their customers. So today the two companies are testifying in front of a Senate subcommittee, trying to explain why that’s not the case.

The hearing kicks off at 2 pm ET, and you can watch a Webcast here. But the people who present at these things give out their testimony in advance, and while that reduces any chance for drama, it is helpful for reporters on deadline.

For instance, here’s an interesting argument from David Cohen, Comcast’s executive vice president: If you let us little guys work together, he says, we can take on the really big guys:

“By enhancing the Cable Companies’ and Verizon Wireless’s own products and services, the Joint Venture will compete with similar solutions that AT&T, Dish Network, Google, Apple, Microsoft, and others already have introduced into the marketplace. This, in turn, will spur other companies to respond, perpetuating a cycle of competitive investment and innovation.”

Wait a minute. AT&T and Dish are direct competitors with Verizon and Comcast. And it’s possible that those other guys might be one day, particularly as Google gets ready to start selling broadband and cable in Kansas City. But what exactly is Cohen talking about there?

The footnotes in Cohen’s remarks here are interesting. To back up his argument, he cites the following news items: Google’s Android launch; a Google/Sprint deal that put the search giant’s tools on Sprint handsets; Apple’s iPad launch; the fact that many tech companies have been buying wireless patents; and Google’s pending deal for Motorola Mobility.

In other words: In the future, our competition won’t just be other pipe companies, but other device makers, too. If you take him at his word, things are going to get very interesting.

People familiar with the FTC’s antitrust probe of Google independently confirmed the agency’s subpoena of Apple to AllThingsD, adding that it has sent subpoenas to other device manufacturers, as well.

News that the FTC has subpoenaed Apple for the details of its mobile-search deal with Google isn’t at all surprising. But it does indicate the breadth of the agency’s probe, and perhaps its quickening as well.

Apple declined comment on the matter.

And in 2012 — which also happens to be the 10th anniversary of the confab of tech and media titans — it’s already shaping up to be another fantastic event in terms of programming, with a lineup of onstage appearances that is sure to make some news.

There are many more very big names to come, but Walt Mossberg and I are pleased to introduce the first group of interviewees, which will give you a glimpse into the firepower we expect at D10 in late May. It is again being held in Rancho Palos Verdes, just south of Los Angeles.

The initial speakers we have confirmed so far include: New York City Mayor Michael Bloomberg; serial entrepreneur Sean Parker, who will appear with Spotify co-founder and CEO Daniel Ek; Zynga founder and CEO Mark Pincus; Federal Trade Commission Chairman Jon Leibowitz; LinkedIn Chairman and VC Reid Hoffman, who will appear with LinkedIn CEO Jeff Weiner; and Skype CEO Tony Bates.

It’s hard to imagine someone we have wanted to have onstage more than Michael Bloomberg, a man of many talents and interests. He’s known worldwide as the 108th Mayor of the City of New York. First elected in November 2001 (and again in 2005 and 2009), he is also one of the most compelling politicians in the U.S. today.

But Bloomberg is also a pioneer in terms of the business of digital news and information technology, having built a huge and groundbreaking media company and information service. Bloomberg (the company) has 310,000 subscribers to its financial news and information service, and more than 15,000 employees worldwide.

There will be a lot to talk about with him, from the upcoming presidential election to the state of our government to the future of innovation, news and technology.

Also sure to be voluble is Sean Parker, the legendary Silicon Valley entrepreneur who has been on the cutting edge of innumerable important digital trends of the recent decade. In 1999, Parker co-founded Napster, the controversial and industry-changing music service, at the age of 19.

He followed up with early contact information service Plaxo, and then shifted over to his critical involvement as founding president of Facebook in its early days as a start-up, an experience which was dramatized in the movie “The Social Network.” Parker continued to found and also invest in companies, from Causes to Spotify to his most recent, Airtime, a social video company that he is doing with his Napster co-founder Shawn Fanning.

Parker will be appearing onstage with Daniel Ek, another serial entrepreneur and technologist, who started his first company in 1997 at the age of 14. The Swedish native later co-founded online music phenom Spotify in 2006, with Martin Lorentzon.

The former CTO of Stardoll and founder of Advertigo leads a company that is changing the way music is delivered and consumed by fans, against a backdrop of intense change in the industry, succeeding even as a plethora of other services have stumbled.

Also a groundbreaker is Zynga CEO and founder Mark Pincus, yet another serial entrepreneur, whose latest effort in the online gaming arena has finally resulted in his biggest success. It recently went public, and now has a nearly $10 billion market cap.

Before founding Zynga in 2007, Pincus had already started three other companies: Push start-up Freeloader in 1995; automated tech-support company Support.com after that; and early social networking site Tribe.net in 2003.

(I met Pincus when he was at Freeloader in Washington, D.C., while writing a profile of him for the Washington Post, so I have enjoyed tracking his progress since then.)

Pincus is also an avid angel investor, with early stakes in Napster, Brightmail, Twitter and Facebook.

Reid Hoffman was another early investor in Facebook, along with many of Web 2.0’s most successful ventures. Well-known in Silicon Valley as an entrepreneur and VC, and recently dubbed the “start-up whisperer” by the New York Times (although I am not sure exactly what that means), he’s also chairman of LinkedIn, the business-networking service that also recently went public (at a $10 billion valuation, too).

He’ll appear with LinkedIn CEO Jeff Weiner, who started out life in Hollywood, but soon made his way to Silicon Valley as a top exec at Yahoo. After running its media division, Weiner spent a short time at venture firms before going operational again at LinkedIn.

What it takes to build and maintain momentum as tech companies move into more mature stages, as well as how the social networking space evolves, are among the many topics on tap for the pair.

The evolution of a start-up phenom — in this case, Internet telephony service Skype — will be among the topics covered by Tony Bates, who is now a president at Microsoft, which bought it last year.

As such, he is responsible, says the software giant in its description of his job, “for overseeing the company’s direction, strategy and overall mission to become a global communications service that will eventually reach billions of users.”

That’s a tall order for Bates, who came to Skype from a top job at Cisco. Bates has deep roots (or maybe, routing?) in the guts of the Internet, having done backbone-engineering strategy for Internet MCI. The U.K. native also holds nine patents.

Lastly, given all the activity we expect will happen between government regulatory agencies and tech companies over the next few years, we felt it was key to bring in FTC Chairman Jon Leibowitz. He has been at the FTC as a commissioner since 2004, but was given the top job by President Barack Obama in 2009.

Among his priorities, according to his bio, is “promoting competition and innovation in the technology sector through law enforcement and policy initiatives; and protecting consumers’ privacy — especially while they are using the Internet.”

Uh-oh!

Leibowitz knows from regulation, having served as the Democratic chief counsel and staff director for the U.S. Senate Antitrust Subcommittee from 1997 to 2000, where he focused on competition policy and telecommunications matters, as well as a similar stint at the Senate Subcommittee on Terrorism and Technology before that.

There will be a lot more speakers to come, of course. But, so far, we think D10 is off and running fast.

“This merger decision should not and will not mean that we are not concerned by the possibility that, once Google is the owner of this portfolio, Google can abuse these patents, linking some patents with its Android devices,” Commissioner Joaquin Almunia told reporters, according to Reuters. “This is our worry.”

European regulators had asked for more information about the deal, but said last month that they would make their call on it by today.

The commission said in a statement that it had concluded that Google was unlikely to prevent other hardware makers from getting access to Android, given Motorola’s relatively small share of the market.

The deal needs approval from the Department of Justice, though that is expected to come as early as this week. It also needs sign-off in other countries, including China, according to Reuters.

Google said it still expects to close the deal early this year.

“This is an important milestone in the approval process and it moves us closer to closing the deal,” Google said in a blog post. “We are now just waiting for decisions from a few other jurisdictions before we can close this transaction.”

However, antitrust enforcers in the U.S. and Europe remain concerned about Google’s commitment to license key Motorola patents to competitors on fair terms, those people said, and are likely to closely monitor Google’s use of the patents. The European Commission has set a deadline of Monday to decide whether to approve the acquisition.

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Reuters reports that the EC will likely make that decision by March. “I will receive comments from the case team towards the end of the first quarter,” said EC antitrust commissioner Joaquin Almunia. “I do not expect anything sooner. Let us see.”

Let us see, indeed. There are rumblings that the EC is compiling a Statement of Objections detailing Google’s various alleged abuses of its market dominance and could drop it in CEO Larry Page’s lap sometime this spring.

Of course, Google is facing regulatory scrutiny in the United States as well. Last week, the Federal Trade Commission said it would expand its antitrust probe of the company to include its controversial “search, plus your world” feature, which introduces social content from the company’s Google+ service into users’ search results.

The Hankook Ilbo reports that the Korean Fair Trade Commission believes Google interefered with a KFTC raid of its South Korean headquarters by deleting pertinent documents instructing its employees to work from home. The agency had been looking for materials supporting complaints that Google is allegedly limiting access to local search engines on Android smartphones.

If the agency determines that Google did indeed obstruct its investigation, it could slap the company with a fine of up to 200 million won. Which, aside from the negative PR that would accompany it, isn’t nearly as bad as it sounds — about $172,000 at current exchange rates.

Reached for comment, Google said that it is cooperating with the KFTC, but flat-out denied accusations that it deleted documents or instructed employees to telecommute to impede the investigation. The company also said it has not been told that the Commission is considering fines.

(Image courtesy of Flickr/toughkidcst)