Google Motorola Unit Hit by EU for Seeking Apple Injunction in Germany

Motorola Mobility had tried to block Apple from using a key GSM mobile standard, but that move apparently violated antitrust rules, the EU said.

Google's Motorola Mobility unit could be facing antitrust charges from the European Union after the agency notified the company that its conduct in seeking a court injunction against Apple last year in Germany "amounts to an abuse of a dominant position prohibited by EU antitrust rules."

According to a May 6 report from the European Commission, which is the executive and regulatory arm of the EU, Motorola Mobility sought the injunction against Apple to try to bolster its own technologies in the mobile phone market, while holding Apple back.

The case surrounds the use of mobile phone standard-essential patents (SEPs), which are patents that have been found to be essential to technologies that adhere to standards created by standards groups, such as mobile phone standards. When such patents are essential to a standard, then the holders of the patents are generally required to license the patent on what is called Fair, Reasonable and Non-Discriminatory (FRAND) terms, so that a patent holder can't block their use by others.

"While recourse to injunctions is a possible remedy for patent infringements, such conduct may be abusive where SEPs are concerned" when the potential licensee is willing to enter into a FRAND agreement, wrote the EC. "In such a situation, the Commission considers at this stage that dominant SEP holders should not have recourse to injunctions, which generally involve a prohibition to sell the product infringing the patent, in order to distort licensing negotiations and impose unjustified licensing terms on patent licensees. Such misuse of SEPs could ultimately harm consumers."

In the statement, Joaquin Almunia, the vice president in charge of competition policy for the EC said: "The protection of intellectual property is a cornerstone of innovation and growth. But so is competition. I think that companies should spend their time innovating and competing on the merits of the products they offer—not misusing their intellectual-property rights to hold up competitors to the detriment of innovation and consumer choice."

By requiring patent holders to license SEP patents on FRAND terms for technologies that are based on standards, the system is set up "to ensure effective access to a standard for all market players and to prevent 'hold-up' by a single SEP holder," according to the EC. "Indeed, access to those patents which are standard-essential is a precondition for any company to sell interoperable products in the market. Such access allows consumers to have a wider choice of interoperable products while ensuring that SEP holders are adequately remunerated for their intellectual property."

In the Motorola case, the SEPs in question relate 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, according to the EC. "When this standard was adopted in Europe, Motorola Mobility gave a commitment that it would license the patents which it had declared essential to the standard on FRAND terms."

That didn't happen, though, and that's why the EC has filed what it calls a "Statement of Objections" about Motorola's alleged conduct, according to the EC. "Nevertheless, Motorola Mobility sought an 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."

The EC first looked into this issue back in April 2012.

The EC will now hear from the parties in the case and will then make a determination on how to proceed.

"A Statement of Objections is a formal step in Commission investigations," stated the EC. "The Commission informs the parties concerned in writing of the objections raised against them and the parties can reply in writing and request an oral hearing to present comments."

If the EC finds sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10 percent of a company's annual global revenue.

Google had acquired Motorola Mobility in May 2012 for more than $12 billion, which included a large patent portfolio of technologies related to mobile and other consumer and business devices.

In a separate case in April, Google agreed to improve how it labels ads in its search results and how it displays links to competitors to resolve search antitrust allegations that surfaced in 2010 from the EC. Under the deal, Google will provide better labeling of its own promoted content and will improve how it displays links to competitors' online ads.

In the United States, Google essentially received a hand slap from the U.S. Federal Trade Commission this past January after a 19-month investigation into antitrust allegations that the company had been manipulating its search algorithms to favor Google's results over competitors. The FTC ruled that not enough evidence existed to prove allegations from some competitors that Google had manipulated its search algorithms to harm competing Websites and unfairly promote its own competing vertical properties. Instead, the company entered into a voluntary agreement with the FTC to change some of its other business practices.