EU Targets Motorola In Antitrust Investigation Over Standards-Essential Patents

Fluffeh writes "Motorola Mobility has found itself on the receiving end of an antitrust investigation by the European Commission due to its alleged abuse of standards-essential patents related to WiFi, H.264, and 3G wireless networking. The EC investigation comes shortly after it launched a similar investigation of Samsung, which has been attempting to leverage its 3G-related patents against Apple. The investigation could be especially worrisome for Google, which was recently granted approval of its planned merger with Motorola."

Comments

Overplayed their hand

[whisper_jeff]

Motorola brought this on themselves. When you attempt to unfairly abuse FRAND patents against your market competition, you're eventually going to be investigated for anticompetitive behaviour. They abused their FRAND patents. They're being investigated. And they're going to be found guilty of anticompetitive behaviour and everyone knows it.

And we should be happy about that.

It doesn't matter what you think of Motorola, Apple, Microsoft, Google, or any other company. You may like or hate any of those companies - it doesn't matter. We should all be happy that Motorola's actions are going to be punished because this is precisely the sort of thing that limits innovation in an industry. This isn't about patents limiting innovation - this is about FRAND patents that are essential for involvement in an industry.

If you don't know what FRAND patents are, you should make an effort to understand them because understanding them is vital to understanding this situation.

FRAND patents are essential patents that are part of an industry standard that MUST be licensed to ANYONE who wishes to license them at _Fair, Reasonable, and Non Discriminatory_ rates. When a company gets a patent included in an industry standard, they agree to license them under FRAND terms.

Motorola's actions have not been Fair, Reasonable, nor Non Discriminatory. They have targeted specific companies (that's discriminatory) with excessive licensing demands (ranging from 2.25% up to "your entire non-FRAND patent portfolio" which is not reasonable), all of which is not fair.

You don't have to like or hate any company involved in this to recognize that Motorola is abusing their FRAND patents and everyone should want them to be punished for doing so.

They have abused their FRAND patents. They are being investigated. They will be found guilty of anticompetitive behaviour.

They overplayed their hand and now they are going to face the consequences.

Re:Overplayed their hand

[jo_ham]

What nonsense.

FRAND works because you get a return on your investment - if your patent goes into the standard then *everyone needs to use it* so you are guaranteed a steady flow of income from your patent. The restriction on this is that as a condition for inclusion of the patent, you must licence it fairly to everyone who wants to use it. That is, you can't use that patent to keep a competitor out of the market, or charge them an outrageous fee etc.

Apple's patents *are not in a standard* and as such are not "pretty essential to a modern smartphone". They differ from FRAND patents because Apple is free to do what it likes with them (licence them, not licence them, charge more for them to company A, less to company B etc) but equally it has no guarantee that anyone will use them at all, since they are not an essential part of any standard that goes into making a smartphone.

You not need to contribute *anything* to be able to use FRAND patents. If I want to make and sell a phone then I do not need to have any patents of my own - I can simply assemble it from other patented technology that I am free to choose from (and pay for the use of those patents). However, what I am *not* free to choose are things that relate to a standard that is necessary for it to work as a phone (eg, GSM/3G/WiFi) - I *must* choose the patent package that covers those technologies whether I want to or not, and as such they are covered by a FRAND agreement to enable me to do so without Motorola saying "hmm, your phone is selling better than ours and we don;t like competition... that will be 2.5% of your revenue please".

Now, where it gets complicated is that companies often offer their own (non-FRAND) patents in cross licensing agreements in payment, but it is *not required*. You can pay in cash if you really want. You don't have to have something to trade if you want to use a FRAND patent.

It is not a competitive disadvantage to have a FRAND patent in a standard - it is quite the opposite, since it is a guaranteed and ongoing source of revenue. What you *cannot* do is then use that patent in violation of the terms of the agreement that you signed up for in exchange for its use by the standards body.

Ultimately the best thing Samsung, Nokia, HTC, etc. could do at this point is jointly develop their own standards without the FRAND badge, use their combined market weight to force them into the industry and refuse to license them to Apple, so that Apple can't even have a smartphone that works on future networks at all. It's apparently the way business has to be done now.

Wow. I mean... really.... wow. I'm not even... Fuck me.

So, they should make phones that don't work with the current cell tower infrastructure? Who's going to pay to tear down all those cell towers and replace them with new ones? Of course, this assumes that the international standards body that sets the standard will accept this cartel's new, incompatible standard. Or they could just make their own network, and be unable to interoperate with every other cellphone on earth. Sounds like a great business model!

Re:Overplayed their hand

[UnknowingFool]

One of the claims by Apple is that Motorola is double-dipping in requiring licenses for some patents. Apple claims that they don't have to license some of the patents as they were in the stock chips they bought from Qualcomm and those patents covered with Motorola's license with Qualcomm. An analogy is that consumers or PC manufacturers don't license SDRAM directly. They buy the memory from the memory manufacturers like Micron who are responsible for licensing the patents. The two areas that will decide this is Apple's agreement with Qualcomm and Motorola's license with Qualcomm.

Re:Any monopopies inside the EU?

[Ihmhi]

Europe does a lot of stuff I like and a lot of stuff I don't like.

What frustrates me is mankind's desire to reinvent the wheel.

We have a fight in America over nationalized healthcare. Obamacare is a half-assed mix between true socialized healthcare like what is in pretty much every European country and our private system. Why reinvent the wheel when we can just copy what has, say, already been working quite well for the UK since the end of World War 2?

We have issues in our schools with... everything. We're looking at more tests and more hours in school like Asian countries that are often near the top of world rankings. Yet Finland is also very much near the top in those rankings but with shorter school hours and more professional teachers. They are doing something quite right and have been for some time. Why don't we have the people who designed this system coming over here and unfucking ours?

I could go on with many more examples. I wish I could say "They can do it, so we should be able to do it as well!" and have someone respond "Right, let's find out how they did it!" rather than "Let's stubbornly try to figure it out ourselves and give private interests the opportunity to corrupt the system!" Related to business, the Consumer Financial Protection Bureau is a great idea that gets nowhere because they are essentially stripped of any real power. Private interests got their hands in the cookie jar.

Re:Any monopopies inside the EU?

[Altrag]

Because the US would never get away with passing such legislation in the path of the well-entrenched and well-funded empires that already exist -- especially when they can bill it as "communist" in the press to garner instant public disapproval.

So they're stuck with such half-assed attempts that don't really please anybody, but are close enough to status quo that they also don't piss off the powerful people and organizations (or at least, not enough to keep fighting it.)

But on the other hand, a half-assed measure is better than none at all. If nothing else, it at least opens the door to the possibility of further change in the future. One step at a time.