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From Antitrust Law Daily, May 6, 2013

EC Issues Statement of Objections to Motorola Mobility over Alleged Misuse of Standard Essential Patents

By Jeffrey May, J.D.

The European Commission (EC) has turned up the heat in a year-old investigation into potential misuse of standard-essential patents by Motorola Mobility LLC, a wholly-owned subsidiary of Google, Inc. The EC announced today that it sent a Statement of Objections (SO) to Motorola Mobility, informing the company that its efforts to seek and enforce an injunction against Apple in Germany on the basis of its mobile phone standard-essential patents (SEPs) might have amounted to an abuse of a dominant position prohibited by EU antitrust rules. The investigation was opened in April 2012.

At issue are Motorola Mobility SEPs relating to the European Telecommunications Standardisation Institute's (ETSI) GPRS standard, part of the GSM standard, which is a key industry standard for mobile and wireless communications, the EC statement explained. When this standard was adopted in Europe, Motorola Mobility committed to licensing the patents which it had declared essential to the standard on Fair, Reasonable and Non-Discriminatory or FRAND terms. Nevertheless, Motorola Mobility sought the injunction against Apple in Germany on the basis of a GPRS SEP and, after the injunction was granted, went on to enforce it, even when Apple had declared that it would be willing to be bound by a determination of the FRAND royalties by the German court.

In circumstances such as these, where SEPs are concerned and the potential licensee is willing to enter into a license on FRAND terms, dominant SEP holders should not have recourse to injunctions, according to the EC statement. The EC said that it was concerned that the threat of injunctions can distort licensing negotiations and lead to licensing terms that the licensee of the SEP would not have accepted absent this threat, leading to less consumer choice.

FTC Settlement

Earlier this year, the FTC released for public comment a proposed consent order with Motorola Mobility, resolving allegations that the company engaged in unfair methods of competition and unfair acts or practices in violation of the FTC Act relating to the licensing of SEPs for cellular, video codec, and wireless LAN standards. As with the EC allegations, the FTC alleged that, after committing to license the SEPs on FRAND terms, Motorola Mobility sought injunctions and exclusion orders against willing licensees, undermining the procompetitive standard setting process. According to the FTC, Google allegedly continued the challenged conduct after purchasing Motorola Mobility in June 2012.

Under the proposed consent order, Google agreed to meet its prior commitments to allow competitors access—on FRAND terms—to patents on critical standardized technologies needed to make popular devices such as smart phones, laptop and tablet computers, and gaming consoles. Google would be prohibited from seeking injunctions against a willing licensee, either in federal court or at the ITC, to block the use of any SEPs that the company has previously committed to license on FRAND terms.

Companies: Google, Inc.; Motorola Mobility LLC.

MainStory: TopStory Antitrust

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