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

Re:Any monopopies inside the EU?

[JaredOfEuropa]

There are many cases brought against European corporations. Most of those do not make the news across the pond, and many do not make the headlines here in the EU either. The same goes for antitrust cases brought against lesser-known US companies.

Re:Any monopopies inside the EU?

[cbope]

It's because large US-based corporations doing business in the EU tend to try and get away with anti-competitive practices that are allowed to pass for "business as usual" in the US, where there is a much more permissive the-market-will-regulate-itself attitude.

It makes headlines because we in the EU try to keep companies from pulling this shit over here, and largely it works.

Re:Any monopopies inside the EU?

[SilenceBE]

There are numerous antitrust enforcements or investigations against European companies. Even ones with very hefty fines. The reason you don't hear about it is that this mostly isn't picked up by non European news agencies.

It isn't about it are "American" companies if that is what you are insinuating. I personally think it also has to do that in America companies get a way with a lot more (America is led by corporations imho) in the states and then they are confronted with a continent that put them more on a leash to more or less protect their citizens.

The warranty thing with Apple and Europe is for me a class book example.

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

[Anonymous Coward]

The problem is that the patents being leveraged against companies like Motorola are patents that don't require much R&D and so don't require a standards committee to come up with, but similarly aren't covered by FRAND as a result.

Many of the things companies like Apple and Microsoft are using against their competitors are just as important to computing and particularly in the case of Apple, modern interaction, but don't have the FRAND badge.

So you've got this absurd situation where Apple can prevent companies like Motorola using tech that is pretty essential to a modern smartphone, but Motorola is barred from doing the same - even though Motorola's patents required a far bigger R&D investment to come up with for the most part.

Until Apple entered the phone market, all other phone manufacturers got along pretty well with patents. The whole patent cluster fuck in the market now is entirely on Apple. Motorola, Sony-Ericcson, Nokia, Samsung, HTC, and so on all got along pretty well until Apple came and fucked things up in the market. What incentive is there for companies with the talent and experience to produce new wireless standards to do so? they can't profit from those standards because of FRAND, and they can't use those standards in a product because Apple will prevent them doing so with some lame thing that shouldn't even be patentable. We sure as hell can't rely on Apple to produce new wireless standards, they can't even build a fucking antenna onto their handset properly.

It's really sad because Apple really shook up the phone market when they entered it, they forced other companies to adapt or die, and really pushed smartphone innovation in an incredible way. Now they're doing completely the opposite - they're killing smartphone innovation, and haven't done anything really worthwhile and innovative now since the original iPad.

So you can rant about FRAND abuse all you want, but all you're doing is making it clear that there's no point in companies putting effort into FRAND based standards in the first place because it puts them at a competitive disadvantage. Better to do things the Apple/Microsoft way and come up with unilateral standards that you force into the market place by abusing your market dominance, then sue other players who dare to try and use them to enter the marketplace too.

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.

FRAND worked great when the market was full of mature and reasonable companies willing to maintain a degree of healthy competition and work together where it was necessary, but that isn't Apple, Apple is the child who wants the world to itself, and anyone else can get fucked, so FRAND no longer works. If Apple had brought it's innovations into the market and shared them with other phone companies in the same way phone companies share their fundamental wireless tech we'd all be better off, but again, that just isn't Apple.

Re:Overplayed their hand

[jo_ham]

Not at all. MS's patents in that case are not FRAND covered and are not part of a standard.

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:The moral of the story is about patent value.

[whisper_jeff]

Actually do expensive research and get patents that mean something, and they will label them "standards essential"...

Um, you do realize that Motorola submitted those patents for inclusion in the industry standard and were accepted into the standard in return for an agreement to license them for FRAND terms. They weren't labeled, against their will, standards essential - they asked to be included in the industry standard.

Motorola isn't the victim here.

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?

[chrb]

Why is it that the only antitrust enforcement I hear about in the EU is against non-EU based companies?

Technically every enforcement action is against an EU based corporation - in order to legally do trade within the EU, you need an EU corporate presence. The European Commission regulates violations of trade law within the EU. The EU didn't levy fines against Microsoft US for antitrust violations within the borders of the United States, it levied fines against Microsoft Europe for antitrust violations within the EU borders.

I would guess that you haven't heard about other enforcement actions because you don't read the EU antitrust news? You chose to read US oriented news, which doesn't report on enforcement actions of foreign regulatory bodies against foreign companies? Also, the EU is made up of many nation states, each of which has its own antitrust regulatory body. The EU only gets involved in antitrust when the scale of the illegal activity exceeds the ability of the national courts to handle, or where the national courts have erred or require clarification. This is usually difficult cases, or those with international scope that involve large transnational corporations. EU-level enforcement actions are, by their nature, more likely to be against a large corporation trading internationally, which for tax and trade reasons may well be headquartered in the U.S. (although increasingly companies are choosing to be headquartered in Ireland or Luxembourg for tax purposes, see Facebook, Twitter, etc.).

Is it really that case that no corporations inside the EU are big enough to be anti-competitive?

The EU have issued over €12 billion of fines in the last 5 years against illegal cartels. How many of those cases did you read about in the U.S. press? This is not some conspiracy - it is entirely understandable, their readers (Americans) generally don't care about the EU fining a Belgian glass manufacturer, or Frankfurt Airport. They only feel an emotional connection when the target of the fine is the subsidiary of a U.S. corporation.
2011/03/03 Siemens AG fined €397 million by EU antitrust
2012/03/29 Telefonica fined €152 million.
2011/10/25 Solvay fined €23 million
2011/06/22 Telekomunikacja Polska S.A €127 million
2008/11/12 Largest every cartel fine from the EU - over €1.3 billion against a Japanese/US/English/Belgian cartel.

Re:Any monopopies inside the EU?

[iserlohn]

The whole "debate" on the viability of the NHS is just a convenient justification for recently passed Tory-led reforms that many consider "privitisation through the back door". The increase in funding earlier on the last decade has started to show results, and heath outcomes are generally on the rise - why we are looking at another complete overhaul of NHS structure is beyond most observers.

The NHS performs quite well compared to any other system in the developed world - it also allows the UK to have the lowest cost as a percentage of GDP (in the developed world, adjusted for demographics) due to the nationalised/socialised nature of the organisation.

http://www.commonwealthfund.org/Surveys/2011/Nov/2011-International-Survey.aspx

Re:Any monopopies inside the EU?

[cbope]

Well, for one thing, don't model your healthcare on the UK system. It's not exactly a pinnacle of socialized healthcare today. In fact there are a lot of problems with the UK system, not necessarily related to socialized healthcare as a whole. I would urge you to look to Scandinavian countries, such as Finland, Sweden and Denmark, for models on which a good healthcare system can be built. I live in Finland and can attest to both the good education system (do I have to mention that university education is *free*?) and a working socialized healthcare system where you don't end up in the poorhouse when you get ill. Prescriptions drugs cost a fraction of what they do in the US, and if you have a chronic illness that requires continuous medication, once you reach a very reasonable yearly cap, everything else above that is free.

As a sidenote, since you brought it up, the Finnish education system is not based on rote memorization and testing of students to gauge progress. It's based on the teacher actually teaching the students (wow, innovative concept!) and taking the needs of each student into account. Each student is allowed to learn at their own pace, it's not forcing the entire class to learn at one speed and fuck the ones who can't keep up. It's also more objective based and learning of problem-solving skills that will be useful in a real job.

I am very familiar with the US and Finnish systems, I'm an American living in Finland for 12 years. I bet you can guess which I prefer...

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.